Supreme Court Decision Exposes GM To Lawsuits

DETROIT, MI — Lawsuits against General Motors over ignition-switch defects in some of its older vehicles may start moving forward. On Monday, the U.S. Supreme Court declined to hear the automaker's appeal of a lower court ruling, which stripped GM of a legal shield from suits filed prior to its 2009 bankruptcy.

The defect, which prompted GM to issue a recall of than 2.7 million older-model cars in 2014 over stalling problems, killed at least 124 people and injured 275 in small cars. The cars were made by what has become known as “old GM.” The automaker argued unsuccessfully last July in the U.S. 2nd Circuit Court of Appeals that “new GM,” which emerged from bankruptcy in 2011, shouldn’t be held liable.

"At minimum, Old GM knew about moving stalls and airbag non‐deployments in certain models, and should have revealed those facts in bankruptcy," the appeals court said in its ruling. "New GM essentially asks that we reward debtors who conceal claims against potential creditors. We decline to do so."

According to a Detroit Free Press report, GM is downplaying any potential legal exposure. "The Supreme Court’s decision was not a decision on the merits, and it’s likely that the issues we raised will have to be addressed in the future in other venues because the Second Circuit’s decision departed substantially from well-settled bankruptcy law," GM said in a statement. "As a practical matter, this doesn’t change the landscape much in terms of the GM litigation."

The Supreme Court's action gives new life to hundreds of lawsuits from potential victims, including some who refused to accept settlements and instead took their chances in court, the Free Press reported. It also gives life to lawsuits from those GM refused to offer deals to and to class-actions by consumers who claim their vehicle values fell because of the scandal, the newspaper reported.

“Hundreds of death and injury cases have been frozen in place for years as GM wrongly tried to hide behind a fake bankruptcy," Robert Hilliard, lead counsel for the victims killed and injured by GM’s defective ignition switches, told the Free Press. "Even when GM told the world it was owning up to its mistakes and doing right by those they killed and injured, they were still ordering their lawyers to spare no expense or legal maneuver to try and stop these victims from having their day in Court."

Taxpayers backed GM’s bankruptcy to the tune of about $49.5 billion. The automaker’s good assets were sold to a new company called General Motors Co., while the bad assets were left in an entity called Motors Liquidation, also referred to as "Old GM,” the Free Press reported.

A condition of the sale was that the new GM would be protected from product liability claims originating with accidents occurring before the bankruptcy. That kind of legal protection has been standard practice for companies that file for Chapter 11 bankruptcy. But the appeals court threw out that protection in its ruling