Arizona’s attorney general announced yesterday that the state had filed a $3 billion lawsuit against General Motors, saying that “the automaker had intentionally misled consumers through its advertising, website and public statements, and that some of its top leaders were complicit in the alleged misdeeds,” reported the New York Times.
The complaint is the “first major legal action” against the manufacturer over its onslaught of safety recalls, particularly for the 2.6 million small cars that saw their defective ignition switch recall delayed for years.
“It is difficult to find a brand whose reputation has taken a great beating as the New GM brand starting in February 2014 when the first ignition-switch recall occurred,” read the suit.
Arizona broke off from a group of 48 other state attorneys general who were investigating GM over its knowledge of the defect prior to the recalls.
“We’re proceeding with our own suit because it’s the best way to protect the citizens of Arizona,” said Attorney General Thomas Horne (R) in an interview with the Times. “General Motors represented that it was taking care of the safety of its cars, and it fact there were serious defects that it did not disclose to the public for years.”
Specifically, the suit claims that “[d]espite 4,800 consumer complaints and more than 30,000 warranty repairs, GM waited until 2014 to disclose this defect.”
Of the millions of cars GM manufactured and recalled, about 300,000 were registered in Arizona, where the consumer penalty statute “stipulates $10,000 per violation, potentially amounting to $3 billion.”
GM said today that it had “not yet had a chance to read and assess the complaint,” but it was remaining committed to proactively recalling vehicles when safety issues arise. The company has set up a compensation program for the faulty ignition switches, but has argued that it should not be held liable for lawsuits over safety issues on cars made before it declared bankruptcy in 2009.
“Companies have a responsibility to alert consumers of defects and to fix the problems it is aware of,” according to Peter J. Mougey, head of Levin, Papantonio’s Business & Securities Litigation Section. “To have a prior knowledge of dangerous problems and not tell consumers in order to protect the bottom line is criminal.”
Mougey believes the new GM, the post-bankruptcy GM, will be held liable for the hidden defects as company executives were aware of the problems and did not tell consumers.
“Our bankruptcy laws are not designed to shield debtors from injuries caused by problems their companies knew about and failed to fix,” said Mougey.
GM withheld information that proved fatal in multiple cases and is now trying to say that it shouldn’t face harsh consequences because it had some financial troubles. That’s unfortunately not how the world works. It’s not like GM couldn’t pay its electric bill (bad example since it actually couldn’t); the auto manufacturer let millions of Americans drive around in cars that they knew had serious safety issues for years.