Bankruptcy Judge Rules on GM Ignition Recall

Punitive damages can be awarded in some cases

A while back we posted on the 2014 recall of 2.7 million cars. This recall resulted from 42 deaths, 58 injuries, 13 years of errors and a cover-up by General Motors. GM filed Chapter 11 in 2009 and restructured itself. This resulted in a Congressional waiver for any responsibility for injuries and deaths caused by the ignition problems at the center of the recall. It wasn’t clear then if the courts would find GM guilty of criminal or gross negligence in the hundreds of lawsuits it’s facing.

This month, U.S. Bankruptcy Judge Robert Gerber cleared the way for punitive damages being awarded to plaintiffs. The ruling increases GM’s financial exposure in the cases seeking compensation for deaths, personal injuries and damages to/loss of vehicles. Punitive damages act to punish defendants for negligence or intentional harm and to discourage such behavior.

Still, the issue of the “old GM” and “new GM” is a sticky wicket. According to the judge’s ruling, plaintiffs cannot argue that post-bankruptcy GM was liable for what pre-bankruptcy GM did or knew.

Earlier this year, GM announced it reached settlements in about 1,380 injury and death cases but did not disclose details. Proposed class-action suits by customers also exist. These allege ignition switch problems and related recalls caused severe decreases in the value of their vehicles.

Source: Jessica Dye, “Judge Rules Punitive Damages Possible for GM in Ignition Case,” insurancejournal.com. 10 Nov. 2015.