Second Circuit Decision Opens Door for Ignition Switch & Other Defects Claims Against GM Previously Barred by Bankruptcy Court
The Center for Auto Safety is the nation’s premier independent, member driven, non-profit consumer advocacy organization dedicated to improving vehicle safety, quality, and fuel economy on behalf of all drivers, passengers, and pedestrians.
July 13, 2016
GM consumers today received a major victory in their ignition switch lawsuits that were previously barred by the US Bankruptcy Court. Today’s decision by the Second Circuit of the U.S. Court of Appeals means that these consumers will finally get their day in court to assert ignition switch claims that could exceed $10 billion. As the court noted, “The amount of purportedly barred liabilities was substantial ‐‐ an estimated $7 to $10 billion in economic losses, not to mention damages from pre‐closing accidents.”
The Courts decision also gave a victory to victims of other defects whose claims were barred. These claims and the ignition switch claims will go back to the Bankruptcy Court for reconsideration consistent with the following Second Circuit rulings:
For the reasons set forth above, with respect to the bankruptcy courtʹs decisions below, we:
(1) AFFIRM the decision not to enforce the Sale Order as to the independent claims;
(2) REVERSE the decision to enforce the Sale Order as to the Used Car Purchasersʹ claims and claims relating to the ignition switch defect, including pre closing accident claims and economic loss claims;
(3) VACATE the decision to enforce the Sale Order as to claims relating to other defects; and
(4) VACATE the decision on equitable mootness as advisory.
We REMAND the case for further proceedings consistent with this opinion.
The Second Circuit was not persuaded by GM’s reliance upon a 2009 Second Circuit decision involving Chrysler’s bankruptcy liability shield, which after the Indiana State Police Pension Fund filed a certiorari petition was vacated by the US Supreme Court.
– Supreme Court Vacates Chrysler Decision (.PDF) – 12/14/09
– Chrysler Bankruptcy Court Decision – 8/5/09