General Motors Co. won its second straight trial against drivers who blamed car wrecks on faulty ignition switches, boosting the company’s outlook for resolving hundreds of similar cases on more favorable terms.
The crash of Dionne Spain’s 2007 Saturn Sky on a New Orleans bridge in 2014 was the result of a rare Louisiana ice storm even though the car had a defect found in millions of GM vehicles, a Manhattan federal jury found on Wednesday.
“The jurors studied the merits of the case and saw the truth: This was a very minor accident that had absolutely nothing to do with the car’s ignition switch,” GM (IW 500/5) said in a statement.
The trial was the second of six bellwether cases, so called because they are used to test strategies. The jury’s reaction to the evidence may push either side to settle -- or battle out -- hundreds of other cases and help set the size of any settlements. Each side selected three of the six bellwethers. GM chose this one.
“This was GM’s handpicked, easy case to win. If they didn’t win this one, they wouldn’t win any case,” said Erik Gordon, a business professor at the University of Michigan Law School who isn’t involved in the litigation.
‘Unreasonably Dangerous’
While the jury sided with Detroit-based GM, it nevertheless agreed that Spain’s Saturn Sky was “unreasonably dangerous” and deviated from the company’s performance standards. GM had argued during the trial that there wasn’t enough evidence that her car contained one of the defective switches.
This was GM’s handpicked, easy case to win. If they didn’t win this one, they wouldn’t win any case."— Erik Gordon, business professor at the University of Michigan Law School
“We are pleased that the jury agreed that we proved that our client’s vehicle was defective, that it was unreasonably dangerous, and that GM failed to use reasonable care to provide an adequate warning of that danger to consumers, including our clients,” attorney Randall Jackson said in a statement. “In a case that was selected by GM as their first bellwether, the jury was still able to look objectively at the proof and arrive at these findings, despite GM’s arguments to the contrary.”
“I do think that the jury’s findings on Spain’s vehicle are good findings, and that they advance the goals” of other plaintiffs, Jackson said.
Pretrial Rulings Favor GM
The trial tilted in GM’s favor even before the jury began deliberating. U.S. District Judge Jesse Furman threw out the plaintiffs’ key fraud claim against GM this week at the end of witness testimony, saying Spain hadn’t presented enough evidence to show that the company made false or misleading statements to her about the defect. He rejected other claims before the trial, including a demand for punitive damages.
GM, which recalled millions of vehicles over the flaw in 2014, admitted using defective ignition switches for years and hiding it from customers and regulators. But the company is challenging suits that it says wrongfully blame the flaw for crashes, injuries and deaths.
The carmaker has already paid out more than $2 billion to resolve legal claims stemming from the scandal, including $900 million to end a criminal probe by the U.S. government; $575 million to settle a shareholder suit and more than 1,380 civil cases by victims; and $595 million through a victims’ compensation fund outside of court.
CEO Mary Barra's Actions
Since the scandal broke, GM Chief Executive Mary Barra has moved to change the company’s culture. She fired 15 people for the involvement in the ignition failure. Barra also added a vice president of safety and has streamlined the process for reporting defects. Company executives will even monitor chat rooms to look for customer complaints that could be defect-related.
When the flaw was discovered, it could have been fixed by spending $1 on each vehicle, prosecutors said.
Spain and her passenger, Lawrence Barthelemy, suffered only minor injuries in the New Orleans crash and didn’t report other health problems until weeks later, GM attorney Mike Brock said in his opening statement to jurors on March 14. The attorney said the vehicle was only scratched.
“This is a case about a car that doesn’t even have a dent,” Brock, of Kirkland & Ellis LLP in Washington, said at the trial. “This car is not the villain in this case.”
Ice Storm
Brock said the crash was caused by an ice storm that was responsible for dozens of accidents on the same bridge that night. Even the police cruiser that responded to the crashes was rear-ended by an ambulance near the pileup, the jury was told.
“Sometimes, accidents just happen,” Brock said at the trial.
GM also argued that Spain’s injuries, reported weeks after the crash, weren’t caused by the accident but were work-related. The carmaker told jurors that Barthelemy’s back pain was the result of sitting in jail for several days for an unrelated traffic violation.
The first bellwether trial, in a case selected by the plaintiffs, ended in embarrassment for their lawyers, who are among the best-known attorneys in the industry. The trial ended abruptly when GM revealed evidence that the plaintiffs, an Oklahoma couple, had lied under oath and wrongfully blamed GM for the family’s eviction from their “dream house.”
Driver Danger
Plaintiffs in all the cases allege GM endangered drivers and passengers by delaying the recall of defective vehicles. Due to a weakness in the design of ignition switches, jostled keys or a bump from a knee could shut off the engine, disable power steering, power brakes and air bags and leave occupants almost helpless as vehicles careen out of control.
GM has said top executives didn’t know the switch was a persistent problem, but in the Justice Department settlement the company admitted knowing about the defect by 2005 and concealing it from regulators from 2012 to 2014. The knowledge was established before the company’s $49.5 billion government bailout in 2009, and the concealment continued after its sale to “New GM” in a bankruptcy reorganization.
The company is separately awaiting an appeals court ruling in a group of lawsuits rejected as a result of the bankruptcy sale. GM argues it was shielded from the suits by bankruptcy law. GM, which received in a 2009 government bailout, was able to dodge the cases because the sale barred litigation against the “old” entity, even though new one employed many of the same employees and executives.
The case is In re General Motors LLC Ignition Switch Litigation, 14-MD-2543, U.S. District Court, Southern District of New York (Manhattan).
