Legal Battles: A Tale of Two GMs?

2014 was a year in which General Motors seemed to always be in the news for the wrong reasons. The automaker made headlines all year due to complications with a hefty recall. GM recalled 20 different vehicle models made between 2007 and 2014. A faulty ignition switch was potentially responsible for 42 deaths and 58 injuries.

As is often the case in these types of situations, lawsuits have ensued. Bloomberg reported that GM is facing over 100 lawsuits. One of the issues plaintiffs in some of the suits have found is that the “new GM” is perhaps not responsible for issues, which took place at the “old GM.”

Specifically, a class-action lawsuit in Manhattan alleges that GM has used its bankruptcy to avoid legal challenges. Part of a Bloomberg reads, “As part of a $49.5 billion government bailout, Gerber ruled in 2009 that the reorganized GM wasn’t on the hook for cars made by its bankrupt predecessor, known as “old GM.” The automaker…used the old orders to protect itself from litigation by most of its customers, halting arguments in a class action this month.” Steve Berman, the lead lawyer in the class action suit, further explains the allegation. In an email to Bloomberg Berman said, “Think how extreme it is. New GM sells a car in, let’s say 2011, with a known bad part. Even if made by old GM, it’s new GM lying to consumers at this point, and we don’t believe they can take refuge behind the bankruptcy.”

The refuge that the plaintiffs and their attorney allege has protected GM from big dollar lawsuits. One potential suit that is currently blocked due to its filing before the bankruptcy seeks damages of $10 billion dollars. In the case filling GM defended its position. Part of the statement reads, “The majority of named plaintiffs are asserting economic loss claims for old GM vehicles that were resold by dealers or third parties (not the old GM).” General Motors has recalled 30 million cars in North America this year at the cost $2.7 billion dollars.

Was GM’s public image hindered by all of the recalls and lawsuits in 2014? Do you think that the hefty amount of recalls will continue into 2015? How do you make the most of the uptick in dealership traffic due to recalls?