GM Faces Class Action After Recall - But Not Over Airbag Deaths

General Motors (GM) is facing a class action lawsuit over the much-publicized recall of 1.6 million vehicles due to problems with the ignition switch. The story’s been a dramatic one, with more and more revelations coming out about potentially life-threatening problems with a range of cars. First, following complaints that engines were shutting off mid-drive, there was a partial recall (reported here); then a fuller recall was announced, along with an admission from the company president that mistakes had been made (reported here); now accusations are flying that the company knew about the problems for years without taking appropriate action. Bloomberg reported yesterday that General Motors may have doubled the number of recalled vehicles only after a lawyer contacted government regulators, while as far back as 2004, GM sent dealers a technical service notice over a problem with ignition switches, in which dealers were told to advise customers not to use heavy key chains for fear of causing electrical problems.

Headlines are being made this week over news of more than three hundred deaths linked to malfunctioning air bags.

A faulty ignition switch, we now know, could cause certain models of GM vehicles to lose engine power – even switching off – while affecting vital components such as braking, power steering, and airbag systems. The vehicles being recalled are:

• 2005-2007 Chevrolet Cobalt
• 2005-2007 Pontiac G5
• 2006-2007 Chevrolet HHR
• 2006-2007 Pontiac Solstice
• 2003-2007 Saturn Ion
• 2007 Saturn Sky

Headlines are being made this week over news of more than three hundred deaths linked to malfunctioning air bags. The ignition switch defect may have caused electrical problems with systems throughout the cars, preventing air bags from working properly in the event of a crash.

It’s important to point out, however, that lawsuits filed by crash victims or their families are not class action lawsuits. Rather, they would be personal injury cases, to be tried individually and not as a group.

The class action lawsuit that GM is facing in Texas federal court has been filed by a group of car owners claiming that the defect has devalued their vehicles. The suit claims that GM was “concealing a defect that cause its vehicles to have a sudden engine power loss,” adding that the company’s attempts to hide the problem were revealed by the recall, “thereby diminishing the value of its vehicles.”

The proposed class for the suit includes all those who owned or leased one of the affected models on or before February 7, 2014. And plaintiffs Daryl Brandt and Maria Brandt are seeking compensation for damages resulting from the decreased value, as well as reimbursement for out of pocket costs related to repairs or alternative transportation.

Reuters is also reporting that federal criminal and civil investigations have been launched, while preparations are being made for a Congressional hearing.

In a twist to the story, GM announced fresh recalls yesterday (March 17) affecting 1.5 million cars. According to GM CEO Mary Barra, crossover utility vehicles, luxury sedans and full size vans are now also subject to recall over new problems unrelated to the defective ignition switches. The company’s press release lists the following vehicles that are being recalled:

• 2009-2014 Chevrolet Express and GMC Savana to get reworked instrument panel material to meet compliance for unbelted passengers
• 2013 and some 2014 Cadillac XTS models to be repaired to prevent possible brake booster corrosion that may result in overheating
• Some 2008-2009 and all 2010-2013 Buick Enclave and GMC Acadia, some 2009 and all 2010-2013 Chevrolet Traverse, and some 2008-2009 and all 2010 Saturn Outlook to repair the wiring harness of seat mounted side air bags

It seems likely that more lawsuits will follow, both in the form of class actions (on behalf of customers in general who have been affected by the recalls) and individual lawsuits (filed by drivers and passengers who suffered injuries in accidents caused by defective ignition switches.) NBC News reports that GM engineers actually found a way to fix the ignition switch problems nine years ago “for as little as $1 a car,” but a “business decision” was made not to implement the repair. If that’s true, you can expect GM to face far more lawsuits for placing profits over the lives of its customers.

This is a complicated story, and we’re learning more every day. As the complaint filed on Friday states, “GM customers and the general public are left to wonder whether safety concerns about GM vehicles are limited to this particular product.”

Customers have been left to wonder for too long, though – it’s time for the truth to come out.