GM Does U-Turn in Ignition-Switch Motion | News | HMG LLP

GM Does U-Turn in Ignition-Switch Motion

August 31, 2017

Man in vehicle examining ignition switch

Source: Wall Street Journal by Mike Spector

General Motors Co. withdrew a court motion in a lawsuit involving a defective ignition switch amid an allegation it violated the terms of a September U.S. criminal settlement, the culmination of a frantic legal back-and-forth that drew attention from the U.S. Justice Department.

GM withdrew the motion after a Texas lawyer suggested to federal prosecutors that its description of a vehicle's capabilities contradicted a statement of facts in its recent Justice Department settlement. The settlement with federal prosecutors forbids GM from making contradictory statements.

Bob Hilliard, a lawyer representing plaintiffs suing the Detroit auto maker for injuries and deaths tied to the defective switch, sent a letter Monday to Manhattan U.S. Attorney Preet Bharara making the allegations, according to a copy of the correspondence reviewed by The Wall Street Journal. Within hours, GM's lawyers withdrew their motion. "Please know that…GM fully stands by the Statement of Facts associated with its recent [Justice Department settlement]," GM's lawyers wrote in a subsequent court filing to withdraw the motion.

A GM spokesman said the nation's largest auto maker takes the settlement terms "very seriously…and we remain committed to cooperating fully and completely with the U.S. attorney's office. GM plans to refile the motion once ensuring it is consistent with the settlement's statement of facts," the spokesman said.

At issue was GM's assertions that the black box in a destroyed Saturn Ion contained information crucial to determining whether the switch prevented an air bag from deploying. GM made the assertion in a motion last week seeking to dismiss a lawsuit as part of a long-running consolidated litigation case in a New York federal court.

But black boxes in such Ion models don't contain the relevant data, according to the Justice Department's statement of facts. Mr. Hilliard called the discrepancies "disappointing" and "troubling."

The legal wrangling could have exposed GM to possible criminal prosecution or increased government oversight, both possible penalties for violating the Justice Department settlement. There aren't any indications prosecutors planned to pursue such options. The settlement allows GM to avoid a violation by repudiating contradictory statements within two days of being alerted by prosecutors.

GM in September entered a deferred prosecution agreement under which prosecutors in three years will seek to dismiss criminal charges over the defective switch so long as the auto maker abides by the deal's terms. The auto maker also agreed to pay a $900 million financial penalty and have safety practices audited for at least three years.

GM in 2014 recalled roughly 2.6 million older Chevrolet Cobalts, Saturn Ions and other cars equipped with a defective switch that can slip out of the “run†position into the “accessory†or “off†mode, disabling safety features including air bags. The defect has been linked to more than 100 deaths and more than 200 injuries. A report that GM commissioned last year by former U.S. Attorney Anton Valukas found the auto maker failed for more than a decade to recall vehicles equipped with the switch despite internal evidence of a problem.

The scrambling from GM's lawyers is a stark reminder that the auto maker's legal headaches from the botched handling of the defective switch are far from over. Current and former GM employees are still being deposed as part of the consolidated litigation in New York, and the auto maker faces other ongoing probes over the safety lapse.

In the legal motion last week, GM sought to dismiss a lawsuit involving the May 2014 crash of a Saturn Ion because the plaintiff failed to keep the car from being destroyed. The Detroit auto maker said that prevented it from accessing the car's black box, or sensing diagnostic module, to determine the power-mode status of the vehicle’s ignition switch after the crash. The switch remaining in the “run†position would suggest the part wasn’t to blame for the air bag failing to deploy, according to the GM legal motion.

A section in the Justice Department settlement's statement of facts said black boxes in other Ion crashes were "unilluminating." Unlike older Cobalt cars, black boxes in Ion models were incapable of recording data that would indicate whether the switch had slipped out of the run position once the vehicle lost power, the settlement said. Mr. Valukas's report reached a similar conclusion.

"For each of these Ion crashes in which the subject vehicles evidently lost power before impact, the SDM data recovered from the crashed vehicles was unilluminating," prosecutors wrote. "Unlike the SDM installed in the Cobalt, the Io's SDM was incapable of recording data—including power mode status—after the vehicle had lost power."

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