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2017-04-25 09:30

SUPREME COURT RULING: General Motors is liable for faulty ignition switches after the supreme court threw out the automaker's appeal. Image: AP / Darko Vojinovic

Washington  - The US Supreme Court on Monday (April 24) turned away an appeal by auto giant General Motors of potentially billions of dollars in consumer claims over faulty ignition switches.

The top court without comment refused to hear GM's appeal against a decision handed down last year by a federal appeals court. The lower court rejected GM's claims that its 2009 bankruptcy should protect it from lawsuits related to the faulty switches.

'GM knew about the defect'

The defective switches would sometimes shut off unexpectedly during driving, and have been linked to more than 100 deaths and hundreds of serious injuries.

GM claimed the 2009 bankruptcy sale, in which government-backed "New GM" bought nearly all of the company's assets, shielded the carmaker from the legal liabilities of its predecessor.

But plaintiffs argued the company should be liable for the conduct of "Old GM" because that company knew about the defect long before the bankruptcy.

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The Second Circuit Court of Appeals in New York in July ruled in favor of the plaintiffs, saying consumer complaints were lodged as early as 2002.

GM's position effectively asked the court to reward debtors who concealed claims against potential creditors, the court found.

Consumers in the lawsuit too

After the decision, the carmaker stood by its position disputing the lower court ruling.

"The Supreme Court's decision was not a decision on the merits and it's likely that the issues we raised will have to be addressed in the future in other venues" the company said in a statement.

It said the appeals court's decision "departed substantially from well-settled bankruptcy law."

GM added that consumers in the lawsuit "must still establish their right to assert successor liability claims. From there, they still have to prove those claims have merit."


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