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GM Recall Cases Consolidated, Sent to N.Y. Federal Court

By Brett Snider, Esq. | Last updated on

Lawsuits against General Motors for alleged recall-related financial injuries have been consolidated and will be heard in a New York federal court.

U.S. District Judge Jesse Furman of the Southern District of New York will hear more than 80 lawsuits filed by GM customers who claim their vehicles lost value as a result of the recent ignition switch recall, Reuters reports.

What comes next for this GM recall case?

  • Have you been affected by a vehicle recall? Exercise your legal rights. Consult with an experienced, local motor vehicle defects attorney about your options.

Consolidation at GM's Request

The recent consolidation of these dozens of GM customer cases was actually at the request of GM. The auto company wished to move all of the claims against it to the same district in New York where it had filed for bankruptcy back in 2009. When the company emerged from bankruptcy, it hoped to separate the "old GM" (pre-bankruptcy) from the "new GM," both in terms of former finances as well as litigation.

One of the lingering threads of the "old GM" is the involvement in a failure to recall a dangerous defect with the ignition switch as early as 2004. GM hopes that by moving the case to the same federal district that handled its bankruptcy, the court will allow the "new GM" to skate.

As Reuters reports, the creation of "new GM" through bankruptcy largely barred liability for the conduct of "old GM." Often when companies reorganize through Chapter 11, lawsuits are put on hold until the bankruptcy process is complete. GM is hoping that the consolidated cases, which deal with its conduct pre-bankruptcy, will be funneled into bankruptcy court.

Consolidation of Non-Accident Cases

The more than 80 cases consolidated in New York federal court deal with alleged economic injuries related to the ignition switch defect. These plaintiffs do not claim that they were physically injured by their GM vehicles, but they do claim the resale values were significantly diminished because of the defect.

These dozens of GM owners present a common question to the court: Is GM responsible for the economic losses associated with the recall? Cases which have enough common questions of law or fact are often consolidated to be tried as one case.

The decision to consolidate these cases was made by a federal judicial panel, which ruled that the cases would best be heard in the same district that was familiar with GM's 2009 bankruptcy -- namely, New York's federal court in Manhattan, reports the Detroit Free Press.

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