Another day, another calamity for General Motors. The beleaguered manufacturer is now staring down the barrel of $10 billion in lawsuits from the disgruntled owners of vehicles affected by the ignition switch recall. Meanwhile, a board of judges will get together and figure out whether to combine the 79 individual lawsuits into one, big suit.
Most of the 79 suits allege that the ignition switch problem has lowered the resale value of the recalled vehicles, while some are arguing directly against GM's bankruptcy defense, claiming the company, as successor to Old GM, remains liable. One suit even alleges that Old GM committed "deceptive and unfair acts and omissions."
As we've reported previously, GM has asked the US Bankruptcy Court to invalidate suits relating to economic loss, citing the Old GM/New GM argument. This is in contrast to death and injury claims, which the company is in the process of negotiating.
GM is now staring down the barrel of $10 billion in lawsuits from the disgruntled owners of vehicles affected by the ignition switch recall.
There seems to be empirical evidence opposing claims of lost resale value. The Detroit News cites ALG, which discovered that used prices of Chevrolet Cobalts affected by the recall have only dipped $300 relative to the average vehicle in the class.
"Similar to Toyota's widespread 'unintended acceleration' recall from 2009, GM has seen short-term impacts to its resale values," ALG's vice president of editorial, Eric Lyman, said in a statement according to The News. "It's unlikely there will be any long-term effects, however, and ALG has no reason to forecast lower values than previously projected."
Meanwhile, GM is aiming to revamp its legal department in a bid to eradicate groups that may have delayed the recall internally. The company's general counsel, Michael Milikin, has hired a legal advisor to work with various department heads to streamline the process of reporting recalls or defects in order to prevent another ignition switch recall situation (we're guessing this is part of the push to "empower" employees to report problems). An internal investigation is also being conducted, the head of which, Anton Valukas, said will be handled without any "sacred cows."
Despite this proactive move, there still seem to be concerns that GM establishment types being blamed for keeping the ignition switch recall quiet will continue to thrive in Detroit. For example, Bloomberg points out that General Counsel Milikin has been with GM since 1977. The firm that's assisting with the recall's internal investigation, meanwhile, has been an ally of GM since the 1970s.