Court Denies General Motors Immunity Through Bankruptcy

Last week, the 2nd U.S. Circuit Court of Appeals ruled that General Motors (GM) cannot bar plaintiffs from suing the company because of GM’s bankruptcy filing. In 2014, GM was forced to recall 2.6 million vehicles over faulty ignition switches that caused over one-hundred deaths, close to three-hundred injuries, and thousands of claims of car devaluation resulting from the ignition switch defect. GM filed for bankruptcy in 2009 and transitioned from “Old GM” to “New GM” which was protected from, the debts and liabilities of the old company. The 2nd U.S. Court of Appeals ruled that barring plaintiffs from suing GM for defects that originated under “Old GM” would violate the plaintiff’s constitutional rights to due process.

GM’s ignition switch problem dates back over a decade. In 2002, GM engineers were aware of serious flaws in an ignition switch that had not yet made it to production. The problem: the ignition switches required too little force to turn and could easily slip into the “off” position which would disable the brakes, steering, and airbags. Though some GM engineers were aware of the problem before production, the ignition switches continued to be built and installed in cars beginning in 2003. A paper trail of memos and service bulletins dating from 2002 verifies that GM knew about the failed switches and failed to take action.

In 2014, as the death and injury toll continued to grow, GM executives were pressured to recall 2.6 million vehicles. A year later, the company was required to pay $900 million in fines to the government after a federal investigation showed GM failed to fix the faulty switches. Altogether the company paid $42 billion in 2014 in fines and damages and $1.6 billion in 2015.

Back in 2009, many accused GM of filing for bankruptcy specifically to thwart future claims for damages regarding the switches. The court’s ruling last week is good news for GM car owners who potentially have the claim; the ruling leaves the company potentially liable for another $10 billion worth of claims.

The number of automobile recalls has grown enormously over the last few decades as the nation’s focus has narrowed on safety measures. In 2014, the National Highway Safety Administration reported 63.9 million automobile recalls, which amounted to about one out of every four cars produced. Toyota recalled more than 9.3 million cars after discovering that some floormats were trapping gas pedals and causing unintended acceleration. Takata, an airbag producer, issued fixes for more than 30 million cars with airbags that sent metal shards flying upon impact. Volkswagen recalled over 11 million vehicles that were equipped with devices that helped them cheat emissions tests.

If you or a loved one has suffered an injury that resulted from a car design flaw or part failure, you may be eligible for compensation. Call the offices of Tenn And Tenn, PA to speak with a personal injury lawyer today.

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