Justices turn away GM appeal over ignition switches
- Author: Zachary Reyes Apr 25, 2017,
Apr 25, 2017, 5:28
The U.S. Supreme Court cleared the way for potentially billions of dollars in legal claims against General Motors Co. over a deadly ignition-switch defect, turning away the company's appeal in a clash connected to its 2009 bankruptcy sale.
Attorneys for GM took their case to the Supreme Court and argued the appeals court violated established laws by ignoring the bankruptcy agreement and the ruling would affect all future business bankruptcies if courts ignore the clear wording in agreements.
A federal appeals court ruled previous year that GM remains responsible for ignition-switch injuries and deaths that occurred pre-bankruptcy because the company knew about the problem for more than a decade but kept it secret from the bankruptcy court and owners of cars with the faulty switches. While GM has said top executives didn't know the ignition switch was a persistent problem, the company admitted in a Justice Department settlement that it knew about the defect by 2005 and concealed it from regulators from 2012 to 2014.
The faulty ignition switches have been linked to 124 deaths and 275 injuries (by GM itself). The switches could unexpectedly switch from the "run" position to "off" or "accessory", shutting off the engine and knocking out air bags and the power-assisted steering and power brakes.
The automaker agreed to certain liabilities when it emerged as a new company in 2009 following its bankruptcy restructuring, but as a new company was protected from some liabilities of the old company.
The appeals court ruled GM would still answer to owners who lost money on their cars due to the ignition switches and that certain personal injury and wrongful death claims could proceed.
GM's bankruptcy was the fourth-largest case in USA history at the time and came a little more than a month after Chrysler filed for chapter 11 protection.
The Supreme Court's decision to reject GM's appeal means that a decision last July by the US 2nd Circuit Court of Appeals will stand.
GM added that consumers in the lawsuit "must still establish their right to assert successor liability claims".
The appeals court found that GM should have known of the ignition-switch defect - or strongly suspected it - at the time of its bankruptcy case and therefore should have disclosed it. It does not expect to pay out and will look to fight the decision in lower courts on multiple fronts. "Even when GM told the world it was owning up to its mistakes and doing right by those they killed and injured, they were still ordering their lawyers to spare no expense or legal maneuver to try and stop these victims from having their day in Court".