GM Shielded From Pre-Bankruptcy Ignition Switch Lawsuits, Admits to 90 Deaths

A large number of lawsuits filed against General Motors (GM) involving defective ignition switches, including most claiming economic harm, may be dismissed following a recent bankruptcy court ruling in the automaker’s favor. The ruling comes even as the company admits that at least 90 deaths have been linked to the defective ignition switches.

Earlier this month, U.S. Bankruptcy Court Judge Robert E. Gerber issued an order that blocks lawsuits filed against General Motors over actions that predate its 2009 bankruptcy, declaring that “New GM” and “Old GM” are two different companies and that the new company is not liable for the actions of the old.

All of the claims stem from GM ignition switch recalls issued last year for defective switches used in millions of different vehicles. The problems may cause vehicles to suddenly shut off if heavy key chains are used or if the ignition is jarred, such as may occur in an accident, potentially causing drivers to lose control of their vehicles or preventing airbags from deploying. Hundreds of accidents and injuries have been linked to the recalled GM vehicles in recent years.

Shortly after the recall was initially announced in February 2014, it was revealed that some in GM had known about problems with the ignition switches for more than a decade, but the company had failed to take action. The company was eventually fined $35 million by the National Highway Traffic Safety Administration (NHTSA).

By year’s end, about 10 million GM vehicles had been recalled due to ignition switch problems, and a GM recall compensation fund was set up by the company to resolve claims involving personal injury and death. However, the GM settlement fund only addresses problems with a subset of small cars, where the new GM has acknowledged that it knew about the problem, but failed to take action.

Since June 2014, all GM ignition switch lawsuits filed over the defective ignition switches have been centralized before U.S. District Judge Jesse Furman in the Southern District of New York, as part of a Multidistrict Litigation, or MDL. As part of the coordinated pretrial proceedings, Judge Furman has established a bellwether process for scheduling a series of trials in the MDL involving recalled vehicles, with the first case expected to go before a federal jury in January 2016.

Earlier this month, parties met in a status conference to determine some of the effects of that ruling, looking at which lawsuits were effectively dismissed by the ruling and which can be refiled. GM has proposed an order calling for dismissal with prejudice of all class claims involved in individual economic loss complaints.

In addition to the lawsuits filed in courts, 4,342 claims were filed with a GM ignition switch settlement fund, which had a filing deadline that passed at the end of January. At least 997 of those claims are still under review. To date, GM has acknowledged 90 wrongful death claims and 163 injuries filed with the fund. However, the fund has found 1,420 of the claims ineligible, and 1,181 claims that were deficient.