GM Faces Punitive Damages Over Ignition Switch Defect

General Motors Co.’s lawyers have said the carmaker will face punitive damages over ignition switch defects if its customers go to trial, creating an urgent need to settle lawsuits.

The automaker, which has said it wants to help accident victims, is dealing with new and revived suits over injuries and deaths as a result of its recall of 2.59 million cars. A case brought by lawyer Lance Cooper was settled for $5 million in September after an adviser warned GM of a “substantial adverse verdict” if a jury heard that it knew of the defect for nine years and didn’t fix it, according to a report by investigator Anton Valukas.

The delay would be taken as “proof positive of GM’s conscience indifference and willful misconduct when it comes to the safety of its vehicles’ occupants,” Philip Holladay of King & Spalding, GM’s outside law firm, told the company last year. “This case needs to be settled,” he said, according to Valukas.

As with Cooper, GM may feel pressure to settle other injury suits to avoid costly awards to victims. In at least four cases since 2010, GM was warned by outside lawyers that jurors might grant accident victims “substantial” or “punitive” awards if they heard of the company’s failures to fix a fault they had long known about, says the Valukas report commissioned by GM to examine its handling of the ignition switch defect.

“I suspect the amount to settle those cases went up significantly after the report’s release,” said Peter Henning, a professor at Wayne State University Law School in Detroit who has written about the automaker’s litigation.

Already Cooper has revised his suit in Georgia and is accusing GM of hiding long-running concerns over ignition switch defects.

Texas lawyer Bob Hilliard, who has demanded as much as $100 million in a wrongful-death lawsuit in the past, says he’s reviving two old suits. He refiled one yesterday in Tyler, Texas, alleging fraud by GM in settling the case.

“There are a ton of cases like this one,” Hilliard said. Accident victims’ lawyers nationwide will be seeking to reopen such cases, he said in an interview yesterday.
Louisiana lawyer Dan Becnel estimates that GM faces around 200 injury suits.

The Detroit-based automaker, which has recalled 2.59 million cars to fix defective ignition switches, named Kenneth Feinberg last week to run a compensation plan for accident victims. GM has said 13 people died in accidents related to the fault.

The hiring of Feinberg to foster settlements is part of a two-pronged strategy GM is taking to victims’ claims. While waiting for the compensation expert’s report on how he’ll proceed, the carmaker has been dealing with lawsuits by injured customers, herding some into manageable pools and recently seeking to dismiss one case.

In Texas, GM last month stopped four accident suits from going forward and forced them instead to go before a panel of judges who will decide whether to combine them into one group suit. Only two of the customers suing agreed, GM said in a court filing. In a Texas claims court, GM just asked a judge to dismiss an accident suit.

The case filed yesterday in Tyler was brought by the family of Mikale Erickson, 25, a passenger in a 2004 Saturn Ion driven by his fiancee, Candice Anderson. Erickson died shortly after the vehicle crashed into a tree. GM is accused in the complaint of deliberately concealing a defect linked to the 13 deaths.

Anderson was charged with criminally negligent homicide because “there was no clear explanation” at the time of the accident why the Ion crashed, according to the complaint. Anderson wasn’t sentenced to prison, Hilliard said.

“GM allowed Candice Anderson to believe that she was solely responsible for causing the death of her fiancee, Gene Mikale Erickson, when GM had knowledge that would exculpate her,” according to the complaint.

The lawsuit is Anderson v. General Motors, 14-cv-00538, U.S. District Court, Eastern District of Texas (Tyler).

–With assistance from Margaret Cronin Fisk in Detroit.