General Motors Co (GM) was sued on behalf of vehicle owners over an ignition flaw in some small-model cars as it faces US regulators’ questions about this year’s recall of 1.6 million vehicles.
Bob Hilliard, one of the lawyers who filed the complaint today in the US federal court in Corpus Christi, Texas, said he seeks to recover US$6 billion to US$10 billion for the lost value of cars affected by the recall. The suit is based on claims GM concealed the defects and the “diminution in value” of the owners’ vehicles, and not deaths resulting from crashes when the engines stopped because keys came loose.
“These vehicles, all they have to do is get on the road for this defect to manifest,” Hilliard said in a telephone interview. “This is a true safety defect.”
GM has said it identified 12 deaths in connection with the recall of models made in the mid-2000s, including some Chevrolet Cobalts and HHRs and other Opel, Pontiac and Saturn models. Detroit-based GM, the largest US automaker, has said it is continuing to review data and information related to the recall.
The GM recall and the multiple US investigations that it has spurred come as the company has sought to shed the “Government Motors” stigma tied to its bankruptcy and US$9.5 billion US government bailout.
“GM is focused now on ensuring the safety and peace of mind of our customers involved in the recall,” Greg Martin, a company spokesman, said in an e-mail responding to a request for comment on Hilliard’s lawsuit. “Our principle throughout this process has been to the put the customer first, and that will continue to guide us.”
The complaint filed by Hilliard seeks class-action status to represent all vehicle owners affected by the recall. The named plaintiffs in the case are Daryl and Maria Brandt of Nueces County, Texas, who own a 2007 Chevy Cobalt, one of the recalled vehicles.
Hilliard also represents the families of two teenagers who died in a 2006 crash of a Cobalt in Wisconsin.
Referring to the Wisconsin claim, he said in an interview earlier this week that GM’s bankruptcy reorganization should not shield it from liability for the pre-2009 crash. While bankruptcy typically protects companies from new claims that predate the reorganization, GM did not present the full extent of its ignition-switch liabilities, Hilliard said.
“If you are aware of potential exposure to litigation and you don’t reveal it, that’s fraud,” he said. “I’m going to go back to that bankruptcy judge and say, ‘You have to undo this, the liability of old GM, because it was the new GM’s continued coverup after the bankruptcy that allowed people to be hurt or killed.’”
To persuade US bankruptcy judge Robert Gerber in Manhattan to reconsider the terms of GM’s reorganization, Hilliard or other lawyers would need to gather evidence and prove that the old GM had knowingly deceived the judge, said Chip Bowles, a bankruptcy lawyer with Bingham Greenebaum Doll LLP who was not involved in the GM liquidation.
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