General Motors Co. appealed to the nation’s top court to lift a large responsibility off its shoulders. However, the Supreme Court found these litigations without grounds, and it has just ruled against the world-renowned automaker. This lost battle could cost the company billions of dollars to support and indemnify hundreds of lawsuits. All of these cases originate from discontent GM clients who were each impaired by a defective ignition switch.
GM Can Lose $10 Billion Dollars Due to Thousands of Lawsuits
On Monday, the Supreme Court didn’t find the argumentation of the General Motors Co. substantial enough to save it from hundreds of lawsuits. The justice authorities stated that the 2009 bankruptcy that the company went through was not an excuse to introduce products on the market that present risks for the life of consumers. However, the court did not give further explanations to why it denied hearing the case.
As a consequence, the company remained out of measures against hundreds of plaintiffs that received products with a faulty ignition switch. Their lawyers are looking at a total of $10 billion as compensation for their clients. However, the company has already lost several lawsuits that dealt with the same charges.
These cases cost GM $2.5 billion in settlements and legal expenses. This amount covered a $900 million penalty for the Justice Department. Further $600 million were redirected to families that suffered the loss of their members due to faulty gear. However, those plaintiffs who already settled in compensation cannot file a second lawsuit against the automaker.
A Court Found that the Company Knew about the Faulty Ignition Switch for a Decade
The main issue that General Motors has to deal with is a defected ignition switch that turns off the key without driver’s permission. As a consequence, the air bags would remain irresponsive in case of an accident. A report confirmed that this scenario happened for 124 times with the victims having fatal or major injuries. As a consequence, the company had to recall around 2.59 million vehicles back in 2014.
Last year, General Motors went through another lost appeal to a federal court. The judge claimed that the company is still responsible for the issues deriving from the faulty ignition switch despite its bankruptcy shield. This is because the authorities found that the organization was aware of the gear defect for more than a decade. However, GM decided to keep these risks under secrecy and avoid a recall of their faulty products.
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