By Jeff Bennett
General Motors Co. signaled it would fend off most lawsuits over
claims linked to its ignition-switch recall using a bankruptcy
protection shield despite calls from lawmakers and victims'
families for the auto maker to forgo the legal maneuver.
The nation's largest car maker said in a federal court filing
late Tuesday that it would ask a U.S. bankruptcy judge this month
to bar claims filed on ignition switch-related injuries that
occurred before its July 2009 bankruptcy filing.
Thirteen deaths have been linked to the ignition switch issue.
At least nine of those fatalities occurred in accidents before its
bankruptcy petition, according to federal records. One claim was
settled out of court and the dates of two deaths haven't yet been
publicly disclosed by the auto maker or safety regulators.
"There have been a number of other cases filed around the
country dealing with the same issues raised here whether New GM
assumed this type of liability from Old GM," GM said in its filing
with a Texas court. "The sale order mandates that all of these
actions should be transferred to the New York Bankruptcy Court
which is supposed to act as the "gatekeeper."
As part of its bankruptcy proceedings, GM was allowed to leave
behind legal claims by a host of car-accident victims. Among those
are victims from accidents in some of the roughly 2.6 million cars
the auto maker has recalled world-wide because of faulty ignition
switches.
GM's government-brokered restructuring shielded it from legal
liabilities from claims for injuries occurring before the auto
maker's July 2009 bankruptcy sale, which sent its best assets to
what is now called "New GM."
"Using bankruptcy protection to fend off lawsuits is not
unexpected," said Boston University School of Law professor Walter
Miller. "Financial liability from lawsuits based on the type of
inaction by GM reported in the media could be high. Any public
relations loss will probably dissipate in the long term, but a
heavy financial loss while the company is just beginning to recover
from one financial crisis could have very serious effects."
Victim families and U.S. lawmakers had called on GM to fulfill
what they call its moral obligations and allow all ignition switch
claimants to have their day in court.
"Whatever GM's lawyers may argue, the judges in these cases
should deny GM this shield," Sen. Richard Blumenthal (D., Conn.)
said in a statement on Wednesday. "Several of my colleagues and I
have called on the Department of Justice to insist that the company
establish a compensation fund as part of any settlement of a
criminal investigation."
GM released a statement on Wednesday in which it acknowledged
"civic and legal obligations in regard to this matter." It didn't
provide details of a plan but said, "it is why we have retained
Kenneth Feinberg to help us explore our options as we move through
this recall process."
Mr. Feinberg, a compensation expert involved in 9/11 and
Deepwater Horizon claims, has promised to present his
recommendations to GM by early June.
The latest move comes a few days after the auto maker asked a
San Francisco federal judge to delay a case seeking class-action
status until after an April 25 hearing in New York bankruptcy
court. In that filing, the company said such a suit may be
inadmissible since it could violate bankruptcy laws.
The auto maker said it is facing more than 30 potential
class-action lawsuits filed in various jurisdictions around the
country as a result of the recalls.
Safety advocates Clarence Ditlow and Joan Claybrook on Wednesday
called on Ms. Barra to publicly and openly produce all documents
relevant to the decision-making on the building of the faulty
ignition switch. The two claim, based on documents released last
week by Congress, the GM ignition switch issue essentially began in
2001 when engineers rejected a safer design.
Ms. Barra has maintained she knew nothing of the faulty switch
until she was briefed on the matter in late 2013. The auto maker
then initiated the recall in February. To date, two engineers have
been placed on unpaid leave while the company conducts an internal
investigation.
Joseph Checkler and Mike Spector contributed to this
article.
Write to Jeff Bennett at jeff.bennett@wsj.com
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