General Motors May Face Punitive Damages In Ignition Switch Litigation

GM Ignition Switch - Punitive Damages

General Motors may soon be facing punitive damages in lawsuits it faces over an ignition switch problem that led to the recall of millions of vehicles and the death of some drivers and passengers, a U.S. judge said on Monday.

The decision from U.S. Bankruptcy Judge Robert Gerber in Manhattan could increase GM’s financial exposure to claims for injuries, deaths or loss of vehicle value stemming from the 2014 recall.

Compensatory damages require General Motors to pay for a plaintiffs’ losses, while punitive damages are used to punish a defendant for¬†egregious or negligent conduct.

Under the new ruling the “New GM” could be held liable for what the “Old GM” did pre-bankruptcy.

“Punitive damages may be sought against New GM to the extent – but only the extent – they are based on New GM knowledge or conduct alone,” Gerber wrote.

New GM may also be responsible for employee knowledge or documents it “inherited” from Old GM, he added.

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GM spokesman Pat Morrissey says the ruling is “not a victory for plaintiffs.”

Gerber’s decision will now be applied to individual lawsuits by the judges overseeing them, including U.S. District Judge Jesse Furman, who presides over more than 200 consolidated lawsuits in Manhattan federal court.

GM has already announced agreements to settle about 1,380 injury and death cases for an undisclosed sum.

Written by Lane Hanson

Lane Hanson

Lane Hanson is BusinessPundit's Economy Editor. He reports on major changes in the US and Global Economies.