Consumer Law

Prove GM fraud on court, if you can, bankruptcy judge tells lawyers in ignition-switch cases


Plaintiffs lawyers in dozens of cases filed against General Motors Co. over the diminished value of vehicles because of ignition-switch recalls have been arguing that a bankruptcy-court bar to such liability prior to 2009 should not apply.

That’s because GM allegedly knew about the defect and didn’t disclose it to consumers, eliminating their opportunity to make a potential bankruptcy-court claim, Bloomberg reports.

However, the plaintiffs’ case for eliminating the bankruptcy bar to pre-2009 economic damages would be stronger if they could prove that GM’s then-CEO knew about the ignition-switch issue and concealed it during his testimony in the Chapter 11 case, a bankruptcy judge in Manhattan said Wednesday.

If the CEO “knew about the switch problem and intended to keep it from me, that might constitute fraud on the court,” said U.S. Bankruptcy Judge Robert Gerber. He also told plaintiffs lawyers during the hearing that he wants to see briefing on the issue, the news agency reports.

“I need the ability to do my job, and I want to look at the issues,” said Gerber.

The former CEO said in an email that he didn’t know about ignition-switch problems, Bloomberg reports, and a law firm retained by GM to conduct an internal investigation found “a pattern of incompetence and neglect” but no intentional cover-up by executives.

Hat tip: GM Authority.

See also:

ABAJournal.com: “GM seeks bankruptcy court ban on class actions alleging lost value due to car ignition-switch issues”

ABAJournal.com: “6 attorneys fired by GM after law firm ignition-switch probe are reportedly identified”

ABAJournal.com: “Plaintiffs’ lawyers identify problems with GM compensation plan for ignition-switch accidents”

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