Last GM Ignition Lawsuit Nears an End
General Motors is about to resolve the last major lawsuit related to 2.6 million defective ignition switches it began recalling six years ago.
Image: General Motors
The class-action complaint, filed in a federal court in New York City, involves hundreds of owners who claim the resale value of their cars fell after being tainted by the recall.
$120 Million Payout
Under terms of the proposed settlement, GM and a trust representing “old GM” before its 2009 bankruptcy will disburse $120 million among the plaintiffs. The plan was approved yesterday by U.S. District Court Judge Jesse Furman.
GM already has paid an estimated $2.6 billion in settlements and regulatory fines related to the debacle.
The issue involves poorly designed switches that could be jogged out of the “run” position by a sharp bump in the road. If that happens, the car’s engine stops running, and the power steering, power brakes and airbags switch off.
GM initially refused to consider the flaw a safety issue, delaying a recall for 10 years. Investigations revealed deep engineering concerns over the switch design before and after it went into production.
GM at first estimated the devices were responsible for 13 fatalities. The company eventually acknowledged that crashes caused by the switches had caused 124 deaths and 275 significant injuries. A special GM fund paid out $595 million to those victims or their families.
Many other uninjured owners of cars with the defect sued GM over the loss of resale value that resulted from the scandal. The result was a long series of lawsuits, appeals and rulings regarding the scope of GM’s exposure.
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