General Motors hit with US$10 billion lawsuit

In the land of the brave and the home of the free-wheeling lawyer (the US of A, in other words) General Motors has just been hit with a ten billion dollar lawsuit, the largest so far, as it wrestles with the aftermath of a series of recalls that have affected more than 27 million vehicles.

CEO Mary Barra (left) and head of GM's internal recall investigation, Anton Valukas, sworn in to testify before a House Energy and Commerce Oversight and Investigations Subcommittee hearing on the GM ignition switch recall June 2014.

The class action against GM seeks compensation for the fall in the value of GM cars as a result of the recalls and in particular for the faulty ignition switch, but in all covers some 60 separate and serious defects in around 27 million cars sold in the USA; it is expected that at least 20 million people will join the action, according to lawyers involved with the case.

The case is aimed at ‘new GM’, which is the name the company is known as after it came out of its 2009 bankruptcy and US government bailout. It covers owners who bought or leased a car that was the subject of a recall from July 2009 up to and until July of 2014, or sold it after mid-February when the recalls started. The suit also covers cars destroyed in accidents between those dates.

“New GM repeatedly proclaimed that it was a company committed to innovation, safety and maintaining a strong brand,” according to the filing. “The value of all GM-branded vehicles has diminished as a result of the widespread publication of those defects and New GM’s corporate culture of ignoring and concealing safety defects.”

Lawyers fighting the case may be on a hiding to nothing to win the case though, as an earlier case in California found that the recalls had no effect on resale value. Another study discovered basically the same thing when looking at other major repair campaigns as well.

image: reuters.com