Ruling may save GM from billion-dollar lawsuits over faulty switches
DETROIT, April 16 (UPI) — A federal bankruptcy judge on Wednesday acted to spare U.S. automaker General Motors from having to spend billions of dollars to fight and settle lawsuits over a faulty ignition switch problem that’s been linked to at least 84 deaths.
Judge Robert E. Gerber of the U.S. Bankruptcy Court in Manhattan issued the decision Wednesday, declaring that a shield from the lawsuits contained in a 2009 bankruptcy agreement would be allowed to stand.
Critics say GM should not be granted legal protection from the lawsuits, particularly because the automaker acknowledged that some of its employees were aware of the ignition problem years ago, but failed to appropriately inform customers.
Lawsuits against GM still may go forward, the judge ruled, but only if they implicate wrongdoing by the automaker after it emerged from government-backed Chapter 11 bankruptcy reorganization on July 10, 2009. Any claim based on actions prior to that date, however, would now be null and void.
Attorneys have previously estimated that the cost to GM over the defective switches could reach $10 billion. Now, for the time being at least, it appears the automaker won’t have to pay out anything remotely close to that amount.
Although Wednesday’s ruling appears to be a major victory for the Detroit automaker, legal analysts say that nothing will be decided in this case until the appeals process has been exhausted. Plaintiffs’ attorneys have said they will appeal Gerber’s ruling.
The defective switches, installed on certain small vehicles manufactured by GM, can completely cut power to those vehicles while in motion — and in the process disable airbags and other safety features. At least 84 people have died in crashes related to the faulty switch.
Amid the outcry after the defect was found, GM radically overhauled its safety protocol and recalled more than 30 million vehicles with potentially dangerous switches.
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