GM Seeks N.Y. Court for Recall Suits as Deaths Claimed

General Motors Co. said it wants a New York court to handle lawsuits arising from its ignition-defect recall as lawyers for car owners said the number of people killed as a result of the flaw was higher than the automaker’s count of 13.

Attorneys representing the owners of the more than 2.59 million recalled GM cars made their allegations of additional deaths yesterday as they sought to combine the cases in California or a location other than New York. One lawyer said his firm knew of 60 deaths, without offering supporting proof.

Andrew Bloomer, a lawyer for GM, asked the seven-member U.S. Judicial Panel on Multidistrict Litigation to send cases filed in Detroit, Boston, Miami and elsewhere to New York, where a judge could manage the litigation and confer with a nearby bankruptcy judge who presided over General Motors Corp.’s 2009 reorganization.

The panel’s decision, which could come within a week, will be the first significant step in resolving whether the Detroit-based automaker is liable for the switch defect and owes billions of dollars in damages to the owners of Chevrolet Cobalts and other cars.

Many car owners want the case handled by the judge in California overseeing sudden-acceleration lawsuits against Toyota Motor Corp. (7203)

Loss Claims

Meeting in Chicago, the judges were asked to consolidate the economic loss claims to better manage pre-trial exchanges of evidence and depositions. Death and bodily injury claims will be excluded from the combined cases. Claims filed in state courts also wouldn’t be included.

Fourteen lawyers suing the automaker argued for consolidation, many telling the panel proximity to U.S. Bankruptcy Judge Robert Gerber was an insufficient reason for moving the cases to Manhattan. Rudy Gonzales, arguing the cases should be handled by a court in Corpus Christi, Texas, said his firm knew of 60 fatalities tied to cars turning off while being driven, disabling power steering and preventing airbags from deploying in the event of a crash.

Most of those death claims haven’t been filed in a court, Gonzales, a partner at Corpus Christi-based Hilliard Munoz Gonzales LLP, said in an interview after the hearing.

Jim Cain, a GM spokesman, declined to comment on Gonzales’s assertion. GM previously told the National Highway Traffic Safety Administration it knows of 13 deaths caused by airbags failing to deploy as a result of an ignition switch failure.

More Deaths

David Friedman, acting head of that agency, on May 23 said the number of fatalities linked to the defect would probably increase.

Separately, a federal judge in Detroit on May 27 combined two shareholder lawsuits against GM’s Chief Executive Officer Mary Barra, saying the move would avoid duplication. Shareholders sued on GM’s behalf, accusing officers and directors of failing in their duties and wasting corporate assets.

The automaker said in an April regulatory filing that there were five shareholder complaints in Michigan targeting executives, four of which were filed on behalf of the company.

GM agreed this month to pay a record $35 million fine as part of the U.S. Transportation Department’s probe into how the company handled the recall, which is the subject of investigations by Congress and the Justice Department.

Old GM

Bloomer argued yesterday that most of the economic-loss claims would be barred by Gerber’s 2009 court order approving the sale of General Motors Corp. assets to the new, similarly named General Motors Co. (GM), which enabled that company to avoid most of old GM’s liabilities.

Confronted with the recall-related litigation this year, GM asked Gerber to issue an order reiterating his earlier decision. Attorneys for the car owners contend the bankruptcy court order shouldn’t bar their claims.

On May 16, Gerber ordered the plaintiffs and the carmaker to file arguments on whether old GM broke rules by not treating customers with defective cars as creditors when it filed for bankruptcy and whether that company hid evidence of the defect.

“This should be a quick trip in and out of the bankruptcy court,” Adam Levitt, a Chicago attorney, told the panel yesterday. He and other plaintiffs lawyers told the judges the loss cases should be moved to Santa Ana, California, where they can be heard by U.S. District Judge James Selna.

Toyota Cases

Selna has been presiding over pending suits on behalf of 16 million owners of Toyota vehicles after recalls over complaints of sudden, unintended acceleration.

“Detroit is where all of the activities took place,” said another plaintiffs’ lawyer, Peter Muhic, who asked that the cases be moved to that city.

Muhic also told the panel that lawyers handling most of the cases that would be transferred had agreed to put them on hold until the bankruptcy judge resolves the issues before him.

“The bankruptcy issue is really a red herring,” he said.

Still, Bloomer, the GM lawyer, pressed for Manhattan. “The Southern District is the right place for this,” he said.

The case is In re General Motors LLC Ignition Switch Litigation, MDL 2543, U.S. Judicial Panel on Multidistrict Litigation (Chicago).

To contact the reporter on this story: Andrew Harris in federal court in Chicago at aharris16@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Joe Schneider, Andrew Dunn

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.