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GM Asks Judge to Dismiss Ignition-Switch Economic Claims
General Motors Co. has petitioned the judge that handled its bankruptcy to throw out two lawsuits demanding the company compensate customers for lost resale value caused by massive recalls this year.
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General Motors Co. has petitioned the judge that handled its bankruptcy to throw out two lawsuits demanding the company compensate customers for lost resale value caused by massive recalls this year.
GM contends Judge Robert Gerber specifically freed it of responsibility for the faults of "old" GM, the company that built most of the recalled cars. The company remains responsible for defective vehicles built after new GM was created in July 2009.
New GM argues it had no control over who would receive notice of old GM's bankruptcy or what old GM told its customers about defects.
One lawsuit seeks economic compensation for 2.7 million vehicles recalled to replace defective ignitions switches. Bloomberg News estimates the cost of compliance, excluding punitive damages, would be about $2 billion if the plaintiffs prevail.
A second lawsuit asks for similar economic compensation to offset the alleged diminished value of 27 million other vehicles GM has recalled this year for various defects.
GM could avoid payouts for both lawsuits if Gerber agrees with its argument. But the judge told GM the decision will be "difficult," and he observed that his earlier ruling "may turn out to have exceptions, or self-destruct."
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