As the saying goes, two words, one finger. That’s the message from GM today, as Judge Robert E. Gerber of the United States Bankruptcy Court in Manhattan said GM could continue receiving immunity for cheating and abusing customers. This is even though the company deliberately hid a defect that killed or injured many people. Judge Gerber is the same judge who OK’d GM’s original bankruptcy settlement in 2009, which immunized the company for harming millions of customers. Wonder what it would have taken to penetrate GM’s “bankruptcy shield”? Finding out it designed cars to deliberately steer into oncoming traffic? Installing air bags that contained shrapnel? (Oh yeah, Takata already did that. Keeps getting harder to imagine new ways these companies can mistreat their customers!)
I do want to take a minute to refresh PopTort readers’ memories as to what exactly happened in 2009 leading up to yesterday’s decision.
When GM and Chrysler filed for bankruptcy in 2009, both companies sought immunity from past and future product liability suits involving the tens of millions of GM and Chrysler cars on the road. Victims, lawyers, state attorneys general and consumer advocates were outraged. These two companies were responsible for nearly half of all defect claims against auto manufacturers in the country. There were about 500 to 1000 serious injuries or deaths due to cars designed or built with defects every year. In 2009, we already knew about some of these defects - indeed knew people injured or killed by them, including:
- seatbelts that fail and strangle children;
- seat backs that collapse and cause brain injury;
- unstable vehicles that flip and roofs that cave, crushing occupants;
- cars with gears that “self-shift” from park to reverse and run someone over;
- gasoline tanks or brake fluid containers that are improperly positioned and catch fire or explode, severely burning or killing the occupants.
After a lot of pressure, both companies finally relented somewhat. They no longer insisted on immunity for “future” (i.e., post-bankruptcy) product liability claims. However, pre-bankruptcy immunity endured. So according to the bankruptcy plan approved by Judge Gerber, anyone severely injured in a collision or otherwise because the car was not made safely had no recourse against the company as long as the incident occurred before July 2009. (See some of our earlier coverage here.)
This was bad enough. Hundreds of severely injured people were left with no recourse at all. Turns out this entire time, GM was hiding a huge secret – it was covering up a horrendous ignition switch defect and hundreds of people had already been injured or killed by it. No one except GM knew about it. They told no one and received immunity for all of it.
Normally after a cover up like this, consumers would have been able to sue GM not only for physical injuries but also over the plunging value of their cars. So this year, the same bankruptcy judge was asked by both families of those killed or injured in these defective cars (pre-July 2009) and those who owned defective cars like Saturn Ions and Chevrolet Cobalts, to terminate the immunity GM had received under clearly fraudulent – and possibly criminal - circumstances.
Yesterday the judge sided with GM and gave these victims a big “No,” in a decision that came “without warning, two minutes before the financial markets closed for the day.” As the New York Times put it,
The ruling shuts down not only lawsuits stemming from accidents that took place before July 10, 2009, but also most of the suits seeking economic damages for the loss in value of the defective cars.…
But even as the automaker has endured withering criticism from lawmakers and regulators, as well as a federal criminal investigation, it has continued to win in the courts. On various legal issues — like a motion last year to compel the company to advise owners of the cars to park them until they were fixed — G.M. has prevailed.
The victims can appeal, which they no doubt will do. Writes the New York Times,
One legal analyst noted that the issue would not be fully resolved until the appeals process played out. “Judge Gerber’s ruling is neither as huge a win for G.M. as it claims nor as dire as the plaintiffs’ bar suggests because much remains to be decided or unclear,” said Carl Tobias, a law professor at the University of Richmond who has followed the case closely. “But I think it’s fair to say that G.M. won something today.”
Indeed, it seems they often do.