The United States Supreme Court has made the final verdict: ignition switch lawsuits against General Motors may proceed, according to The Detroit Free Press.
The highest court rejected an appeal by GM from a previous hearing. Initially, a bankruptcy judge ruled the automaker’s reorganization protected it from lawsuits against the old entity, or in this case, “Old GM.”
GM has long argued its Chapter 11 bankruptcy created a new company, leaving the old entity responsible for wrongdoings in the past. Legal claims predating “New GM” could not be filed.
However, the Supreme Court’s final decision means New GM will be responsible for Old GM’s actions and hundreds of new lawsuits are expected to move forward, some likely coming from those who did not settle with GM when it dished out millions of dollars via a victim compensation fund.
“Hundreds of death and injury cases have been frozen in place for years as GM wrongly tried to hide behind a fake bankruptcy,” said Robert Hilliard, lead counsel for the victims killed and injured by GM’s defective ignition switches.
The ruling also sets an important precedent for companies that may find themselves in a similar situation.
“It’s an important one, I think, for consumers and people hurt by defects and products,” Carl Tobias, a law professor at the University of Richmond in Virginia said. “You can use these bankruptcy proceedings to shield yourself, as long as you don’t do what GM did.” That is, know about the defects while operating under the old entity.
“At minimum, Old GM knew about moving stalls and airbag non‐deployments in certain models, and should have revealed those facts in bankruptcy,” the court said in its ruling. “New GM essentially asks that we reward debtors who conceal claims against potential creditors. We decline to do so.”
The ignition switch recall was named responsible for 124 deaths and 275 injuries. GM recalled a total of 2.7 million vehicles over the defect.