On March 18, 2014, the CEO of General Motors (GM) apologized to the public for the company’s failure to recall more than a million vehicles until years after it learned they had potentially deadly defects. The CEO of GM, Mary Barra, admitted something went wrong in the process and the company took too long to issue the recall. The deadly defect was tied to 12 deaths and 31 frontal crashes nationwide.
Numerous fatalities and injuries have been pinned to a faulty ignition switch in GM vehicles that would cause the engines to shut down, which kills the car’s electrical power, which affects the car’s power steering and airbag deployment. GM records show that GM engineers first noticed the ignition switch problem in 2001 during development and pre-production work of the 2001 Saturn Ion, and again in 2003 and 2004. A 2011 study by the Insurance Institute for Highway Safety found the Chevrolet Cobalt had the highest automobile fatality rates of the best-selling cars in its class. The company didn’t recall any of the vehicles until February 2014, over 13 years later.
The lag between the initial signs of trouble and the actual recall prompted ongoing investigations by the National Highway Traffic Safety Administration, the Department of Justice, and two Congressional committees.
Impounding Legal Issue for GM
Thus far, GM has not promised to accept responsibility for any deaths, injuries or damages as result of the recall, specifically those that occurred before the 2009 federal government-supervised bankruptcy reorganization of GM. The bankruptcy proceeding barred the reorganized company, formed in July 2009, from product liability and other claims for incidents before the reorganization. The “old” GM retained those liabilities, as well as unwanted assets to be liquidated. The “old” company now exists as a shell, and is unlikely to be able to make good on claims from the accidents. The “new” GM did carry with it responsibility for the products themselves, such as handling warranty claims and recalls.
While both Congress and the Justice Department are conducting criminal and civil investigations against the car manufacturer for allegedly misleading government regulators by not giving notice of the defect, the company faces numerous civil lawsuits, or even class action suits, from those directly injured by the defective products.
The first lawsuit was filed against the auto company in Texas in March 2014. The class action suit filed on behalf of vehicle owners over the ignition flaw seeks to recover $6 billion to $10 billion for the lost value of cars affected by the recall. The lawsuit names a couple who owned a 2007 Chevy Cobalt, one of the recalled vehicles. The couple does not claim any injuries, but seeks compensation for diminished resale value and loss of use of their vehicle. The families of two dead teenagers are also considering legal recovery for the 2006 deadly highway crash in Wisconsin.
Lawyers for the plaintiffs will argue that GM’s bankruptcy reorganization should not shield the company from pre-2009 crashes. While bankruptcy typically protects companies from new claims that predate the company’s reorganization, in this case GM did not present the full extent of its ignition-switch liabilities until after 2009. Thereby, consumers were not aware of the defect. GM was aware of potential exposure to litigation and did not reveal it to the consumers, which amounts to fraud. GM’s continued misrepresentation and desire to cover up liability injured, and even killed, people – and, the company should be held liable.
If you or a loved one has been injured in an automobile accident, contact our experienced Pennsylvania personal injury attorneys to secure the best outcome in your case. Contact our office at (215) 481 – 9979 for a confidential consultation.