The ignition switch debacle ain't over yet.
General Motors is now in a difficult situation following a US Supreme Court ruling that leaves in place a lower court’s ruling. The Detroit News reports that Supreme Court justices turned down an appeal by the automaker that sought to block hundreds of lawsuits from victims and/or their families that suffered death, injuries, and economic loss because of appreciated car values due to faulty ignition switches. As a result of this ruling, GM is now potentially exposed to as much as $10 billion in damages.
The lower court’s ruling specifically stated that GM is liable for these pre-bankruptcy claims because it knew about the faulty ignition switches for more than a decade but still opted to cover it up. GM, for its part, tried to claim that it wasn’t responsible for the liabilities of "Old GM," following its 2009 bankruptcy and subsequent reorganization. All told, those faulty ignition switches have been linked to the deaths of 124 people, as well as hundreds of injuries. In 2014, GM recalled around 2.7 million older vehicles, such as the Chevrolet Cobalt and Saturn Ion, to replace their poorly designed ignition switches.
Specifically, they could be accidently switched to the "Off" position while driving, resulting in power being cut to the engine. The brakes and airbags were also rendered useless. Shockingly, the problem was identified by a few GM engineers more than a decade prior, but was kept hush-hush. GM’s current CEO, Mary Barra, was only on the job for a few weeks when the scandal hit, and she has since fired a number of people, ordered said recall, and created a $600 million victims’ compensation fund. GM has already paid $2.5 billion in legal costs and related settlements, along with a $900 million fine to the US Justice Department.
Following the most recent ruling, a GM spokesman stated that "the Supreme Court’s decision was not a decision on the merits, and it’s likely that the issues we raised will have to be addressed in the future in other venues because the Second Circuit’s decision departed substantially from well-settled bankruptcy law." Nevertheless, GM will still have to continue to bear the financial consequences of its actions.