A federal appeals court ruled on Wednesday that General Motors Co. is not protected from some ignition switch defect lawsuits, reversing an earlier bankruptcy court ruling.
In its decision, the 2nd U.S. Circuit Court of Appeals in Manhattan maintained that preventing plaintiffs some making claims over accidents and lost vehicle value would deny their constitutional right to due process as they were not notified of the issue before GM went through bankruptcy proceedings in 2009.
The ruling prevents GM from shielding itself against lawsuits related to the ignition switches and other components on the basis that the 2009 bankruptcy resulted in “New GM” assuming control of assets while “Old GM” absorbed liabilities.
In its opinion, the circuit court stated that “Due process applies even in a company’s moment of crisis” and “Old GM – if reasonably diligent – surely should have known about the defect.”
GM has committed $2 billion to settle criminal and civil penalties linked to 124 deaths and 275 injuries ruled to be connected to the faulty ignition switches.