Supreme Court confirms that new GM can be sued for old GM's ignition switches

April 25, 2017

Today's auto news headlines are dominated by stories about self-driving cars, ride-sharing companies, and exploding airbags. But just three years ago, ignition switches were the dominant topic of conversation--specifically faulty ignition switches manufactured by General Motors. 

You might've forgotten about all that, but GM hasn't, because it's been fighting to dismiss hundreds of lawsuits involving those devices. Unfortunately for the automaker, the U.S. Supreme Court has given those cases the go-ahead

GM had been hoping, of course, that it might be shielded from such lawsuits, because it's not the same company that installed the flawed switches on 2.6 million Chevrolet, Pontiac, and Saturn vehicles. The former firm--known as General Motors Corporation--was left in a heap of ashes as GM raced through bankruptcy in 2009 and was soon reborn as General Motors Company.

But, GM's hopes were dashed in 2015, when federal judge Robert Gerber ruled that the restructuring might not fully protect "new GM" from lawsuits targeted at "old GM". In July 2016, the U.S. Second Court of Appeals upheld Gerber's decision and went a step further, ruling that to prevent plaintiffs from suing the automaker would be to violate their due-process rights. 

After that, there was only one place GM could turn for assistance: the U.S. Supreme Court. And unfortunately for GM, the court has declined to hear GM's case. 

What does that mean, exactly? It means that anyone injured and anyone whose family member died because of GM's ignition switches can sue the automaker for damages--provided they didn't receive a payout from GM's compensation fund. While that important caveat eliminates 275 injured persons and the families of 124 people killed, thousands more people filed claims but were turned away.

In fact, 3,944 claims were ruled ineligible by fund administrator Kenneth Feinberg. Those people can now join a class-action suit against GM, as can many folks who say that their GM vehicle's resale value was diminished by the scandal. 

Combined, suits from those two groups could cost GM up to $10 billion--four times the amount that GM has paid to date in fines, fees, and legal expenses. 

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