Appeals court rules federal judge was correct to rule bankruptcy agreement protects GM.

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GM Not Liable For Punitive Damages in Ignition Switch Lawsuits
Appeals court rules federal judge was correct to rule bankruptcy agreement protects GM.

— General Motors got a big break when an appeals court ruled the automaker isn't liable for punitive damages concerning ignition switches installed in vehicles built prior to June 2009 but involved in crashes that occurred after its June 2009 bankruptcy.

The defective switches could move out of position while driving, leaving drivers without power steering, power brakes and sometimes the airbags.

At least 124 people were killed when the vehicles lost power and crashed, and more than 270 injuries were blamed on the defects.

Attorneys for vehicle owners argued if any company should pay punitive damages based on wrongdoing, it's General Motors and its decision to ignore defects that were killing people. Punitive damages are awarded simply to punish a defendant for its actions, especially when deaths and injuries are involved.

GM argued its bankruptcy agreement shielded the company from actions taken by the Old GM, as the company is referred to prior to the 2009 bankruptcy.

The 2nd Circuit Court of Appeals received the case based on a 2018 decision by U.S. District Judge Jesse Furman who is in charge of thousands of lawsuits filed over the ignition switches.

Furman ruled the bankruptcy agreement clearly said which liabilities GM would be responsible for after June 2009, and the appeals court agreed.

In a 3-0 decision, the court found the judge who handled the bankruptcy proceedings originally said the New GM couldn't be held liable for claims the Old GM wouldn't have paid.

The appeals court also found the bankruptcy agreement allowed the automaker to be free and clear of most liabilities concerning the GM that existed prior to June 2009.

Thousands of ignition switch lawsuits have been brought under one courthouse roof in New York where the federal judge is encouraging both sides to settle the cases before more reach trial stages.


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