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NY judge to encourage settlements of GM lawsuits

Wednesday, August 13, 2014    

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NEW YORK (AP) — A federal judge told lawyers on Monday last he'll encourage settlements in lawsuits brought on behalf of nearly 1,000 plaintiffs against General Motors (GM) for defective ignition switches.

US District Judge Jesse M Furman told dozens of lawyers at a hearing that he'll be careful not to interfere with the work of a bankruptcy judge who is deciding if the Detroit-based automaker's 2009 bankruptcy protects it from economic damages claims.

Furman said he wanted to be "sensitive about stepping on the toes" of the bankruptcy judge but planned to advance the litigation as much as possible nonetheless.

He made introductory remarks at an initial hearing after he was chosen to preside over more than 100 lawsuits that were consolidated in New York because of their common attributes. He said he planned "to encourage settlement as much as possible" once any potential payouts were better defined after rulings by the bankruptcy court.

Lawsuits were filed after General Motors Company in February began recalling 2.6 million of the cars, mainly Chevrolet Cobalts and Saturn Ions. GM has acknowledged knowing that the switches in its small cars had problems since at least 2001. Federal law requires automakers to report safety defects to the government within five days of discovering them.

The ignition switches, when jostled, can shut off the engine, cutting power steering and brakes and potentially causing drivers to lose control. The problem also can disable air bags.

GM says at least 13 people have died in 54 crashes linked to the problem, while lawyers suing the company say the death toll is more than 60.

In May, federal safety regulators ordered General Motors to pay a record US$35 million fine for failing to disclose the ignition switch defect in millions of cars for more than a decade.

GM attorney Richard C Godfrey told Furman that 983 plaintiffs had filed 109 lawsuits, with about a dozen of the lawsuits making personal-injury claims while the rest were solely for economic losses.

Owners of the 2.6 million small cars that were recalled are eligible for compensation from a fund being administered by compensation expert Kenneth Feinberg on GM's behalf. Feinberg, who handled claims for the BP Gulf Oil Spill and the Sept. 11, 2001, terrorist attacks, has said GM has placed no limit on the amount of money he can spend to compensate anyone who was injured or killed.

In all, GM has called back 16.5 million vehicles for ignition switch problems while beginning reforms, including appointing a new safety chief and continuing to issue recalls when problems are identified.

GM received a US$49.5 billion bailout from Washington during its 2009 bankruptcy. While the government was once the automaker's majority shareholder, it sold off the last of its GM stock in December.

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