GM could face billions in damages from faulty ignition switches

A ruling of the U.S. Court of Appeals for the 2nd Circuit located in New York stands after the U.S. Supreme Court declined to review the case about General Motor's defective ignition switches. The automaker had hoped to block lawsuits from customers concerning the crashes. The company claimed that its bankruptcy cleared the slate of its liabilities, but the appeals court sided with the rights of car owners because they had not been notified about the defects at the time of the bankruptcy. Rejecting their lawsuits would have represented a violation of their due process rights.

As a result, GM remains exposed to liabilities related to the vehicle ignition switches that were prone to falling out of place. This defect stalled engines and sometimes cut power to brakes, air bag systems and steering. Crashes attributed to the faulty parts resulted in 124 deaths and 275 injuries.

In 2014, GM recalled about 2.6 million vehicles. In addition to lawsuits, GM faced criminal charges because some employees at the company had knowledge of the potentially deadly defects for years prior to the recall. So far, the defective products have cost GM about $2 billion. With the failure of the bankruptcy to shield the company from further liability, the company could incur another $10 billion in settlement costs.

When auto part defects injure or kill people, the victims could be eligible for compensation from the manufacturer for their losses under the theory of products liability. An attorney could be of assistance in preparing and filing a lawsuit and then entering into settlement negotiations.

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