Product Liability & Toxics Law News

‘New GM’ Challenges Liability for Some Injuries in Ignition Case

Jan. 7, 2019, 9:14 PM

General Motors LLC wants a federal court to throw out certain ignition-switch defect personal injury claims that are based on the liability of its bankrupt predecessor.

The latest legal battle centers on which state’s laws apply to plaintiffs in 12 states. GM argues three states’ laws on successor liability apply to the plaintiffs’ claims and preclude them from holding “New GM” responsible for their injuries.

The court already dismissed economic-loss claims by consumers in 10 jurisdictions against New GM as the successor of “Old GM,” because those states would apply Delaware, Maryland, or New York law, the company said a brief filed Jan. 4. The same reasoning applies to personal-injury plaintiffs, the company says.

And the plaintiffs conceded that people in two additional states are bound by the same logic, according to GM.

GM recalled millions of vehicles beginning in February 2014 for ignition switches that could get jostled into the “off” position, causing stalls and air-bag failures. More than 100 crash deaths have been linked to the faulty switches.

The personal-injury plaintiffs reject GM’s premise about which states’ laws apply to which claims, they say in a brief opposing summary judgment.

The plaintiffs have asked the court to impose successor liability on New GM, arguing that New GM intended from the beginning to control Old GM’s general unsecured creditors trust and its assets.

And statements by New GM officers about “doing the right thing” mean the company assumed liability under Delaware, Maryland, and New York law, the plaintiffs say.

GM, by contrast, says the plaintiffs haven’t shown it controlled the trust, and that issue is irrelevant to successor liability under Maryland and Delaware law. And New York law doesn’t allow liability in the circumstances, either.

Some of New GM’s problematic conduct, according to the plaintiffs, relates to undermining a settlement between the creditors’ trust and economic-loss and personal-injury plaintiffs.

The accord would have triggered a provision of the 2009 sale, forcing GM to contribute $1 billion in stock to help pay the claims.

The plaintiffs “anticipate entering into another settlement agreement with the GUC Trust,” the plaintiffs say in their brief. But they “anticipate that they will have to again fight New GM over whether they can be compensated by the GUC Trust,” they say.

Hilliard Martinez Gonzalez LLP represents the personal-injury plaintiffs.

Kirkland & Ellis represents GM.

The case is In re Gen. Motors LLC Ignition Switch Litig., S.D.N.Y., No. 14-md-2543, brief filed 1/4/19

To contact the reporter on this story: Martina Barash in Washington at mbarash@bloomberglaw.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com

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