GM Seeks Lawsuit Protection for Actions that Occurred before 2009 Bankruptcy

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As a lawyer, I am fascinated and disgusted by this current form of legal maneuvering by GM.  The auto maker is trying to block certain lawsuits from going forward because they are a œnew company under bankruptcy laws.  This sends a message to any company that if you are able to hide your negligent acts long enough then file for bankruptcy and restructure, no one should be able to sue you.  Come on GM “ this is not right.

Let me give you the background for my comments –

Back in April, General Motors moved to prevent future safety lapses by expanding its oversight of problematic vehicles even as the automaker continued to take an aggressive legal posture in dealing with its past missteps.

General Motors asked a federal bankruptcy judge to dismiss dozens of potentially costly lawsuits filed against the company over its handling of a defective ignition switch in millions of cars, and to bar similar cases in the future.

The legal filing, which was made in the Federal Bankruptcy Court for the Southern District of New York, asked the judge who approved the company’s 2009 restructuring agreement to explicitly enforce a provision that shielded the œnew company from liability for incidents that took place before July 10, 2009, the day the agreement went into effect. Most of the cars in the recall were manufactured before 2009.

Though the motion was asking Judge Robert E. Gerber to reaffirm a protection that already existed in the agreement, it was seen as a shrewd tactic to get the cases dismissed in one move, saving the company enormous amounts of time, personnel and money that would come from fighting to dismiss each case one by one.

But the move carried risks, too. A coalition of eight of class-action plaintiffs countered with a lawsuit in the same bankruptcy court seeking to void that part of the restructuring agreement and accusing G.M. of committing bankruptcy fraud by not disclosing potential liabilities from the faulty switch. G.M. has acknowledged that it knew about problems with the switch internally for more than a decade before it recalled 2.6 million vehicles this year.

G.M.’s motion listed 54 cases that have been filed around the country since Feb. 27, all but two of them seeking class-action status, and all of them claims for economic damages like a lower car value or missing work while it was repaired.

In both the filing and in public statements made by G.M. executives, the company stressed that it was not asking for the dismissal of personal injury lawsuits related to the faulty switch, which can, if jostled, shut down the power in a moving car, disabling air bags and impairing power steering and braking systems. The company now links the problem to 13 deaths.

After the bankruptcy court filing, the company issued a statement saying that said it was continuing to investigate ways to compensate accident victims outside the courts.  It went on to state that GM recognizes its “civil and legal obligations relating to injuries” tied to the recall cars, adding that GM has retained lawyer Kenneth Feinberg to advise it of its legal options.

Since it began to recall vehicles in February, GM has been hit by dozens of lawsuits on behalf of individuals injured or killed in crashes involving recalled cars, as well as customers who said their vehicles had lost value as a result of the company’s actions.

The plaintiffs have said they bought or leased vehicles that had the defective ignition switch and accused GM of fraudulently concealing its knowledge of the defect. As a result, they said, the company was not entitled to protection from liability.

In its filing, GM asked the court to direct the plaintiffs to stop suing new GM for claims that are barred by the bankruptcy sale order and the injunction, and to dismiss the earlier claims.

Also in April, GM sought a stay on lawsuits involving the ignition claims until a judicial panel on multidistrict litigation decides on a motion to consolidate the case with others and the bankruptcy court rules on whether the claims violate GM’s 2009 bankruptcy sale order.

I will be watching this very closely.  I hope this judge sees through GM acts and denies their motion.  Stay tuned¦

If you or a loved one was injured in a vehicle that has been recalled by GM, you may be able to file a lawsuit separate from the class actions to hold GM accountable for your injuries. A personal injury lawsuit may provide compensation for past and future medical bills, pain and suffering, and in the case of death, funeral expenses. To learn more about filing a personal injury lawsuit, contact us today at 904-399-1609.

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