General Motors sued for $10B over potentially lost resale value
General Motors has one more recall-related lawsuit to add to its growing stack, but this time it isn't about the company's ignition switch fiasco. The latest case claims owners lost value on vehicles dating back to 2009, including those that the automaker never recalled. The law firm filing the suit thinks it could affect over 15 million vehicles in the US and be worth over $10 billion.
Law firm Hagens Berman Sobol Shapiro filed the case against GM in the Central District of California on June 18. The attorneys hope to get class-action status to cover potentially any owner of the company's vehicles made between July 10, 2009, and April 1, 2014. The lawsuit alleges that the continual recalls from the automaker this year "has so tarnished the affected vehicles that no reasonable consumer would have paid the price they did," cites Reuters, and claims that the business put profits ahead of safety to sell sold sub-standard models to consumers.
GM was already facing about $10 billion in lawsuits related to just the ignition switch recall, but so far, the automaker has vehemently fought back against allegations of lost resale value to its vehicles. In one recent example, Kenneth Feinberg, who is running the company's compensation fund, responded that he had no intention of negotiating with these claims, and he asked to judge to throw out the case. However, with lawyers apparently smelling blood in the water, it's hard to imagine that keeping them at bay.
Ken Feinberg details General Motors' ignition switch recall compensation plan
Kenneth Feinberg and General Motors have announced the long-awaited compensation plan for victims of the Detroit-based manufacturer's botched ignition switch recall.
The compensation plan will be open to family members of anyone that was killed or injured due to ignition switch failure. That includes drivers, passengers, pedestrians and other motorists that were killed or seriously injured in the incidents. While GM acknowledges 13 deaths and 54 crashes, the actual number of claims is expected to be much higher.
Plaintiffs can begin filing claims on August 1 with an end date of December 31. According to the Associated Press, Feinberg is expecting claims to be completed in 90 to 180 days.
As for the size of the compensation, there is no limit for deaths or extreme injuries (brain damage, loss of limb, paralysis or severe burns). Lesser injuries will come with smaller compensation, with Feinberg expecting to use the formulae and scale used for the Boston Marathon bombing compensation plan. General Motors, for its part, hasn't placed a limit on how much money Feinberg has at his disposal and the company is unable to overrule any of his decisions.
This won't be a free-for-all, though. The burden of proof is on the claimants, who must show that their crash was due to the faulty ignition switch. We're curious to see how this plays out, considering that a number of the cases GM has acknowledged involved alcohol and involved occupants that weren't wearing a seatbelt.
Finally, those that choose to settle with Feinberg surrender their right to sue GM at a later date.
General Motors' CEO Mary Barra issued the following statement after the unveiling of Feinberg's plan:
"We are pleased that Mr. Feinberg has completed the next step with our ignition switch compensation program to help victims and their families. We are taking responsibility for what has happened by treating them with compassion, decency and fairness. To that end, we are looking forward to Mr. Feinberg handling claims in a fair and expeditious manner."
The cars might be better, which wasn't exactly a hard thing to do, but they are the same company culturally they've always been. Even before this recall mess happened, I knew nothing had changed and it feels so good to see I was right. And I have zero doubt in my mind nothing will change after all of this, either.
I also find it comical that this apparent "investigation" shed no light on whether top execs like Bob Lutz and Rick Wagoner knew. I call BS.
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GM recalling 8.4M cars, 8.2M related to ignition problems
GM Announces Six Safety Recalls
DETROIT – General Motors announced today it will conduct six new safety recalls in the United States involving about 7.6 million vehicles from the 1997 to 2014 model years.
"We undertook what I believe is the most comprehensive safety review in the history of our company because nothing is more important than the safety of our customers," said GM CEO Mary Barra. "Our customers deserve more than we delivered in these vehicles. That has hardened my resolve to set a new industry standard for vehicle safety, quality and excellence."
Among these recalled vehicles, GM is aware of seven crashes, eight injuries and three fatalities. The fatal crashes occurred in older model full-size sedans being recalled for inadvertent ignition key rotation. There is no conclusive evidence that the defect condition caused those crashes.
"We have worked aggressively to identify and address the major outstanding issues that could impact the safety of our customers," Barra said. "If any other issues come to our attention, we will act appropriately and without hesitation."
GM has made changes to every process that affects the safety of its vehicles, and the company has acted or will act on all 90 of the recommendations put forward by former U.S. Attorney Anton Valukas in his independent report to the company's Board of Directors.
GM expects to take a charge of up to approximately $1.2 billion in the second quarter for the cost of recall-related repairs announced in the quarter. This amount includes a previously disclosed $700 million charge for recalls already announced during the quarter.
Until the ignition recall repairs have been performed, it is very important that customers remove all items from their key ring, leaving only the vehicle key, and always use their seat belts. The key fob, if present, should also be removed from the key ring.
Feinberg is the same head arbitrator who handled the BP claims several years ago. I listened to him tonight on the PBS News Hour, interviewed by Judy Woodruff, and he is a sharp guy who knows his stuff. He seems to be a real expert on separating true, legitimate claims that have substance from the more frivolous ones.
Cadillac CTS, SRX Sales Halted for Ignition Switch Issue
General Motors has issued a stop-sale order on certain models of the 2003-2013 Cadillac CTS and 2004-2006 SRX.
According to an NHTSA filing, the American automaker doesn’t have a fix yet for the vehicles recalled in late June over the ignition switch issue. In the notice, GM is requesting its Cadillac dealerships to not sell 2003-2013 models of the CTS and 2004-2006 models of the SRX from their used-car inventories.
GM spokesman Alan Adler noted that the order “is still in effect for the foreseeable future,” and that the automaker’s engineers are “looking at one common solution” for the issue. Cadillac switched to a push-button starter switch on the 2014 CTS, so only older models of the sedan are affected.
GM Recalls 221,000 Cadillac XTSs, Chevy Impalas Over Brake Problem
An issue with the electronic parking brake in the Chevrolet Impala and Cadillac XTS is the latest recall being issued by General Motors.
The recall was prompted by an NHTSA investigation that was opened in April to look into “investigate allegations of inappropriate autonomous braking while driving”, according to The Detroit News. Both the Impala and XTS sit on GM's extended Epsilon platform. It affects 2013-2015 Cadillac XTSs and 2014-2015 Chevy Impalas.
In these cars, the electronic parking brake may not fully disengage and cause the brake pads to stay engaged with the rotor, thereby causing excessive heat and increasing the chance for a fire.
GM has not reported any crashes or injuries relating to this problem, and is instructing dealers to perform a software upgrade.