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CARS

GM seeks court ruling on product liability protection

Todd Spangler
Detroit Free Press
General Motors wants to delay a federal judge in San Francisco from ruling on a class-action case until a bankruptcy judge in New York decides whether the company is shielded from all product liability claims tied to crashes or defects before it exited bankruptcy in July 2009.

WASHINGTON — General Motors is asking a bankruptcy judge in New York to confirm its shield from liability lawsuits tied to crashes or defects occurring before its bankruptcy.

A federal judge in San Francisco has scheduled arguments for April 25 in a class-action case from a group owners of cars that are part of GM's vehicle recall. But on Friday, GM asked the judge to delay any ruling until it can get a bankruptcy judge in New York to reaffirm the liability protection granted to it in 2009.

The liability shield could void the class-action lawsuit.

Five years ago, GM went through a bankruptcy reorganization that U.S. taxpayers financed. President Barack Obama's auto task force, which orchestrated the process, offered the emerging company immunity from product liability claims arising before it exited bankruptcy.

Such claims were left with the old GM, which mainly consisted of shuttered factories, some of which have been sold. GM's critics have argued the present company should bear responsibility for a defect linked to 13 deaths and 32 crashes in North America.

It was not immediately clear how the court request — which GM said would be filed soon in U.S. Bankruptcy Court in New York — would affect any plans to compensate families affected by the defective Chevrolet Cobalts, Saturn Ions and similar cars. Two weeks ago, GM CEO Mary Barra announced that compensation expert Kenneth Feinberg had been hired to advise the company.

GM officials did not immediately respond to a request for comment from the Free Press.

GM made its plans public in a motion submitted Friday in a proposed class action filed in U.S. District Court in San Francisco. The company asked for a delay in the case until both a bankruptcy judge rules on its request and, separately, a federal panel decides — most likely after a May 29 hearing in Chicago — whether to consolidate at least 19 cases across the U.S. linked to the recall.

The company said it would seek an order in bankruptcy court against "plaintiffs in all related actions to cease and desist from further prosecuting against 'New GM,' or otherwise pursuing any and all claims barred by the provisions" of the July 2009 bankruptcy reorganization and sale.

In the filing, GM lawyers said the "New GM" assumed the so-called "glove box warranty" to repair "Old GM" products, but that was all. That warranty was limited to a period of three years or 36,000 miles, whichever came first.

The model years affected are largely 2003 through 2010, though it also includes 2011 Chevrolet HHRs.

In the San Francisco case, a group of owners of the recalled cars from nine states are arguing that GM knew about the faulty ignition switch and should financially compensate buyers for the reduced value of their cars. Adam Levitt, a director at Grant & Eisenhofer in Chicago who represents the plaintiffs, was not available Tuesday to comment.

Since the recall began, it has been known that GM had bankruptcy protection, but legal experts have said that shield could be pierced if top officials knew about the liability and kept it from the bankruptcy court in 2009. While there are indications GM knew it had a problem with defective switches going back to preproduction of the Ion in 2001, the company has said it only learned late last year that the switches could inadvertently be jostled out of position, potentially disabling the air bags in the event of a crash.

Also Tuesday, Sen. Richard Blumenthal, D-Conn., kept up the pressure on GM, demanding that Barra provide "clear and accurate information" on when repair parts will be available to all dealers.

Blumenthal said an informal survey of 34 GM dealers in his state indicated that of the 14 dealers responding, 11 said they still haven't received replacement parts even though they were supposed to be widely available last week.

"I call on GM to state how many dealerships have received replacement parts necessary for these repairs, and how soon the remaining parts will be delivered," he said in a letter to Barra. "This information is vital to your customers' safety — indeed, their lives — in driving your cars."

"Parts are being delivered to dealers and vehicles are being repaired. As we have said before, GM is fully committed to getting replacement parts to dealers as quickly as possible," GM spokesman Greg Martin said in response to Blumenthal's letter.

After speaking at a conference in New York late Tuesday afternoon, Barra declined to respond directly to Blumenthal's response, but did say, "We are communicating with NHTSA (the National Highway Traffic Safety Administration) and that is our regulator."

Blumenthal has repeatedly called for GM to establish a victims' fund to compensate people injured or who lost relatives in crashes involving the recalled vehicles. He and others have asked GM to tell drivers to park all the vehicles until they are repaired.

Contributing: Brent Snavely, Detroit Free Press

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