Bankruptcy Judge Rules GM May Face Punitive Damages

A recent decision by a federal bankruptcy judge has cleared the way for consumer protection attorneys to seek punitive damages against GM for deaths and injuries caused by the company's ignition failure. GM claims its bankruptcy should shield it from liability, but this judge's decision proves manufacturers can't use bankruptcy to excuse their illegal actions.

When GM declared bankruptcy in 2009, the company that emerged was called “New GM.” But an opinion from federal bankruptcy Judge Robert Gerber, has shown that the New GM still has to deal with the same old problems.

On Monday, November 9, 2015, Judge Gerber ruled that consumers injured by GM's faulty ignition switches could sue New GM for punitive damages. This was an exception to the rule that a bankruptcy shields a person or company from liabilities created before the bankruptcy was initiated.

GM has faced years of scrutiny and legal challenges based on ignition switches that can slip out of position and shut off the engine. When this happens, the car shuts everything down, including power steering, brakes, and air bags. The problem caused a wave of car crashes, killing 169 people and injuring hundreds more.

Earlier this year, GM faced claims by the National Highway Traffic Safety Administration that the company had known of the problem for over a decade before finally initiating a recall in February 2014. NHTSA and GM settled those claims in September, agreeing to pay $900 million in fines and three years of federal monitoring to avoid criminal sanctions.

The federal agency's settlement did nothing for the over 250 wrongful death and personal injury lawsuits still pending as a result of the faulty ignition switches. While GM was quick to point out it had not assumed liability for “Old GM conduct relating to Old GM vehicles,” the judge's ruling acknowledges the reality that the same people had the same knowledge before and after the bankruptcy and still the company did nothing.

Now lemon lawyers like Dani K. Liblang at The Liblang Law Firm, P.C., can present evidence that New GM employees had knowledge “inherited from their tenure at Old GM or documents inherited from Old GM and may be based on knowledge acquired after” the new company was formed. If consumer protection attorneys can show that New GM employees had access to knowledge of the defects and failed to act, the company may still have to pay substantial punitive damages to those injured by their silence.

GM's 2009 bankruptcy doesn't excuse the company from failing to warn its consumers of a deadly defect in its vehicles' ignition systems. This decision gives consumers access to hold the company accountable for its behavior. If you or someone you know has been injured because of a vehicle defect, contact The Liblang Law Firm, P.C., today for a free consultation.