By on November 21, 2019

The 2nd U.S. Circuit Court of Appeals in Manhattan has decided to give General Motors a pass on the punitive damages associated with its faulty ignition switches. If you don’t recall the issue, it’s hardly your fault. The cars were manufactured prior to GM’s 2009 bankruptcy declaration and encompassed models from brands that no longer exist.

That timing was everything, too. Apparently the affected Saturn, Pontiac, and Chevrolet vehicles are part of the “Old GM” that died during the Great Recession. Most of the automaker’s former assets and liabilities were transferred to the “Motors Liquidation Company,” so that the General could be reborn fresh and untainted, like a baby phoenix. 

According to Reuters, Circuit Judge Dennis Jacobs explained GM’s agreement to acquire assets “free and clear” of most liabilities technically excused it from any punitive damages stemming from Old GM’s conduct. On top of the government bailout, that’s a pretty sweet deal. However, one could also argue that the brutal financial position the manufacturer found itself in ahead of the recession wouldn’t have allowed it to pay out anyway. Jacobs certainly did.

From Reuters:

Tuesday’s 3-0 decision may help GM reduce its ultimate exposure in nationwide litigation over defective ignition switches in several Chevrolet, Pontiac and Saturn models.

It is also a defeat for drivers involved in post-bankruptcy accidents, including those who collided with older GM vehicles driven by others, as well as their law firms.

The ignition switch defect could cause engine stalls and keep airbags from deploying, and has been linked to 124 deaths.

Injuries are presumed to be closer to 300. Thus far, the company has recalled more than 2.6 million vehicles since callbacks began in 2014. Claims exist that GM was well aware of the issue going back all the way to 2004; many blame the entire issue on the firm knowingly taking risks by using cheaper parts that could render its vehicles unsafe.

However, General Motors has already shelled out more than $2.6 billion in penalties and settlements stemming from the ignition switches — including $900 million to settle its criminal case with the Justice Department (with oversight conditions). It didn’t exactly get away scott-free.

[Image: Michael Urmann/Shutterstock]

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17 Comments on “Court Finds GM Not Liable for Punitive Damages In Ignition Cases...”


  • avatar
    Halftruth

    I hope the victims did get some of that 2.6 billion. It would be a shame otherwise. Especially if you were victimized and didn’t/don’t own a GM product.

  • avatar
    R Henry

    @Halftruth

    This article refers to “punitive damages” not actual damages. Two different things.

  • avatar
    R Henry

    Uhg….I hate being reminded of the GM bailout. So much of what is wrong with our Government and private industry…all rolled into one fugly episode…

  • avatar
    SCE to AUX

    “…many blame the entire issue on the firm knowingly taking risks by using cheaper parts that could render its vehicles unsafe”

    I know you’re trying to be succinct, but my recollection is that GM’s ineptitude with its change order system is the root of the issue.

    While defensible, they failed to bump the revision of the switch assembly (or change its part number) once the fix was in place. Fixing a premature wearout problem was not considered a change to Form, Fit, or Function, and therefore no revisions or inventory purging or recalls were deemed necessary or performed. In hindsight, that was a terrible mistake, because a good FMECA would have revealed the grave consequences of switch wearout.

    Furthermore, piecing together disparate accident reports over many years is exceptionally difficult. It’s not like GM receives accident reports on every death in its vehicles, which are certainly in the dozens per day. Compounding the issue is that many of the accidents involved alcohol, speed, a collision, or lack of seatbelts.

    Unfortunately, such court decisions may have legal merit, but they don’t satisfy the victims or their families.

    • 0 avatar
      ToddAtlasF1

      My recollection is that the reason they didn’t change the part number was to cover up that they knew about the problem and its likely consequences months before the first vehicle was delivered to a customer. This should be a criminal prosecution instead of a Post-Modernist exercise in undermining people’s faith in justice.

      • 0 avatar
        geozinger

        Takata.

        And Honda was complicit.

        • 0 avatar
          Lokki

          Oh, well!

          That Honda had problems too makes anything GM does totally okay and ethical.

          Gee, I’m definitely going to buy one of their cars now, safe in the knowledge that if something goes wrong in a GM car and kills people, Honda had problem too.

          The fact that GM tried to hide the problem is totally the same as Honda’s response.
          Wait. What?

          Oh, snap!

          It’s NOT.

          “ It took a while for Honda Motor Co. to recognize the scope of its problem with bad Takata airbag inflators, but after it started issuing recalls, the company has led the way in finding affected vehicles and getting their owners to come in for repairs.

          The automaker has employed a series of innovative initiatives to locate the millions of potentially deadly inflators that still need to be replaced.

          It aggressively lined up other suppliers besides Takata to build up sufficient inventory of inflators for needed repairs, while shortages among competitors often force people to wait months for a repair.

          https://www.autonews.com/article/20171211/OEM11/171219942/on-recalls-honda-goes-the-extra-mile

        • 0 avatar
          NormSV650

          “…And you don’t have to look very far into the public record to conclude that the myriad management studies are based on myths or they show that Honda knew – or should have known – that Takata’s chronic inflator manufacturing problems were going to blow up in their faces….”    

          http://www.safetyresearch.net/blog/articles/honda-finds-convenient-scapegoat-takata

    • 0 avatar
      jkross22

      “Unfortunately, such court decisions may have legal merit, but they don’t satisfy the victims or their families.”

      In other words, an unjust outcome.

      GM – a company where they traded good looks for a morally confused outlook on business.

  • avatar
    Fliggin_De_Fluge

    Nothing like getting away with murder. It’s easy when you have deeeeeep pockets! Thanks ATP’s for bailing this POS company out!

    • 0 avatar
      SCE to AUX

      Murder is defined by intent. Do you really believe that GM wanted to murder its customers?

      • 0 avatar
        ToddAtlasF1

        You need to look into the ramifications of monkey spheres. People at GM, almost certainly including Mary Barra, made a conscious decision to move forward with production knowing they were going to ship cars with steering columns that would lock while simultaneously defeating airbags and ABS. People have been convicted of murder for lesser acts of wanton indifference involving vehicles and alcohol.

      • 0 avatar
        jkross22

        Of course not. It was much easier for them to rationalize their decisions that led to deaths of people when all they perceived was a number on a spreadsheet.

        Criminal negligence should be the charge and it should pierce the corporate umbrella.

        If we don’t hold people accountable… well, you know the rest.

        • 0 avatar
          SCE to AUX

          “Criminal negligence should be the charge”

          No argument there, but isn’t that why GM has already settled so many lawsuits? It’s not as though they got away with no punishment whatsoever, but “piercing the corporate umbrella” is tough.

  • avatar
    phxmotor

    It’s worse:
    I’m sitting on a plane a few years ago and the retirement age lady sitting next to me is telling me about the little town in Michigan where she is from. . I asked what she did for a living… she and her husband worked at one of the big Buick factories that used to surround Flint. I told her that she and her husband were smart to have careers where they stuck with GM what with their generous pay and their generous medical coverage and generous pensions.
    She laughed. Then … she damn near broke out in tears. It took her awhile to explain…( after taking a few minutes to compose herself ) …
    … the moral of the story? …
    …well you can figure it out yourself. Suffice it to say that the bankruptcy did more damage to more people than has ever been reported upon. Ever …

  • avatar
    KingShango

    The recalls were issued in 2014 by “New GM” so they are both responsible and somehow also are not responsible?

  • avatar
    jkross22

    I appreciate being reminded of what GM did and their continued efforts to avoid accountability.

    No company is perfect, but GM’s unethical behavior and negligence is VW like.

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