Retired U.S. Bankruptcy Judge Robert Gerber ruled in April 2015 that most ignition-switch claimants could not sue New GM for damages because the company should emerge from bankruptcy free of claims against Old GM. They are linked to at least 124 deaths and 275 injuries.
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The ruling by the 2nd U.S. Circuit Court of Appeals in Manhattan means that hundreds of pre-bankruptcy claims can proceed, including some lawsuits alleging that GM’s actions caused the value of its cars to drop.
So far, the recall includes more than 32 million vehicles in the USA from about three dozen brands including Toyota, Honda, Nissan, GM, Mitsubishi and Ford, the report said. “For years numerous victims of the GM ignition switch have had their claims languishing in bankruptcy court”. In responses filed Friday, GM accused the supplier of using the bankruptcy process and its position as a critical parts supplier to protect personal interests rather than honor contracts.
“Due process applies even in a company’s moment of crisis”, they wrote in the court’s decision.
“New GM essentially asks that we reward debtors who hide claims against potential creditors”, the court wrote.
The ruling affects an unknown number of cases seeking compensation for deaths and injuries as well as lost vehicle value.
GM, in court documents, said even a one-day disruption to its supply of parts could force it to halt North American vehicle production at its plants.
Plaintiffs had argued that the post-bankruptcy “New GM” should still be liable given that GM personnel knew well before 2009 that the ignition switch was prone to shutting off while driving and could lead to lethal accidents.
The supplier stopped producing parts for GM after shifts on Friday and laid off its workforce, a source familiar with the company’s production plans told the Detroit News.
Attorneys for both CCM and GM have come to some resolutions: GM can have its tooling, it can pay more than $2 million for the finished goods inventory and the issue of equipment ownership needs to be discussed further. The company has admitted that certain employees knew about the problem for more than a decade before a recall was ordered.
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If the Supreme Court elects not to take the case, the ruling of the Second Circuit stands and is virtually impossible for GM lawyers to change, which would force the automaker to consider some sort of expensive settlement.
