Judge Rules G.M. Is Shielded from Defective Switch Lawsuits

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Huge Win for Corporate Negligence; Major Loss for Accident Victims’ Rights

It is clear that General Motors not only knew about its defective ignition switches for more than a decade, but took great pains to hide the problem. As a result, at least 84 people died and dozens were severely injured as a result of the mega corporation’s despicable actions. To save a few bucks, G.M. cost many of its customers their lives and countless enormous medical bills, lost wages, and joften life-changing injuries.

Yesterday afternoon, G.M. won the right to ignore its victims fight for justice. A U.S. Bankruptcy Court in New York ruled that G.M. is shielded from lawsuits arising from accidents that occurred prior to July 10, 2009. In addition, G.M. is relieved from most lawsuits seeking economic damages related to the defective G.M. automobiles. The ruling covers the bulk of the defects.

G.M. Knew of the Defect When Relief From Liability Agreement Signed

A struggling G.M. filed for bankruptcy in 2009. Another company purchased G.M. in a Chapter 11 reorganization plan. As part of that sale, the New G.M. was granted a release from liability from all pre-acquisition lawsuits. 

But G.M. employees were well aware of the ignition switch defect when the company entered into the release agreement, and yet never informed the court of the potential future claims. The judge decided that even though GM had enough information to issue a recall before filing for bankruptcy, it deliberately did not tell its bankruptcy attorneys of the massive pending liability – estimated by some lawyers as being $10 billion. 

In fact, G.M. did not even inform owners about the enormous danger of driving a G.M. vehicle. Instead, the corporate giant chose to remain quiet despite its unique position to save lives. Then “New G.M.” remained slow to act when investigators discovered the faulty part. But due to verdicts and over 140 lawsuits prosecuted by plaintiff personal injury attorneys and eventually prodding by government safety agencies, New G.M. eventually orchestrated the largest auto recall in history.

What Does This Ruling Mean to G.M. Victims?

The ruling means that New G.M. is not liable for acts of the pre-acquisition G.M. However, victims may still recover limited compensation through the victims compensation program that handles settlements of non-litigated claims. Many injury victims and families of victims who died because of the faulty ignition switch are entitled to settlements under the $400 million program. But they are now barred from suing the company to recovery all of their damages. Sadly, those victims who sought justice in the court of law may now be deprived of all options for compensation recovery. The deadline for filing a claim with the victims compensation program passed this past January. 

As Corpus Christi lawyer Robert Hilliard, who took the lead in handling these cases, said: “This ruling padlocks the courthouse doors. Hundreds of victims and their families will go to bed tonight forever deprived of justice. GM, bathing in billions, may not turn its back on the dead and injured, worry free.” 

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