April 24, 2017 by The Associated Press
WASHINGTON – The Supreme Court on Monday turned away an appeal from General Motors Co. seeking to block dozens of lawsuits over faulty ignition switches that could expose the company to billions of dollars in additional claims.
The justices without comment left in place a lower court ruling that said the automaker’s 2009 bankruptcy did not shield it from liability in the cases.
A federal appeals court ruled last year that GM remains responsible for ignition-switch injuries and deaths that occurred pre-bankruptcy because the company knew about the problem for more than a decade but kept it secret from the bankruptcy court.
The company had argued that well-established bankruptcy law allowed the newly reorganized GM to obtain the old company’s assets “free and clear” of liabilities.
GM recalled 2.6 million small cars worldwide in 2014 to replace defective switches that played a role in at least 124 deaths and 275 injuries, according to a victims’ fund set up by GM and administered by attorney Kenneth Feinberg.
The automaker has paid nearly $875 million to settle death and injury claims related to the switches. That includes $600 million from Feinberg’s fund and $275 million to settle 1,385 separate claims. It also has paid $300 million to settle shareholder lawsuits. But many others are pursuing their claims in court.
After it emerged from the government-funded bankruptcy, the company referred to as New GM was indemnified against most claims made against the pre-bankruptcy company, known as Old GM. A bankruptcy court sided with the company in 2015, ruling that most claims against Old GM could not be pursued.
But the appeals court in Manhattan overturned most of that decision and said hundreds of pre-bankruptcy claims could go forward.