MARIETTA: General Motors failed to convince a Georgia judge to dismiss a lawsuit over the death of a 29- year-old woman that helped trigger the recall of 2.59 million cars over faulty ignition switches.
Cobb County State Court Judge Kathryn Tanksley rejected GM’s motion to dismiss the revived lawsuit at a hearing on Saturday in Marietta, and set a trial date for April 2016. The lawsuit, brought by the parents of Brooke Melton, who died in a 2010 crash of a Chevy Cobalt, was settled in September 2013. The Meltons filed a new complaint in May, claiming General Motors fraudulently had concealed defects in the Cobalt and withheld evidence before the accord was reached.
General Motors contended the Melton suit couldn’t go forward because it was settled. Allowing the new case would mean that anyone could unilaterally redo a settlement, Robert Ingram, GM’s lawyer, said at Saturday’s hearing.
The new Melton case is different because of the fraud allegations, Tanksley said. “We’re plowing new ground,” she said.
The decision gives support to other accident victims hoping to reopen settled ignition-switch cases. A revived suit would also allow the Meltons to immediately seek evidence of General Motors’ knowledge of the defect before the recalls, Lance Cooper, the family’s lawyer, said in an interview before the hearing. Such information-gathering is stalled in other suits combined in a federal court in Manhattan, as two judges determine the effect of GM’s bankruptcy on the litigation.
Cooper asked at the hearing Saturday for GM to begin sending documents by September 2.
Tanksley said GM would have to begin producing documents by September 26, along with reasons for not providing any material requested by the Meltons’ lawyers.
General Motors is disappointed with the decision, Pat Morrissey, a spokesman for the Detroit-based company, said in an emailed statement. “We continue to believe that the parties reached a good- faith settlement last year,” he said. “GM will review the court’s order once it is entered and will evaluate its options.”
The decision is “very bad news for GM,” said Erik Gordon, professor at the Ross School of Business at the University of Michigan. “GM has more to fear going before jurors than going before Congress and federal regulators who have done little more than put executives though a few difficult hours of questioning,” he said in an email. “Juries, hearing evidence about GM’s stifling its employees who were worried about the ignition switch, are likely to punish GM with huge damage awards.”
The ignition-switch recall began in February and expanded to about 2.59 million cars, including the Cobalt and Saturn Ion. Following the Cobalt recall, the largest US automaker stepped up its review of potential safety issues and recalled about 29 million vehicles in North America this year, a record.
GM faces more than 100 lawsuits claiming loss of vehicle value caused by the recalls. They are combined in a multidistrict litigation, or MDL, in federal court in New York before US District Judge Jesse Furman. More than 30 suits have been filed in the US and Canada claiming deaths and injuries connected to switch recalls. Many of these have been transferred to the MDL.
General Motors has established a fund, overseen by outside lawyer Kenneth Feinberg, to pay death and injury claims related to the ignition switch recalls. The company said last month that it took a charge of $400m for the victim compensation program. The fund isn’t capped and the cost may rise to $600m, the automaker said.
Plaintiffs’ lawyers began filing claims with Feinberg this month, while some continue to pursue lawsuits. WP-BLOOMBERG
