GM dodges some, but not all, Switchgate lawsuits

July 19, 2016

Last week was something of a roller coaster for General Motors and its legal team.  

On Wednesday, the 2nd U.S. Circuit Court of Appeals ruled that GM could indeed be sued for damages stemming from the faulty ignition switches installed on vehicles made before GM's 2009 restructuring. Because those cars were built by a company that technically no longer exists, "new GM" was hoping to avoid liability, but the court dashed those hopes to bits.

On Friday, however, U.S. District Judge Jesse Furman gave GM a bit of a breather when he dismissed a number of "old GM" lawsuits. Among those suits were a few brought by individual states, as well as some involving racketeering charges.

But the most important thing Judge Furman did was toss out claims from owners whose cars weren't affected by the Switchgate recalls, but who claimed that their vehicles lost resale value because of GM's tarnished reputation.

Had the vehicles in question been equipped with defective switches, the situation might've gone differently. However, Judge Furman said that there was no precedent for owners of one product suing a company for damages because of defects on another product the company made--and admittedly, that would open a very large can of worms. It would be a bit like owners of Brand X washing machines seeking damages because Brand X made some defective refrigerators.

Lawyers for the plaintiffs plan to appeal.

Furman didn't entirely let GM off the hook, though. He noted that plaintiffs whose cars were equipped with faulty ignition switches could sue for lost value. Furman also said that plaintiffs could sue to recover out-of-pocket expenses associated with the Switchgate recall.

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