BGD Partner C. R. Chip Bowles Jr. Weighs in on Recent GM Vehicle Recall
Reproduced with permission from Product Safety
& Liability Reporter, 42 PSLR 304 (March 31, 2014).
Copyright 2014 by The Bureau of National Affairs,
Inc. (800-372-1033) http://www.bna.com
General Motors Company is in the news once again due to recent vehicle recalls for failing ignition switches. This recall affected a range of cars, some dating back to the early 2000’s, after the discovery of an ignition-switch that has caused accidents across the country. However, those across the country attempting to battle GM for any damage caused by the affected cars may be facing a long fight.
BGD partner Claude R. Chip Bowles Jr. discussed why plaintiffs attempting to sue GM may have a difficult time in the recently published Product Safety and Liability Report. According to multiple bankruptcy attorneys, GM received immunity by virtue of its bankruptcy proceeding and plan for claims which arose pre-bankruptcy. That immunity could mean that GM would not be responsible for any accidents caused by the cars with failing ignitions around the country which were manufactured prior to bankruptcy.
The recent recalls of the Chevrolet Cobalt and other GM cars for the ignition-switch problem have focused new attention on older accidents. The affected vehicles were made in the mid-2000s, up through model year 2007. GM said it identified 12 deaths related to the switch issues, but safety advocates and plaintiffs’ attorneys say there may be many more.
Many people who have been affected by the ignition-switch defects are saying that the immunity should not be valid because GM committed fraud on the court. “It just seems to me that fraud on the court that might involve people’s lives – there might be a judge somewhere who would say, that’s sufficient fraud on the court,” said Bowles.
Fraud is one the most difficult cases to prove over a period of time with businesses that have undergone new management and/or stipulations. The nature of this fraud on the court case is entirely different. The difficulty would be making the company go back and redo a business deal when the new company has already agreed to what it’s going to take over and what it is not. “That would be a long shot, but the difference is the fact that people died,” said Bowles.
The circumstances surrounding the ignition-switch failures are pretty extraordinary for a normal fraud on the court case, according to Bowles. “If it turns out that GM actively hid this from a recall and a dozen people died since they knew it should have been recalled, you’re talking about a species of fraud that’s as bad as you can get: People died because they lied,” he said.
The battle for plaintiffs in this case is far from over. The fraud charges will be complicated by the issues of the “Old GM” (before the bail out) versus the “New GM.”
“New GM that came out of bankruptcy and Old GM, although they both make cars under the General Motors brand, they’re radically different things… the proponent would have to show New GM’s knowledge of the continuing problem,” said Bowles.
This case is certainly one to keep an eye out for in the news. At least twelve deaths were caused by the ignition-switch defect; it’s yet to be seen if there is anything the plaintiffs can do about it.
To read the full Product Safety and Liability Report please click here.