Lawsuits seek to pierce GM's liability shield

PRIMER
Related Links
Related Stories
Related Topics

Lawyers across the United States are using a variety of strategies, including allegations of bankruptcy fraud, in hopes of overcoming the legal immunity that General Motors gained through its 2009 Chapter 11 reorganization.

As part of the bankruptcy, GM agreed to a deal that shielded it from liability for any accidents that occurred before July 10, 2009, when it emerged as a new, leaner company. But evidence turned over to federal safety regulators by GM shows that the company had discovered problems with the ignition switches and knew of crashes linked to them well before it filed for Chapter 11 protection.

One of the numerous suits filed in recent weeks seeking class-action status names 13 GM customers as plaintiffs, six of whom are described as having bought their cars after GM emerged from bankruptcy. At least two lawsuits filed by GM shareholders accuse the automaker of committing securities fraud. One blames the delayed recall of 1.6 million cars worldwide for "wiping out billions in shareholder value."

A desire to contain the public-relations fallout from the recall - particularly given the taxpayer funding that helped save GM - could compel the company to compensate owners and victims' families beyond the limits of its exposure under the bankruptcy agreement. GM CEO Mary Barra has said she intends to do what's right for customers.

Among the cases GM faces:

• Brandt vs. GM, filed March 14, and Silvas vs. GM, filed March 24 in U.S. District Court in Corpus Christi, Texas: Suits seek extended warranty protection and compensation for loss of resale value.

• McConnell vs. GM, filed March 19 in Santa Ana, Calif.: The suit filed by a Seattle law firm that reached a $1.6 billion settlement with Toyota Motor Corp. is over defects related to unintended acceleration complaints.

• Rimer vs. GM, filed March 21 in Hennepin County, Minn.: The families of Natasha Weigel, 18, and Amy Rademaker, 15, who died when a 2005 Chevrolet Cobalt crashed into trees and a telephone junction box, accuse GM of negligence and fraud, among other allegations.

• Pio vs. GM, filed March 21, and Hockstein vs. Barra, filed March 28 in U.S. District Court in Detroit: Shareholders accuse GM of securities fraud.

• Maciel vs. GM, filed March 24 in U.S. District Court in San Francisco: The suit seeks to force GM to recall more cars and claims the recall has reduced the value of customers' vehicles.

• Smith vs. GM, filed March 24 in Lauderdale County, Ala.: The wrongful-death case is brought by a former GM and Delphi employee whose daughter died in a December 2013 Cobalt crash.

• Ramirez vs. GM, filed March 28 in U.S. District Court in Los Angeles: The suit seeks "a court-supervised compensation fund to repay the expense and inconvenience to consumers of being saddled with this defect."

You can reach Nick Bunkley at nbunkley@crain.com. -- Follow Nick on Twitter


advertising
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

Or submit an online comment below. (Terms and Conditions)




Rocket Fuel