Drivers Argue that GM MDL Should Continue After 2nd Circuit Bankruptcy Rulings

Jacqueline Gilbert was injured when this Chevy Cobalt hit a tree. Now she is suing General Motors, charging that the car's faulty ignition system malfunctioned, shutting the engine down and causing it to lose its power steering.
Jacqueline Gilbert was injured when this Chevy Cobalt hit a tree. Now she is suing General Motors, charging that the car’s faulty ignition system malfunctioned, shutting the engine down and causing it to lose its power steering.

The drivers in multidistrict litigation who charge that GM’s ignition switch defect cover-up devalued their vehicles, wrote a letter to US District Judge Jesse M. Furman that separate rulings by the Second US Circuit Court of Appeal are sufficient to defeat GM’s bid to kill their third amended complaint, according to Law360.

The Second Circuit ruled on July 13, 2016 that General Motors’ 2009 bankruptcy does not shield it from lawsuits over a deadly ignition-switch defect that led to criminal charges against the automaker and prompted the recall of 2.6 million vehicles in 2014.

The Manhattan Appeals Court held that barring plaintiffs from suing GM over crashes and lost vehicle value stemming from the faulty switch would violate their constitutional rights to due process, because they had not been notified of the defect prior to GM’s bankruptcy.

Faulty ignition switches

The ruling effectively rebuffs GM’s attempts to block hundreds of customer lawsuits over faulty ignition switches, and other vehicles components, on grounds that they were automatically barred by the company’s 2009 bankruptcy sale to a new corporate entity, according to Reuters.

The cases have been consolidated in In re General Motors LLC Ignition Switch Litigation, MDL 2543 before Transferee Judge Jesse M. Furman of the US District Court for the Southern District of New York. A status conference is scheduled for July 28, 2016.

The 699-page Third Amended Consolidated Complaint has 121 plaintiffs from across the US, and alleges:

  • New GM falsely promoted all of its vehicles as safe, reliable, and high-quality.
  • New GM’s advertising and marketing literature falsely claimed that new GM placed safety and quality first.
  • New GM was aware of the Delta Ignition Switch Defect from the date of New GM’s inception.
  • New GM continues to conceal the ignition switch defect.
  • New GM received many complaints of power failures in the Delta Ignition Switch Vehicles.

“New GM was aware of these problems year after year and nationwide, as reflected not only by the internal documents reflecting knowledge and cover-up at high levels, but in the thousands of customer complaints, but also, and not by way of limitation, by New GM’s internal complaint logs and other documents,” the third amended complaint states.

Larry Bodine

Attorney Larry Bodine is Editor of Mass Tort Nexus, and the Editor of The National Trial Lawyers. He is the former Editor in Chief of Lawyers.com and the American Bar Association Journal. He is a cum laude graduate of both Seton Hall University Law School and Amherst College.

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