A United States federal appeals court finally said what everyone already knew: In 2009, General Motors’ deceived the lower bankruptcy court – not to mention its own suffering customers – about its lethal ignition switch defect. This was just to avoid compensating customers injured or killed in crashes caused by that defect. And GM should not have been allowed to get away with that.
As the Associated Press reports,
By failing to disclose the problems, GM prevented crash victims from making claims or contesting the bankruptcy provisions, robbing them of due process, the court ruled.
In a 74-page opinion, a three-judge panel said that GM essentially asked the court to reward it for concealing claims. "We decline to do so," the court said. …
[U.S. Bankruptcy Judge Robert] Gerber's [lower court] ruling took away legal rights of crash victims because they never got a chance to contest the bankruptcy seven years ago, yet they were barred from suing New GM after the defective switches were disclosed, said William Weintraub, an attorney representing ignition switch accident plaintiffs. "The only person who could effectively make an argument in 2009 is somebody who bought a time machine," Weintraub said.
I have a few questions:
Let’s begin with the obvious: Why didn't (now retired) Judge Gerber seem to care that he was so blatantly deceived, allowing the case to even get this far?
What about the attorneys who knowingly deceived various courts on GM’s behalf? For example, the firm King & Spalding assisted the company in the defect cover-up, and then when on to represent GM before the bankruptcy court, where they recently had the nerve to argue:
[T]he plaintiffs were seeking "special treatment" and a "second bite at the apple" that other Old GM car owners with defects do not have. He said there would have been no rescue of GM if the sale meant New GM would have assumed the liabilities of Old GM.
Steinberg told the panel there was no evidence that GM engineers knew of a defect significant enough to trigger a mandatory safety recall in 2009.
First of all, the company already paid close to a billion dollars in criminal fines for that safety failure. So as they say, that argument doesn't pass the laugh test anymore.
Second, when GM first approached the bankruptcy court in 2009, it (and Chrysler) both asked the court to extinguish all liability for crashes caused by potential defects in all of its 30 million cars then on the road, including for all the crashes that hadn't happened yet. This was so outrageous - and GM clearly didn’t need this for its “rescue” - that the public and Congress rebelled. Both companies eventually pulled back. Ultimately, the only claims they were able to extinguish were the ones for crashes that had already taken place, which never should have happened at all. But it’s nowhere near the same liability exposure. In sum, GM didn't need any sort of product liability immunity to recover - at all.
What kind of callous response from GM to the 2nd Circuit decision is this?: “'Many of the claims we face have been brought on behalf of car owners who want to be compensated even though they have not suffered any loss,' a company statement said.”
Is he talking about the fact that the company’s victim compensation fund - which GM set up when it thought ignition switch victim lawsuits would be impossible - rejected about 90 percent of the claims because the criteria established for compensation was impossible to meet?
And speaking of the compensation fund, continues AP:
The ruling also could affect 399 injury and death cases settled for GM by compensation expert Kenneth Feinberg for a total of $594.5 million. GM says those who settled gave up their legal rights to sue the company, but [attorney Robert] Hilliard said he will look into whether some of those claims could be reopened in light of the court's ruling.
That would be right thing for GM to do - which sadly at this point, means very little.