Court Finds GM Not Liable for Punitive Damages In Ignition Cases

Matt Posky
by Matt Posky
court finds gm not liable for punitive damages in ignition cases

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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  • KingShango KingShango on Nov 22, 2019

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

  • Jkross22 Jkross22 on Nov 22, 2019

    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.

  • SCE to AUX Good summary, Matt.I like EVs, but not bans, subsidies, or carbon credits. Let them find their own level.PM Sunak has done a good thing, but I'm surprised at how sensibly early he made the call. Hopefully they'll ban the ban altogether.
  • SCE to AUX "Having spoken to plenty of suppliers over the years, many have told me they tried to adapt to EV production only to be confronted with inconsistent orders."Lofty sales predictions followed by reality.I once worked (very briefly) for a key supplier to Segway, back when "Ginger" was going to change the world. Many suppliers like us tooled up to support sales in the millions, only to sell thousands - and then went bankrupt.
  • SCE to AUX "all-electric vehicles, resulting in a scenario where automakers need fewer traditional suppliers"Is that really true? Fewer traditional suppliers, but they'll be replaced with other suppliers. You won't have the myriad of parts for an internal combustion engine and its accessories (exhaust, sensors), but you still have gear reducers (sometimes two or three), electric motors with lots of internal components, motor mounts, cooling systems, and switchgear.Battery packs aren't so simple, either, and the fire recalls show that quality control is paramount.The rest of the vehicle is pretty much the same - suspension, brakes, body, etc.
  • Theflyersfan As crazy as the NE/Mid-Atlantic I-95 corridor drivers can be, for the most part they pay attention and there aren't too many stupid games. I think at times it's just too crowded for that stuff. I've lived all over the US and the worst drivers are in parts of the Midwest. As I've mentioned before, Ohio drivers have ZERO lane discipline when it comes to cruising, merging, and exiting. And I've just seen it in this area (Louisville) where many drivers have literally no idea how to merge. I've never seen an area where drivers have no problems merging onto an interstate at 30 mph right in front of you. There are some gruesome wrecks at these merge points because it looks like drivers are just too timid to merge and speed up correctly. And the weaving and merging at cloverleaf exits (which in this day and age need to all go away) borders on comical in that no one has a bloody clue of let car merge in, you merge right to exit, and then someone repeats behind you. That way traffic moves. Not a chance here.And for all of the ragging LA drivers get, I found them just fine. It's actually kind of funny watching them rearrange themselves like after a NASCAR caution flag once traffic eases up and they line up, speed up to 80 mph for a few miles, only to come to a dead halt again. I think they are just so used to the mess of freeways and drivers that it's kind of a "we'll get there when we get there..." kind of attitude.
  • Analoggrotto I refuse to comment until Tassos comments.