One of the groups that haven't been able to take any legal action against General Motors over the faulty ignition switch were those who bought the affected vehicles before the company announced bankruptcy in 2009. Last year, a bankruptcy judge said that New GM was shielded from liabiliites over the actions taken by Old GM.
But today, the U.S. Second Circuit Court of Appeals in Manhattan reversed that decision. In the ruling, the court stated that New GM must face some of the claims from owners that arose from their actions before their bankruptcy.
“We are reviewing the ruling and its impact. Even if some claims are ultimately allowed to proceed, the plaintiffs must still prove their cases," said GM spokesman Jim Cain in an email to the Wall Street Journal.
This decision could expose GM to additional costs as it tries to move away from this mess. According to the ruling, the protection given to GM shielded them from up to $10 billion of liability claims.
Source: Automotive News (Subscription Required), Wall Street Journal (Subscription Required)
While Volkswagen and the U.S. Government are finishing negotiating the final agreement over the diesel emission scandal, some interesting bits of the agreement have leaked out.
The Associated Press and Bloomberg have learned from sources that Volkswagen will pay $10.2 billion as part of a settlement over the scandal. As part of the settlement, Volkswagen will compensate owners of affected TDI models between $1,000 to $7,000. The payment amount will vary on a number of factors such as the age of the vehicle. Volkswagen will also offer owners the choice having their vehicles fixed for free or buying them back at the value before the scandal came to light (September 18, 2015).
One item still up in the air is whether or not Volkswagen will be able to fix all of the TDI models to the EPA's satisfaction. A source tells the AP, "any fix likely would require a bigger catalytic converter or injection of the chemical urea into the exhaust to help neutralize the pollution."
Along with the owner compensation, Volkswagen will use the $10.2 billion to pay various penalties and setting up a fund to clean up air pollution.
The sources do stress that the terms of the settlement could change before being presented to U.S. District Judge Charles Breyer next Tuesday. Also, this settlement is for the 2.0L TDI engine. The 3.0L TDI V6 is being dealt with separately.
The first bellwether trial against General Motors over the faulty ignition switch has come to abrupt end. The plaintiff, Robert Scheuer has voluntarily dismissed his lawsuit against the automaker according to a filing in Manhattan federal court today.
Scheuer accused GM of concealing a defect in the ignition switch that caused the airbags in his 2003 Saturn Ion to not deploy when he crashed into two trees in Oklahoma in May 2014. The accident caused injuries to Scheuer's back and neck.
As we reported in December, GM tried to dismiss the case. However, U.S. District Judge Jesse Furman said the plaintiff had provided sufficient evidence to bring the case to trial.
So why was the case dismissed? To understand fully, we need to look at one of the claims made by Scheuer. He claims the crash caused memory loss and, in turn, caused him to misplace a $49,500 check for a down payment on a house in Tulsa, OK. This caused Scherer's family to be evicted from the house.
But paperwork filed by GM's lawyers earlier this week tell a much different story. They have found evidence that Scheuer committed check fraud when buying the house. A real estate agent found Scheuer faked a check stub totaling $441,430.72 from his federal government retirement account as a “proof of funds”. The check stub originally totaled $430.72 before the changes took place.
GM lawyer Richard Godfrey said in the filing suggests that Scheuer "misled his own counsel, as well as the court and the jury.” GM asked Judge Jesse Furman to present the evidence and bring two witnesses; the real estate agent and a forensic technology expert.
“We are assessing GM’s allegations about a situation we were unaware of,” Robert Hilliard, the lawyer representing Scheuer told Bloomberg earlier this week.
On Thursday, Furman granted GM permission to present this new evidence to the jury. Furman also said the new evidence would be “devastating,” making the suit “almost worthless as a bellwether case.” Furman urged the two parties to consider dismissing the case.
“The apparent lies the plaintiff and his wife told the jury ended the trial early, and we are pleased that the case is over without any payment whatsoever to Mr. Scheuer,” GM spokesman Jim Cain said in a statement.
Scheuer and his wife have hired criminal defense lawyers.
The dismissal of this case is unlikely to affect other cases against. What it will do is make it slightly harder to determine the value of similar claims.
General Motors will be heading to court on January 11th to face the first of several planned 'bellwether' cases over its defective ignition switch.
On Wednesday, U.S. District Judge Jesse Furman in Manhattan rejected GM's claims to dismiss the case as the plaintiff provided sufficient evidence to justify letting a jury hear whether or not the switch caused or enhanced injuries in a crash.
The case in question was brought to court by Robert Scheuer who crashed into two trees in Oklahoma on May 28, 2014. The Saturn Ion he was driving did not deploy the front airbags, which he says is a result of a defective ignition switch.
Furman's decision "paves the way for the jury to have an unfettered and full view of GM's behavior in covering up this defect," said Bob Hilliard, lawyer for Scheuer in a statement.
"We are fully prepared to go to trial, and introduce evidence showing that the ignition switch issue did not cause the injuries in this accident, or cause the airbags not to deploy," said GM spokesman James Cain in a phone interview with Reuters.
This case is important as it is the first of six 'bellweather' cases being brought to trial. These cases are sometimes used in product liability litigation where hundreds or thousands of people have a similar case. The results of the six cases will help those decide whether or not to continue with their case or settle.
General Motors has issued a recall for 3,296 pickups and SUVs for a problem for the ignition switch.
The Associated Press reports that the key in the switch can get stuck in the "start" position and then slip to "accessory" if bumped. This is due to the lock gears in the ignition have a larger diameter than the specifications allow. If this happens, this will cause the loss of power assistance to the brakes and steering, along with possibility of no airbag deployment. This seems very familiar to another ignition switch problem on older GM compacts last year.
The models affected include,
2014 Chevrolet Silverado 1500
2015 GMC Sierra 1500
2015 Chevrolet Silverado Heavy Duty
2015 GMC Sierra Heavy Duty
2015 Chevrolet Tahoe
2015 Chevrolet Suburban
Unlike the recall last year which caused GM to pay a large amount in fines due to the problem being kept under wraps, this one was quickly identified. The AP says an employee had this problem and notified officials at the automaker via the Speak Up for Safety program. GM found five other cases of this fault, but no injuries or deaths were reported.
GM says in a statement that dealers will replace the ignition-lock housing on the affected models.
Source: Associated Press via The Detroit News, General Motors
Press Release is on Page 2
GM Statement General Motors is recalling 3,073 full-size trucks from the 2014 and 2015 model years in the U.S. Some of these vehicles may have an ignition lock actuator gear with an outer diameter that exceeds specifications, which may make turning the ignition key difficult. The ignition key could get stuck in the "start" position. This may be more likely at higher interior ambient temperatures. If the vehicle is driven with the key stuck in the "start" position, and the vehicle experiences a significant jarring event or the vehicle's interior temperature cools, the ignition lock cylinder could move out of the "start" position, rotate past the "run" position, and move into the "accessory" position, leading to loss of power steering assist, power brakes and potentially air bag deployment in certain crashes. Dealers will replace the ignition lock housing. The affected vehicles are the 2014 Chevrolet Silverado LD, and GMC Sierra LD models and 2015 Chevrolet Silverado HD, Suburban, Tahoe, and 2015 GMC Sierra HD. GM is aware of five shutoffs but no crashes, injuries or fatalities related to this condition. Including Canada, Mexico and exports, the total recall population is 3,296.