Supreme Court Turns Down GM Appeal to Block Ignition Switch Lawsuits
The U.S. Supreme Court has rejected an appeal from General Motors to stop hundreds of lawsuits related to faulty ignition switches, reports The Detroit News. Now, the automaker faces up to $10 billion in damages from the additional claims.
The court upheld a previous ruling that said the automaker couldn’t use its previous bankruptcy as a way to avoid ignition switch claims involving death, injury, and economic loss from the depreciation of affected vehicles. Last year, a federal appeals court argued GM must face these pre-bankruptcy claims because it knew about a problem with its ignition switches for more than a decade and decided to keep the matter a secret.
Still, the automaker maintains that bankruptcy laws protect it from dealing with many of the liabilities of “Old GM.” As part of its 2009 reorganization, the automaker accepted liability for claims related to accidents occurring after it became a new company, but not before. Faulty ignition switches have been linked to 124 deaths and hundreds of injuries in older GM vehicles.
In a statement to The Detroit News, GM spokesman Jim Cain said, “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.”
As expected, the ignition switch scandal has proved costly, with the automaker shelling out $2.5 billion in legal costs already. These expenses include a $600 million compensation program established for victims and their families, as well as a $900 million fine from the U.S. Justice Department.