GM wins victory in ignition switch defect lawsuits

August 7, 2019 11:54 AM

By Jonathan Stempel

NEW YORK (Reuters) - General Motors Co (NYSE: GM) persuaded the U.S. federal judge who oversees nationwide litigation over defective ignition switches to narrow claims by owners who said their vehicles lost value because of the defect, which has been linked to 124 deaths.

In a decision late on Tuesday afternoon, U.S. District Judge Jesse Furman said owners in three "bellwether" states - California, Missouri and Texas - could not seek damages based on the difference in value between what they paid for their defective vehicles and what the vehicles were really worth.

He said the owners' failure to show the fair market value of their vehicles, despite testimony from an expert witness, created an "absence of evidence on an essential element" of their claims, making it impossible for a jury to assess damages.

The Manhattan-based judge also said that while damages could be measured by costs to repair defective vehicles, they could end up being zero if GM footed the bill.

GM spokesman David Caldwell said the Detroit-based automaker was pleased with the decision, saying it dismissed the owners' largest remaining claim.

Furman's 44-page decision is a defeat for owners who said they suffered economic losses from buying vehicles they thought were defect-free, only to see the ignition switch problem hurt GM's brand, reputation and ultimately resale values.

Because the decision "changes the landscape in dramatic ways," Furman delayed indefinitely a proposed Jan. 13, 2020 trial on claims from bellwether states, and said "it may well make sense for the parties to revisit the issue of settlement."

Steve Berman, a lawyer for the owners, said he may ask Furman to reconsider the decision, and was confident he could address the judge's concerns in cases from other states.

"There has to be a damage remedy for consumers who unwittingly drove cars with serious safety issues," Berman said in an email. "The car maker doesn't get a free pass when it's caught lying years later and then fixes the cars."

GM has recalled more than 2.6 million vehicles since 2014 over ignition switches that could cause engines to stall and prevent airbags from deploying.

The automaker has paid more than $2.6 billion in penalties and settlements, including $900 million to settle a U.S. Department of Justice criminal case.

That case was dismissed last September after GM honored its obligations under a three-year deferred prosecution agreement.

The nationwide litigation before Furman also covered well over 3,000 personal injury and wrongful death claims. A large majority have been resolved or dismissed.

The case is In re: General Motors LLC Ignition Switch Litigation, U.S. District Court, Southern District of New York, No. 14-md-02543.

(Reporting by Jonathan Stempel in New York; Editing by Bernadette Baum and Marguerita Choy)

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