NEW YORK (Reuters) -- A U.S. judge said General Motors may be liable for limited punitive damages in lawsuits it faces over an ignition switch problem that prompted the recall of millions of vehicles last year.
The decision Monday from U.S. Bankruptcy Judge Robert Gerber in Manhattan could increase GM's financial exposure to claims for injuries, deaths or loss of vehicle value stemming from the 2014 recall.
Unlike compensatory damages, which are meant to make up for plaintiffs' losses, punitive damages are designed to punish defendants for egregious or negligent conduct, and to deter future misbehavior.
Gerber said, however, post-bankruptcy "New GM's" exposure to possible punitive damages over vehicles made by pre-bankruptcy "Old GM" would be limited.
"Punitive damages may be sought against new GM to the extent -- but only the extent -- they are based on New GM knowledge or conduct alone," Gerber wrote.
While allegations based solely on the knowledge or conduct of Old GM will be barred, he added, New GM may also be liable for employee knowledge or documents it "inherited" from Old GM.
Robert Hilliard, who represents GM plaintiffs, called the ruling a win, but GM spokesman Pat Morrissey disputed that characterization, saying it was "not a victory for plaintiffs."
The ruling comes in litigation against GM after it discovered last year that some ignition switches in older vehicles could slip out of place, causing them to stall and cutting power to brakes, airbags and steering systems.
In September, GM announced that it had reached agreements to settle about 1,380 injury and death cases for an undisclosed sum. At least six unsettled suits have been slated for trials to begin early next year.
The company is also facing proposed class actions brought by customers who said the ignition switch problems and related safety recalls from last year caused their vehicles' value to plummet.