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GM Sued for $10 Billion Over Losses on Recalled Cars

October 16, 2014
3 min to read


General Motors was hit with its biggest lawsuit so far over serial recalls, brought on behalf of drivers of 27 million vehicles who are seeking more than $10 billion in compensation for fallen car prices, reported Detroit Free Press.


The class action against GM aims to represent everyone who bought or leased a recalled car from July 2009 to July 2014 and still owns it, or sold it after mid-February when the recalls started, or had an accident that destroyed it after that date.

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The automaker spurred the price drops by hiding at least 60 serious defects in around 27 million vehicles sold in the U.S., according to the complaint filed yesterday in federal court in Manhattan against "New GM," as the carmaker became known after its 2009 bankruptcy and government bailout.


"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."


Hundreds of individual car-price complaints against GM were combined in two separate class actions, according to a Web post by Steve Berman of Hagens Berman Sobol Shapiro LLP, one of the lawyers leading the fight against the automaker.


The larger suit concerns cars made after the bankruptcy.


A smaller one, focused on ignition-switch faults in cars made before the bailout, may be curtailed by a bankruptcy judge's ruling next year on whether older claims for accidents and economic losses are allowed. GM asked the judge to rule that his earlier orders, which enabled the U.S. to rescue the stumbling company, bar most of the claims over old cars.

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According to the suits, 2010 and 2011 Chevy Camaros lost $2,000 in value as a result of recalls. The price drop of the 2009 Pontiac Solstice is $2,900.


GM spokesman Pat Morrissey didn't respond to an e-mail seeking comment on the suits.


The number of fatalities tied to the ignition-switch defect has more than doubled from initial company estimates, based on the latest data from the automaker's compensation program that aims to settle, rather than fight lawsuits.


The victims' fund, run by lawyer Kenneth Feinberg, said this week that it approved 27 payouts as of Oct. 10 for cases of death. At least 151 other fatality claims are under review.


GM, the largest U.S. automaker, said in July that it was setting aside $400 million to $600 million to pay victims. Feinberg received 1,371 claims in total, 1,193 for non-fatal injuries. Twenty-five of those injury claims so far have been ruled valid.

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An investigator paid by GM said this year that for at least a decade the company failed to promptly resolve complaints from consumers, dealers and others about abnormal crashes in the Chevy Cobalt and Saturn Ion, and later it replaced the faulty ignition switch without alerting the public or changing the part number as required.

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