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GM Georgia move may preview handling of switch injury litigation

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NEW YORK (Bloomberg) -- General Motors Co. previewed how it may handle some death and injury lawsuits triggered by faulty ignition switches when it moved an already-settled case from state to federal court after the plaintiffs tried to revive their claim.

The automaker said Wednesday that the Georgia lawsuit, involving a fatal 2010 crash, belongs with about 90 other “tag along” cases that GM is fighting, due to be handled by a federal judge in Manhattan. The company emphasized in its filing that the matter has already been settled.

Lawyers for the family of Brooke Melton, who died in the accident, accused GM of breaking its promise to help victims of the ignition-switch defect.

“It’s a frivolous move calculated to delay,” lawyer Jere Beasley of Montgomery, Ala., said in an interview today.

Lawyer Lance Cooper of Marietta, Ga., filed the suit in 2011. GM paid Melton’s family $5 million in 2013, according to a report by investigator Anton Valukas, who was chosen by the company to investigate its response to the switch defect. Cooper, working with Beasley, refiled the suit last month, saying GM hid its knowledge of the defect when it settled the case.

Kenneth Feinberg, the lawyer hired by GM to compensate accident victims, has said he’ll take eligible injury claims starting Aug. 1. GM’s bid to transfer the Melton case indicates it may not consider the already-settled Georgia claim to be potentially viable.

'Potential claim' 

“Any potential claim related to injury regardless of timing would be subject to Feinberg and the protocol he outlines,” GM spokesman Kevin Kelly said in an e-mail today.

The Melton case should eventually join car owners’ suits over economic losses, originating in courts across the U.S., that are being transferred to the federal judge in New York, GM said. Whether an injury suit belongs with the economic-loss cases will be dealt with later, the company said. Moving the Melton case requires a judge’s approval.

At the same time, the company is asking a bankruptcy judge to reaffirm orders he issued during its 2009 reorganization that freed the company from many liabilities. GM hasn’t asked that judge to shield it from injury suits, saying it accepts responsibility for those, even if it isn’t legally liable for all of them.

Beasley’s firm said in a statement today that the carmaker was using a “bankruptcy firewall” to escape liabilities instead of “living up to the promise” to help victims made by CEO Mary Barra.

Millions recalled 

GM has recalled 2.6 million Cobalts, Ions and other vehicles, tying the flawed switches to 13 deaths and 57 crashes. Valukas said in his report that engineers and lawyers within GM long knew about the defect, which can cause engines to cut out and switch off power to air bags, but kept it from the public until the February recall.

The Melton case was settled in September, months before the recalls, after an adviser warned GM of a “substantial adverse verdict” if a jury heard that it knew of the defect for nine years and didn’t fix it, according to the Valukas report. Outside law firms recommended settling at least four other injury cases related to the switch, Valukas said.

GM said the Melton family is asking for damages that exceed the federal court’s jurisdictional minimum of $75,000. The demands are for “the full value” of Melton’s life, her “physical pain and suffering,” her “mental pain and suffering” and her “funeral and burial expenses,” GM said, citing the revived suit.

While waiting for Feinberg to devise a compensation plan for victims, GM has acted to make injury suits more manageable. In Texas, it forced four accident suits last month to go before a panel of judges who will decide whether to combine them. In a Texas claims court, GM asked a judge to dismiss an injury suit.

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