Bloomberg News

GM Economic-Loss Recall Cases Bundled in New York Court

June 09, 2014

General Motors Co. (GM:US) won a bid to fight at least 85 federal lawsuits over its recalls of almost 2.6 million cars before a federal judge in New York.

The suits have been filed across the U.S. on behalf of people claiming their cars lost value as a result of this year’s recalls to repair defective ignition switches. The U.S. Judicial Panel on Multidistrict Litigation bundled them today and sent them to Manhattan federal court for pretrial proceedings before U.S. District Judge Jesse M. Furman.

The Washington-based panel last year assigned to the same judge a collection of state lawsuits over claims that McGraw Hill Financial Inc. (MHFI:US)’s Standard & Poor’s unit lied about the objectivity of its rating system for mortgage-backed securities.

The seven-member panel today cited Furman’s prior experience with mass litigation and with lawsuits over the 2009 bankruptcy of General Motors Corp. The judges rejected requests by several customer lawyers to ship the cases to U.S. District Judge James Selna in Santa Ana, California, who presided over pretrial litigation concerning Toyota Motor Corp. (7203)’s recall of millions of cars subject to sudden and unintended acceleration.

Today’s panel ruling didn’t mention Selna.

Air Bags

Ignition switches in the Chevrolet Cobalt, Saturn Ion and other cars made by Detroit-based GM were prone to turning off engines and power if jostled, preventing air bags from deploying in the event of a crash.

The company, which has acknowledged 13 deaths stemming from the defect, last week fired 15 people after an internal investigation led by former Chicago U.S. Attorney Anton Valukas faulted the company for failing to act on the issue while knowing about it for more than a decade.

The litigation going to Furman concerns only money lost by vehicle owners, not crash injuries or fatalities. State-court lawsuits aren’t included either. The cases will be returned to their constituent courts at the end of pretrial litigation if not resolved before then.

Mark Robinson of Newport Beach, California, one of several plaintiffs’ attorneys who tried to get the cases sent to Selna, didn’t immediately respond to voice-mail and e-mail requests for comment on today’s decision.

Close Courts

At a hearing last month in Chicago, GM attorney Andrew Bloomer had touted the Manhattan’s court’s proximity to the bankruptcy court where GM went through its 2009 reorganization and where the company is also fighting car owners’ claims.

“This order confirms what we’ve maintained all along,” Jim Cain, a spokesman for GM, said in an e-mailed statement. The New York court, he said, is “in the best position” to coordinate with the bankruptcy court and has already heard appeals from that proceeding.

GM has asked U.S. Bankruptcy Judge Robert Gerber to declare most of the recall-related litigation barred by his 2009 order enabling the automaker to emerge from bankruptcy by shedding most of General Motors Corp.’s liabilities.

Gerber ordered each side to submit its arguments on paper and hasn’t yet ruled on the question.

The case is In Re General Motors LLC Ignition Switch Litigation, MDL 2543, U.S. Judicial Panel on Multidistrict Litigation (Chicago).

To contact the reporter on this story: Andrew Harris in federal court in Chicago at aharris16@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Andrew Dunn, Stephen Farr


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  • GM
    (General Motors Co)
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