A federal bankruptcy judge on Wednesday blocked most lawsuits against General Motors over a defective ignition switch that is tied to at least 84 deaths, sparing the automaker billions in claims and handing it a momentous victory as it tries to move past its gravest safety crisis.þþJudge Robert E. Gerber of the United State Bankruptcy Court in Manhattan ruled that the liability shield included in the 2009 agreement that lifted G.M. from bankruptcy should be allowed to remain in place, even though the company has acknowledged that many employees knew about the defective switch at the time but failed to alert owners of the cars that they might have a potential claim against the company.þþThe ruling shuts down not only lawsuits stemming from accidents that took place before July 10, 2009, but also most of the suits seeking economic damages for the loss in value of the defective cars.þþLawyers had estimated that the economic loss claims potentially totaled $7 billion to $10 billion. Economic loss cases will be allowed to go forward, the judge ruled, only if they can be tied solely to actions by the post-bankruptcy company, known as New G.M., and “do not in any way rely on any acts or conduct” by the pre-bankruptcy company.þþJudge Gerber’s ruling reaffirmed that lawsuits tied to accidents after the 2009 bankruptcy could still proceed.þþPlaintiffs’ lawyers said they would appeal the ruling.þþThe switch, which was included in older Chevrolet Cobalts, Saturn Ions and other small cars, can, if jostled, shut down power in a moving car and disable airbags and other safety features. Outcry after the defect was disclosed prompted G.M. to overhaul its safety practices and recall a record 30 million vehicles worldwide, including 2.6 million for the defective switch, last year.þþBut even as the automaker has endured withering criticism from lawmakers and regulators, as well as a federal criminal investigation, it has continued to win in the courts. On various legal issues — like a motion last year to compel the company to advise owners of the cars to park them until they were fixed — G.M. has prevailed.þþJudge Gerber’s ruling came without warning, two minutes before the financial markets closed for the day. In an emailed statement, G.M. welcomed the ruling, though it kept its official reaction muted and technical.þþ“Judge Gerber properly concluded that claims based on Old G.M.’s conduct are barred, and that the sale order and injunction will be enforced for such purposes,” G.M. said. “With respect to any claims that were not expressly barred, Judge Gerber’s decision doesn’t establish any liability against G.M. and the plaintiffs still must prove the merits of their claims.”þþRelatives of people who died in accidents involving the defective vehicles were more emotional.þþ“It’s like a ‘Get Out of Jail Free’ card for G.M.,” said Ken Rimer, the stepfather of Natasha Weigel, an 18-year-old killed in 2006 when the Chevrolet Cobalt she was riding in swerved off the road and crashed into trees. “It’s very frustrating that the bankruptcy judge made that decision.”þþFamilies like Mr. Rimer’s who have had relatives die in accidents linked to the switch have been able to seek monetary compensation from G.M. outside of the courts through a fund that Kenneth R. Feinberg, a lawyer and victim compensation expert, independently administers. Under Mr. Feinberg’s formula, the automaker has been paying families over $1 million — sometimes significantly more — for each death. To date, 84 families of victims who died have accepted his offer.þþMr. Rimer’s family accepted an offer from the Feinberg program last fall, but had initially considered pursuing a legal case. He said his heart went out to families who wanted to seek justice through the courts.þþ“It’s heart-wrenching,” Mr. Rimer said. “Those families have already lost so much.” Most of the families, G.M. and Mr. Feinberg have all kept the amounts of the payments private.þþ“It’s worse than a slap in the face,” said Laura Christian, the birth mother of 16-year-old Amber Rose, who was killed in a July 2005 crash in Maryland. “I think the judge is flat-out wrong.”þþMs. Christian’s family also accepted an offer from G.M.’s compensation fund last year. She had wanted to pursue legal action, but said she decided against it because Ms. Rose’s adoptive mother did not want to go through it.þþ“Part of me is grateful I went through the compensation program, but another part of me really would have preferred to stand in solidarity with the other families,” Ms. Christian said.þþShe said that the compensation fund allowed G.M. to decide about how much it would pay families, whereas a court case might have allowed for punitive damages. “I would prefer to have G.M. punished for its actions.”þþPlaintiffs’ lawyers argued that G.M. denied their clients’ due process in the bankruptcy proceedings because the automaker did not inform them individually, either of the bankruptcy proceedings or of whether they might have potential claims against G.M.þþ“This ruling padlocks the courthouse doors,” said Robert C. Hilliard, a lead plaintiffs’ lawyer. “Hundreds of victims and their families will go to bed tonight forever deprived of justice. G.M., bathing in billions, may now turn its back on the dead and injured, worry-free.”þþSteven Berman, who along with Mr. Hilliard is a co-lead counsel representing plaintiffs in nationwide litigation against G.M., said, “It cannot be the law that Old G.M. could hide the defects, and subsequently use the bankruptcy court as a shield. As Judge Gerber agreed, due process required that Old G.M. give notice to owners of cars with defects, and consumers did not get notice. The law must provide a remedy.”þþOne legal analyst noted that the issue would not be fully resolved until the appeals process played out.þþ“Judge Gerber’s ruling is neither as huge a win for G.M. as it claims nor as dire as the plaintiffs’ bar suggests because much remains to be decided or unclear,” said Carl Tobias, a law professor at the University of Richmond who has followed the case closely. “But I think it’s fair to say that G.M. won something today.”þþ
Source: NY Times
