NEW YORK (March 30, 2016) — General Motors Co. has 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 jury in U.S. District Court in Manhattan found today.
“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 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.
In its verdict in favor of GM, the jury agreed that Spain's Saturn Sky was “unreasonably dangerous” and deviated from the company's performance standards.
Randall Jackson, the lead lawyer for the plaintiff, said his team was “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.”
“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. We think that the jury's findings are a victory for consumers and will advance the cause of all of the plaintiffs in the (multi-district litigation).”
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 Ms. 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 believes wrongfully blame the flaw for crashes, injuries and deaths.
The car maker has already paid out more than $2 billion to resolve legal issues 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.
When the defect was discovered, it could have been fixed by spending $1 on each vehicle, prosecutors said.
Ms. 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 also said the vehicle suffered only scratches.
“This is a case about a car that doesn't even have a dent,” Mr. Brock, of Kirkland & Ellis L.L.P. in Washington, said at the trial. “This car is not the villain in this case.”
Moreover, Mr. 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 site of the pileup, the jury was told.
“Sometimes, accidents just happen,” Mr. Brock said at the trial.
GM also argued that Ms. Spain's injuries, reported weeks after the crash, weren't caused by the accident but rather were work-related. The car maker told jurors that Mr. Barthelemy's back pain was the result of sitting in jail for several days for an unrelated traffic violation, rather than the crash.
The first bellwether, selected by the plaintiffs, ended in embarrassment for their lawyers, who are among the best-known attorneys in the industry. That trial ended abruptly midstream 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.”
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 airbags and leave occupants nearly 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. Knowledge of the defect was established before the company's $49.5 billion government bailout in 2009, and the concealment continued after the company's sale to “New GM” as part of a bankruptcy reorganization.
The company is separately awaiting an appeals court ruling in a group of cases in which plaintiffs had their cases 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 entity employed many of the same employees and executives.
This Bloomberg News report appeared on the website of Automotive News, a Detroit-based sister publication of Tire Business.