What Will Faulty Ig­ni­tion Switches Cost GM?

Prod­uct Li­a­bil­ity ▶ Courts will help de­ter­mine the value of le­gal claims ▶ “You get a $100 mil­lion ver­dict, and you don’t see an­other trial”

Bloomberg Businessweek (North America) - - Companies/industries -

Dionne Spain was driv­ing her 2007 Saturn Sky over the Cres­cent City Con­nec­tion bridge in New Or­leans in Jan­uary 2014 when she hit her brakes to avoid a multi-car pileup. The car didn’t stop, and its power steer­ing failed, she said. Spain rear-ended the ve­hi­cle in front of her, scrap­ing the bridge’s in­side rail. The ac­ci­dent left her with back and neck in­juries. A pas­sen­ger, Lawrence Barthelemy, was also hurt.

On March 14, Spain and Barthelemy will take their law­suit against Gen­eral Mo­tors, maker of Saturn, to trial in fed­eral court in Man­hat­tan, al­leg­ing a de­fec­tive ig­ni­tion switch caused the brakes and steer­ing to fail just when Spain needed them most. The case is the first big test for plain­tiffs’ lawyers and the car­maker’s at­tor­neys in as­sess­ing the strength and value of hun­dreds of sim­i­lar al­le­ga­tions against GM. At least 17 cases sched­uled for trial in state and fed­eral courts this year will help de­ter­mine how much the au­tomaker will have to pay to re­solve all the claims.

GM re­called mil­lions of ve­hi­cles in 2014 over an ig­ni­tion switch that could move and shut off the en­gine, dis­abling the power steer­ing and brakes and pre­vent­ing air bags from de­ploy­ing. The de­fect has been linked to at least 124 deaths and an ad­di­tional 275 in­juries. The car­maker has paid at least $870 mil­lion to set­tle death and in­jury claims, and an ad­di­tional $900 mil­lion to the Depart­ment of Jus­tice to re­solve a crim­i­nal in­ves­ti­ga­tion. But more than 900 claims re­main, and new cases are filed al­most ev­ery week.

Each side looks for pat­terns in the ini­tial tri­als to come up with a rough es­ti­mate of the value of in­di­vid­ual cases, says Carl To­bias, a law pro­fes­sor at the Univer­sity of Rich­mond. The strat­egy changes de­pend­ing on who wins or loses: A GM win in one case could lead sev­eral oth­ers to be dropped, while a big loss could push up a plain­tiff’s set­tle­ment de­mands. “If there are a cou­ple of big wins for the plain­tiffs or the de­fense, that’s when peo­ple start get­ting se­ri­ous about set­tle­ments,” To­bias says.

GM is fo­cus­ing on six test cases in fed­eral court, so-called bell­wethers, to “es­tab­lish the set­tle­ment val­ues for cases with sim­i­lar claims,” says GM spokesman James Cain. The SpainBarthelemy suit is one of three GM chose as a bell­wether. Plain­tiffs’ lawyers also se­lected three, in­clud­ing the first case that went to trial in Jan­uary but was dis­missed fol­low­ing ac­cu­sa­tions the plain­tiffs lied on the stand.

For decades, mas­sive prod­uct-

Am­ber Cove in the Do­mini­can Re­pub­lic fea­tures bars, shop­ping, zip lines, a wa­ter slide, and a re­sort pool

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