GM dodges billions in ignition switch liabilities
DETROIT - A federal bankruptcy judge ruled Wednesday that General Motors (GM) is shielded from death and injury claims potentially totaling billions of dollars tied to defective ignition switches in certain GM small cars.
In 2009, a bankruptcy court allowed GM to emerge from bankruptcy protection free from the liabilities of the old company. Plaintiffs argued that GM misled the court because it knew about but failed to disclose the problem with the ignition switches. The switches are now linked to at least 84 deaths.
Judge Robert Gerber denied that argument, but did rule that under narrow circumstances, some plaintiffs who sued over a loss to the value of their cars due to faulty ignition switches can file claims against the company for actions after it left bankruptcy protection in 2009.
The ruling is a victory for GM. One plaintiffs' attorney said the decision shields GM from $7 billion to $10 billion in potential liabilities from lawsuits.
Lawyers for plaintiffs in more than 140 lawsuits had argued that their clients never got a chance to dispute the bankruptcy order because GM concealed the defective ignition switches.
But the new GM contended that when it bought assets from the old GM in the 2009 government-funded bankruptcy, the new company got them "free and clear" of liabilities before the bankruptcy.
Texas attorney Robert Hilliard, who represents multiple wrongful death and injury plaintiffs in lawsuits against GM said the ruling cuts off court options for victims in crashes that happened before GM left bankruptcy protection in July of 2009.
"Hundreds of victims and their families will go to bed tonight forever deprived of justice," he said. "GM, bathing in billions, may now turn its back on the dead and injured, worry free."
GM said the judge ruled properly that claims based on the conduct of the pre-bankruptcy GM are barred, and that the judge's order "doesn't establish any liability against GM, and the plaintiffs must prove the merits of their claims."