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GM Lawsuits name Old and New GM

Timely Insights on Laws, Issues and New Developements

CarAccident3While GM has thus far recalled some 1.6 million vehicles for a faulty ignition switch, the car maker is arguing that, under the terms of its bankruptcy filing in 2009,  the liability switch doesn’t turn on for the company until after that time.

Reuters reported in March 2014, however, that a lawsuit filed in California seeks to hold GM liable for the car maker’s concealment of some of its cars’ ignition problems before the 2009 bankruptcy.

GM Recall Lawsuits name Old and New GM

Because the GM of 2014 is considered a different legal entity from the one that filed  bankruptcy in 2009, the 2014 GM is not responsible – under the terms of its bankruptcy exit in July 2009 –  for legal claims relating to what took place before that time.

But a proposed class action filed in federal court in California said that plaintiffs should be allowed to sue over GM’s pre-bankruptcy behavior. The argument says that GM is liable for pre-bankruptcy behavior because the auto maker actively concealed ignition switch problems.

The lawsuit also said GM was responsible for reporting any safety-related problems to the federal government before it declared bankruptcy.

A GM spokesman declined to comment to Reuters regarding the lawsuit, but did point out that the company apologized for the recall. The spokesman also said that taking care of customers was GM’s top priority.

GM knew of Ignition Issue in 2001

The notion that safety comes first for GM  is a tough sell at this moment, given what we know. The recall was announced in February 2014, but documents seem to show GM engineers knew of the ignition switch problem back in 2001. GM has now admitted that when the ignition switch is jostled ion the recalled cars, the ignition key can kill the car’s engine, as well as disable airbags, even while a car is moving at a high rate of speed.

The lawsuit claims GM knew about ignition switch problems as early as 2001 during its “old GM” phase, yet the company still continued to assemble and market defective vehicles until 2007. The suit says the “new” GM then continued the deception and should therefore be held liable “for the deceptive and unfair acts and omissions” of the “old” GM. The suit  says GM’s actions should therefore prompt the court to waive the statute of limitations for older claims.

The California suit is one of several filed by car owners now claiming the recent recall has caused their vehicles a loss of value. But the California suit appears to be the first to argue “successor liability,” which means that GM could be held liable for its behavior prior to its emergence from bankruptcy in 2009.

The California plaintiff named is Katie McConnell, the owner of a 2007 Saturn Ion Coupe. The lawsuit seeks at least $350 million in damages.

GM Lawsuits name Old and New GM

The recall has been linked to at least 12 deaths. It has led the government to investigate criminal and civil allegations and to prepare for Congressional hearings.

Contact a GM Recall Attorney

Matthews & Associates is investigating and handling GM Recall Lawsuit claims. Contact a GM Recall Lawyer for a free legal case evaluation.


by Matthews & Associates

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