GM Asks Supreme Court to Overturn Ignition Switch Ruling

General Motors Co. has petitioned the U.S. Supreme Court to overturn an appellate court ruling in July that left the company exposed to certain pre-bankruptcy claims about its defective ignition switches.

The flawed switches can be easily jogged out of the “run” position, thereby turning off the engine, power brakes, power steering and airbags. The defect has been linked to 124 deaths and nearly 300 major injuries.

The federal judge who presided over the emergence of “new” GM from bankruptcy in 2009 agreed at the time that the relaunched company was shielded from claims related to the behavior of “old” GM—including lawsuits over switch-related crashes that occurred before the bankruptcy.

But the U.S. Circuit Court of Appeals in Manhattan partially reversed that position five months ago. It agreed with plaintiffs’ attorneys who pointed to GM’s admission that old GM knew about problems with the switches even before they went into production in 2003 but didn’t reveal them during the bankruptcy. New GM didn't publicly acknowledge the defect until 2014.

The appeals court ruled that accepting new GM’s shield argument would “reward debtors who conceal claims against potential creditors.” Instead, the court allowed lawsuits to proceed by owners who claim lost resale value for affected vehicles purchased from old GM and creditors who settled with old GM before the switch defect was revealed.

GM has paid out about $2 billion in ignition switch-related fines and compensation already. It could face billions more if the Supreme Court allows the appellate ruling to stand.