General Motors loses Supreme Court appeal over car faults

Image source, Bill Pugliano/Getty

General Motors has lost a legal bid aimed at protecting it from lawsuits over faulty ignition switches.

The US Supreme Court, the top US court, will not hear the carmaker's appeal, which argued that its 2009 bankruptcy protected it from the claims.

The Supreme Court decision exposes GM to potentially billions more damages over the switches, which have been linked to deaths and accidents.

The switches shut unexpectedly, cutting power to brakes, steering and airbags.

Customer complaints date to 2002, but the company did not issue recalls until 2014.

That was several years after it filed for bankruptcy, when a new, government-backed entity called New GM, bought most of its assets.

A New York court found in 2016 that the firm knew or should have known about the defect and did not properly notify people during the bankruptcy process. That was a violation of due process and called in to question the sale deal, the court found.

If the complainants had been at the table, the outcome might have been different, given how many stakeholders were involved, it found.

"While we cannot say with any certainty that the outcome would have been different, we can say that the business circumstances at the time were such that plaintiffs could have had some negotiating leverage, and the opportunity to participate in the proceedings would have been meaningful," they wrote.  

GM had hoped the Supreme Court would reconsider that ruling.

The firm has already paid $2.5bn (£1.95bn) in penalties, settlements and legal fees related to the faulty switches.

The firm on Monday downplayed the court's decision, saying future lawsuits have to prove the faulty switches were responsible for the problems.

"The Supreme Court's decision was not a decision on the merits and it's likely that the issues we raised will have to be addressed in the future in other venues" the company said in a statement.

The company is due to report its first-quarter earnings to investors on Friday.

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