Ignition switch claims against GM must be heard according to a recent appeals court ruling. While General Motors was successful in filing for protection from creditors under the federal bankruptcy code in 2009, a federal appeals court recently ruled that the protection of the bankruptcy stay will not extend to lawsuits filed by victims of accidents caused by faulty ignition switches. The vehicle manufacturing giant was forced to recall 2.6 million vehicles in 2014 due to the ignition switch problem, which led to 124 fatalities and 275 injuries and the filing of hundreds of lawsuits against the company.
Why Does GM Have To Pay Victims for Ignition switch claims?
In some cases, bankruptcy can provide protection for a company that is being sued. However, in this case, the 2nd U.S. Circuit Court of Appeals in New York stated that barring lawsuits related to injuries caused by faulty ignition switches would be a violation of the victims’ Constitutional rights. The faulty switches caused vehicles to shut down without warning and disabled key safety features such as airbags, leading to deaths and serious injuries.
This decision was based in part on evidence which showed that certain GM employees knew for up to a decade that ignition switches on certain models were faulty and could have caused serious problems yet did nothing to prevent these injuries. So far, GM has paid $2 billion in both civil and criminal penalties stemming from these accidents, $900 million of which went to the United States as reparation for a criminal investigation.
How Did The GM Bankruptcy Affect Settlements?
In 2015, a bankruptcy judge separated the current General Motors company from the old GM, in effect creating a repository for assets that would allow the company to continue production while removing liabilities incurred by the former management.
This judge ruled that “New GM” was protected from liability for pre-bankruptcy lawsuits. However, the concealment of the defective switch problem has shone a new light on the culpability of GM, thereby leading to the new ruling.
GM has been attempting to block hundreds of ignition switch claims due to the bankruptcy. Now, these victims may have a chance to recover losses from the car manufacturer.
What About Other Lawsuits Against GM?
While injured victims are the primary focus of this new ruling, there is also another group of GM owners who are suing the company as well. Known as the “economic loss” group, these victims claim that the faulty switch led to lost value for their vehicles, and estimate the total of their cases to be worth between $7 and $10 billion.
A federal judge is currently considering a motion to dismiss these cases based on the former bankruptcy filing. Lawyers for GM argue that these cases, which deal strictly with monetary loss, should not be exempt from the bankruptcy protection.
The Personal injury attorneys at David & Philpot, P.L. work with victims such as those injured in the GM faulty ignition switch cases. Our lawyers help victims understand their rights and offer support for those who need help recovering money for medical bills, lost wages, disabilities and pain and suffering caused by these accidents. Contact us today at 800.360.7015 for a free, no obligation consultation about your case.