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GM could face punitive damages in ignition switch suits

Melissa Burden
The Detroit News

General Motors Co. may face and be liable for certain punitive damages in lawsuits related to the ignition switch recall, according to a bankruptcy court judge’s ruling Monday.

Judge Robert Gerber of U.S. Bankruptcy Court in Manhattan said the Detroit automaker can face punitive damages for product liability claims and economic loss claims involving vehicles made by Old GM, or the company that existed before GM’s 2009 bankruptcy.

In a written opinion, the judge said those cases could be sought against today’s GM — or the company that emerged after its 2009 bankruptcy — but only when they “rely solely on New GM knowledge or conduct.”

The claims can be based on knowledge New GM employees “inherited from their tenure at Old GM or documents inherited from Old GM and may be based on knowledge acquired after” the formation of the new company, according to the ruling.

The new GM has been shielded from liabilities from the old company.

Texas attorney Bob Hilliard, the lead attorney for personal injury and death cases in a group of federal lawsuits, said the ruling is a win for plaintiffs.

“The judge considered GM’s arguments that it should not have to worry about punitive damages and disagreed,” Hilliard said in a statement Monday. “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.”

GM responded: “Today’s decision is not a victory for plaintiffs. The bankruptcy court held that New GM did not contractually assume, as part of the bankruptcy sale, liability for punitive damages based on Old GM conduct relating to Old GM vehicles. Although it is true that the Court also held that New GM could be liable for punitive damages for ‘independent claims’ based solely on New GM’s conduct, plaintiffs to date have not established any such independent claims against New GM. Further, the bankruptcy court order today stayed plaintiffs’ bellwether complaints that improperly rely on Old GM conduct.”

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.

An independent administrator for a victims compensation fund ultimately linked 124 deaths and hundred of injuries to the defect.

In spring 2014, GM settled an investigation over the delayed recall with the National Highway Traffic Safety Administration, paying a $35 million fine and agreeing to up to three years of monitoring.

The automaker in September settled with the Department of Justice, agreeing to a $900 million fine and three years of federal monitoring as part of a deferred prosecution agreement. The settlement ended the criminal investigation into GM’s delayed recall for defective ignition switches.

Through mid-September, the ignition switch issue had cost the Detroit automaker more than $2.35 billion.

The company still faces investigations by the Securities and Exchange Commission, Federal Trade Commission, Transport Canada and 50 state attorneys general. It also faces dozens of lawsuits.

In September, GM agreed to a $575 million settlement of a shareholder class-action suit filed in Detroit and 1,380 outstanding death and injury claims, about 60 percent of claims it was facing.

mburden@detroitnews.com

(313) 222-2319

Twitter.com/MBurden_DN