GM has said it is protected from liability for claims related to
incidents that occurred before it exited bankruptcy in 2009, and has
taken steps to raise those issues with the court by filing motions
to stay recall-related lawsuits while it asks that bankruptcy court
to clarify the extent of that protection.
In a filing with the U.S. District Court for the Southern District
of Texas on Tuesday, GM asked for a stay on litigation related to
ignition claims until a judicial panel on multidistrict litigation
decides on a motion to consolidate the case with other lawsuits and
the bankruptcy court rules on whether the claims violate GM's 2009
bankruptcy sale order.
The company earlier filed a similar motion with the U.S. District
Court for the Northern District of California seeking a stay on
The plaintiffs in those cases have claimed they bought or leased
vehicles that had an ignition switch defect. The defect has been
linked to the deaths of at least 13 people and the recall of 2.6
million GM vehicles.
GM said it would shortly file a motion in the Bankruptcy Court for
the Southern District of New York to enforce an injunction contained
in its sale order, which the company said bars plaintiffs from suing
the reorganized company for any claims related to the predecessor
U.S. Senator Richard Blumenthal, a Connecticut Democrat, said in a
statement Wednesday that the filings "demonstrate clearly" GM's
intent to use the bankruptcy process to block lawsuits, and urged
judges to deny it that protection.
"Regardless of these legal battles, the company should simply do
right by these victims and establish a compensation fund that will
make them whole," Blumenthal said in the statement.
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 lost value as a result of the company's actions.
A spokesman for GM, Greg Martin, said in an email on Wednesday that
it was premature to comment on the litigation. He reiterated that GM
had "both civic and legal obligations" in the matter, as GM Chief
Executive Mary Barra told members of Congress during testimony
earlier this month.
JUDICIAL DAY OF RECKONING?
GM emerged from bankruptcy protection in 2009 as a different legal
entity than the so-called old GM. Under those terms, "new GM" shed
liability for incidents predating its exit from bankruptcy, and any
lawsuits related to pre-bankruptcy issues must be brought against
what remains of old GM.
That protection has outraged some safety advocates, politicians and
plaintiffs' lawyers, who have called on GM to either waive
bankruptcy protection or establish a fund to compensate victims
whose claims might otherwise be barred.
[to top of second column]
They have said that because GM allegedly covered up problems with
the switch for more than a decade, and received support from the
U.S. government during its bankruptcy, it should not fight against
plaintiffs' attempts to seek payment for their injuries.
Plaintiffs' lawyers have also accused GM of fraudulently concealing
its knowledge of the defect, and said that as a result, it was not
entitled to protection from liability.
"As a result of GM's conduct, especially in light of the taxpayer
bailout of that company, they've lost the right to impose their view
as to what's best for my clients and the other class members," said
Adam Levitt of Grant & Eisenhofer, a lawyer for plaintiffs in the
A lawyer for the Texas plaintiffs, Robert Hilliard of Hilliard Munoz
Gonzales, said that whether the case is resolved in federal district
court or bankruptcy court, "there will soon be a judicial reckoning"
for the company.
GM announced on April 1 that it had retained lawyer Kenneth Feinberg
to help assess legal options, adding that the company would take up
to 60 days to evaluate the matter.
Feinberg has administered funds to compensate victims of the
September 11, 2001, attacks, the BP Plc oil spill and Boston
Safety advocates said the move indicated that the company was
exploring the creation of a victims' fund, although GM has not
GM has said it is working to obtain replacement parts for affected
customers. Barra said in an interview with NADA-TV posted online on
Tuesday that the replacement ignition switches "are flowing now" and
reiterated the company's position that the customer stands at the
center of its decisions.
The Texas case was in Re: Charles Silvas and Grace Silvas vs.
General Motors LLC in the U.S. District Court, Southern District of
Texas, No. 2:14-CV-00089
(Reporting by Jessica Dye in New York, Sweta Singh in Bangalore, Ben
Klayman in Detroit and Richard Cowan in Washington; editing by Ted
Kerr, Matthew Lewis and Bernard Orr)
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