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GM could face upto $10 billion in penalties over defective switch


03/14/2016

As per the plaintiff’s lawyers, the entire case rests on whether the judge will be willing to overrule its earlier verdict in the 2009 GM’s bankruptcy case.



All those people who have taken General Motors to court over its faulty ignition switch will now get two chances in a Manhattan court to argue that the auto manufacturer should be held accountable for loss of value to their vehicles, injuries and deaths.
 
Jury selection for the trial will begin today in a trial revolving around a car accident allegedly caused by a faulty switch. This particular defect was supposedly known to some of its employees for years. In fact it even prompted General Motors to recall 2.6 million vehicles in 2014. It has so far been linked to 400 serious injuries and even death.
 
Earlier in January this year, a first trial ended abruptly with the plaintiff giving misleading testimony.
 
Tomorrow, plaintiffs suing General Motors over loss of vehicle value and accidents that occurred before General Motor’s 2009 bankruptcy, will ask the same Manhattan court, the 2nd U.S. Circuit Court of Appeals, to reverse its judgement pertaining to a bankruptcy court last year, which is unfavorable to their stand.
 
They think the bankruptcy ruling could potentially have an impact on their claims, under a sale agreement that will largely absolve the "New GM" from any burdensome liabilities that predate the bankruptcy.
 
If these people can successfully sue General Motors, the defective switch can cost the auto giant several billion dollars. The issue at hand was that the defective switch used to slip out of place, stalling the engine and cutting the power to air bags, brakes and the vehicle’s steering system.
 
Although GM has already shelled out $2 billion in penalties and settlement over the defect, it is still facing lawsuits arising out of injuries and deaths. So as to gauge the severity of the liabilities it will face from these fresh cases, a series of test trials will take place in order to gauge how juries will react to the evidence.
 
Since the first trial did not reach a jury led verdict, the one starting today will be the first time a jury weighs in on whether General Motors will be held liable for its year-long failure to conduct a recall.
 
General Motor’s spokesman said the company will take the stance that the injuries, crashes and deaths were not caused by the switch.
 
Lawyers for the plaintiffs however will argue that GM should face their claims since its deceptions deprived them of a chance to participate in the bankruptcy proceedings.
 
As per Steve Berman, a lawyer for the plaintiffs, had the U.S. government known about the defective switch in General Motor’s cars during its bankruptcy proceedings, "The cars would have been recalled then, or the deal modified."
 
Lawyers for the plaintiffs have calculated the estimated economic loss of their clients to be as high as $10 billion. However, they say their entire case hinges on whether the 2nd Circuit judge is willing to overturn its earlier decisions.