GM Captures Key Win in Recall Case

Judge rules internal investigation notes off limits.

by on Jan.16, 2015

GM secured a major court victory when a federal judge denied plaintiffs lawyers access to the notes of its internal investigation.

General Motors scored a major court victory as a New York federal judge ruled that plaintiffs suing the automaker for compensation due to faulty ignition switch couldn’t access critical documents from the law firm handling GM’s internal investigation.

Prior to the ruling, GM denied plaintiffs lawyers access to the notes taken by Jenner & Block LLP during the automaker’s internal investigation into its ignition switch defect.

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U.S. District Judge Jesse Furman’s decision concluded that plaintiffs could not view the interview materials involved in Jenner & Block LLP’s internal investigation of the automaker. Those notes were the basis of what is now called the Valukas Report. Anton Valukas, a former federal prosecutor, oversaw the investigation.

The notes included interviews with hundreds of witnesses, including current and former GM employees and its outside counsel. Furman ruled the materials were protected by attorney-client privilege and not public records, as the plaintiffs claimed.

GM faces a mountain of litigation stemming from the defective ignition switch that has led to the recall of 2.5 million defective vehicles during the past 12 months. Kenneth Feinberg, the New York attorney handling the claims against GM, has approved settlements n cases involving at least 42 deaths.

GM Chief Executive Officer Mary Barra noted the Valukas report outlined GM’s senior management did not try to engage in any kind of cover up. The technology was changing all the time and a decade ago, when the switch was designed, GM’s engineers had relatively little understanding of how the defective switch could move to an off position and disable the airbags, which were supposed to protect drive and passenger.

(Barra says low gas prices won’t change GM’s plans. For more, Click Here.)

Barra said the ignition switch recall had been a terrible experience for GM. But the company has learned from its mistakes and put completely new processes in place to make sure it can’t happen again. She also categorically denied that GM tried to cover up the problem.

(Click Here for details about GM’s profit predictions for 2015.)

Nonetheless, GM faces years of litigation linked to recall, including a federal criminal investigation, which may be able to get around Furman’s ruling. In addition, several state governments, led by their attorneys general, are considering legal action against GM.

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Barra has already faced two rounds of Congressional hearings and the company’s general counsel has resigned. GM also has set aside more has set aside more than $2.7 billion to cover the cost of the recalls.

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