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Arizona sues General Motors, says it hid safety defects

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[November 20, 2014] (Reuters) - Arizona State filed a lawsuit against General Motors Co, claiming the carmaker put the public at risk by concealing safety defects to avoid the cost of recalls.

Arizona was seeking an estimated $3 billion from GM, the New York Times reported. (http://nyti.ms/1udmHMA)

Arizona Attorney General Tom Horne said civil penalties could be up to $10,000 per violation. Hundreds of thousands of "unsuspecting" car owners and lessees had been driving unsafe vehicles, he said in a statement.

GM said on Thursday it had "not yet had a chance to read and assess the complaint." It said it was committed to recalling vehicles proactively whenever a safety issue is identified.

GM has been hit by a slew of lawsuits this year since it announced the recall of 2.6 million vehicles because a problem with the ignition switch could cause it to slip out of position, cutting power to air bags, steering and brakes.

The recalls have grown to encompass numerous problems affecting millions of vehicles. About 300,000 of the vehicles recalled this year were registered in Arizona, the New York Times reported.

The attorney general said the case was the first by a U.S. state against GM for its alleged role in suppressing knowledge of defects and not recalling vehicles in a timely manner.

The state cited ignition switches and numerous other car parts, including airbags, wiring, brake lights and seat belts.

Though many issues relate to cars produced before GM went bankrupt, Horne said "New GM" was liable because it had concealed known safety defects.

"New GM was not born innocent," he said in the filing.

GM has argued it should not face lawsuits based on safety issues on cars made before its 2009 bankruptcy.

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The company is running a compensation program for the faulty ignition switches.

Arizona argued consumers lost money because GM vehicles fell in value. It also said GM Chief Executive Mary Barra, while head of product development, was informed in 2011 of a safety defect in the electronic power steering of several models.

"Despite 4,800 consumer complaints and more than 30,000 warranty repairs, GM waited until 2014 to disclose this defect," the filing said.

The case is State of Arizona vs General Motors LLC, Case No. CV2014-014090, the Superior Court of the State of Arizona, County of Maricopa.

(Reporting by Rama Venkat Raman in Bangalore and Paul Lienert in Detroit; Writing by Rodney Joyce and Robin Paxton; Editing by Saumyadeb Chakrabarty)

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