Personal Injury Law

New GM Accepts New Product Liability Claims

By Greg Webb

In a bid to win court approval for a quick sale from bankruptcy, General Motors Corp. (GM) has agreed to accept liability for future product defects. Additionally, GM stated that it would change the terms of its proposed asset sale to address the objections raised by twenty suppliers and was working to create a 'consensual' agreement regarding the future of a joint-venture plant with Toyota. These statements by GM demonstrate how the auto manufacturer and Obama administration officials have worked to counter some of the more controversial issues raised by the company's bankruptcy filing. A group of nine state attorney generals, for example, voiced opposition to GM's reorganization because it would have robbed consumers of protection against product defects under state legislation.

By August, under the GM reorganization plan, a new company would be created to buy the company's best assets out of bankruptcy. This new company would be 60 percent owned by the federal government, 17.5 percent by the United Auto Workers union and 11.7 percent by the Canadian government and the province of Ontario. The consumers who have lawsuits pending against GM have objected to the reorganization plan since those injury and wrongful-death claims would have to be paid from the sale of GM's most worthless assets. They further claim the automaker's insurance would only cover product liability claims of up to $35 million per claim. This amount would not cover the claims of almost any of the lawsuits since many of the cases involved 'devastating injuries' from alleged automobile defects.

GM has agreed, however, to continue paying 'lemon law' claims so consumers would be entitled to a refund or replacement for defective vehicles. GM has also stated that the reorganized company, which will be nationalized with a $50 billion investment from the United States Treasury, will assume liability for future product defect claims as well.

While it is a good thing that GM will be back in business as (the New GM), it is a tragedy that there are thousands of product liability claims, including those for asbestos-related illnesses, that will effectively be kicked to the curb. All claims that existed before the "reorganization" are likely never going to be paid anything close to acual value. All of those that fall into this latter group probably feel as if the justice system has failed them. I am not sure how I could argue differently at the present time.

Full post as published by Charlottesville Personal Injury Lawyer on July 20, 2009 (boomark / email).