A bankruptcy judge on Monday ruled GM could be charged with punitive damages for knowledge it had about faulty switches.
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New GM also may be responsible for employee knowledge or documents it “inherited” from Old GM, he added.
However, Gerber said that the company’s liability for punitive damages would be generally limited to its conduct or knowledge after its 2009 bankruptcy, or that which its employees “inherited” from the pre-bankruptcy predecessor.
“The Judge considered GM’s arguments that it should not have to worry about punitive damages and disagreed”. Plaintiffs, he ruled, can see seek punitive damages if they can show that “New GM” knew of the faulty switches but covered it up.
GM’s 2009 bankruptcy essentially split the company, with New GM purchasing profitable business operations and Old GM retaining burdensome liabilities.
Although the court ruled that New GM could be liable for punitive damages for claims based exclusively on its conduct, “plaintiffs to date have not established any such independent claims against New GM”, the statement said.
The company in early 2014 recalled 2.59 million older Chevrolet Cobalts, Saturn Ions and other small cars because of defective ignition switches that could slip out of “run” while driving, disabling power steering, brakes and air bags.
Mr. Hilliard, the Texas lawyer, represents 1,385 plaintiffs with death or injury claims who didn’t get recompense from the GM’s victims compensation fund. GM said it has agreed to spend $575 million to settle those cases, as well as a shareholder lawsuit that said GM’s actions reduced the value of its stock.
“A jury will now be allowed to hear evidence of GM’s cover up and determine what monetary punishment to assess for so many needless deaths and injuries”.
Gerber’s decision will now be applied to individual lawsuits by the judges overseeing them, including U.S. District Judge Jesse Furman, who presides over more than 200 consolidated lawsuits in Manhattan federal court.
A GM spokesman is said to have downplayed the decision, pointing out that such claims have not yet been pursued in the lawsuits.
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While the company was still liable for claims from crashes after the bankruptcy, punitive damages, or damages that punish the company for its conduct, remained an open question. “Further, the bankruptcy court order today stayed plaintiffs’ bellwether complaints that improperly rely on Old GM conduct”.
