Court tosses out GM ignition switch shareholder lawsuit
Washington — A Delaware judge on Monday tossed a lawsuit filed by shareholders of General Motors Co. against the company’s board of directors. It’s a win for the Detroit automaker that has been fighting a flurry of lawsuits over defective ignition switches.
The dismissal by Judge Sam Glasscock in the state where GM is incorporated may make it likely that three separate ignition suits filed in federal and state courts in Michigan may now also be tossed out connected to GM’s delayed recall of 2.6 million vehicles linked to at least 119 deaths.
The shareholders “have failed to raise a reasonable doubt that GM’s directors acted in good faith or otherwise face a substantial likelihood of personal liability in connection with the faulty ignition switches,” Glasscock wrote in a 46-page opinion.
The shareholders argued GM’s board should have done more to assess and address risks to the company from defective vehicles. GM faces dozens of suits related to ignition switch crashes.
GM praised the decision. “The Delaware Court properly dismissed the complaint because GM’s board of directors did its job in exercising oversight over the company. The other shareholder derivative actions pending against the bard make the same allegations, so we hope the courts will dismiss those as well,” GM spokesman Jim Cain said.
After GM management learned of the deadly defect, the board and CEO Mary Barra commissioned an internal review by an outside lawfirm. GM fired 15 and disciplined five in the wake of the report that Barra said last year showed the delayed fix was the result of a pattern of “incompetence and neglect.”
The U.S. Attorney’s Office in Manhattan is being aided by a federal grand jury, the FBI, 50 state attorneys general, the Securities and Exchange Commission and Transport Canada in an investigation of GM’s delayed recall.
The U.S. Justice Department is nearing a decision on whether to charge GM criminally in connection with the delay — and could seek to require a guilty plea or offer a “deferred prosecution” agreement — along with a fine expected to top $1.2 billion.
GM paid a record-setting $35 million fine last year to the National Highway Traffic Safety Administration in the delayed recall and set aside $550 million to pay claims. To date, GM’s compensation fund has approved more than 360 claims for deaths and injuries.