GM Agrees to $120m Ignition Switch Scandal Settlement

Money going to 49 states and D.C.

by on Oct.20, 2017

One of the defective GM ignition switch units now blamed for causing at least 124 deaths.

General Motors has agreed to pay out $120 million to settle a lawsuit filed by 49 states and the District of Columbia over its handling of an ignition switch defect linked to at least 124 deaths and 275 injuries.

The problem was revealed in early 2014 and eventually led to the recall of 2.6 million vehicles and the firing of more than a dozen GM employees who either failed to act on early warning signs or attempted to sweep the problem under the carpet.

The Last Word!

“GM will continue ongoing improvements it’s made to ensure the safety of its vehicles,” a spokesman for the automaker said. That includes changes ordered by CEO Mary Barra after the problem was first revealed, as well as efforts that were agreed to as part of a settlement with the federal government in December 2015.

The problem involved a poorly designed ignition switch used on millions of GM vehicles that was prone to inadvertently move out of the “On” position. That would cause the vehicles to shut off, leading to a possible crash. Worse, it would also disable a vehicle’s airbag system, increasing the likelihood of injury or death.

The ignition switch debacle marked a moment in time where (GM) committed deeply to safety.”

As investigators looked to the cause of the problem they discovered that at least some GM employees had known about the problem for as much as a decade. That led then-new CEO Mary Barra – facing her first big crisis – to order to fire 15 employees. Former U.S. Attorney Preet Bharara warned that some current and former GM employees might also face prosecution, though legal analysts said that would be a difficult case to prove to a jury.

(GM sidesteps possible $1b ignition switch settlement. Click Here for more.)

Shortly after the defect was revealed, Barra announced the creation of a victims’ compensation fund. It received claims from hundreds of crash victims and ultimately approved pay-outs to many of those who could make a reasonable case that they – or loved ones – experienced a crash as a result of the defect.

At this point, at least 124 deaths and 275 injuries have been attributed to the problem, though other claims are continuing to work through the courts. GM has meanwhile paid out about $2.5 billion in penalties and settlements, including a $900 million agreement reached with the U.S. Justice Department to close a criminal investigation in September 2015. The automaker also paid a $35 million penalty to the National Highway Safety Administration.

The latest settlement ends a three-year consumer protection case that involved all but one of the 50 states, as well as Washington, D.C. Among them, GM’s home state of Michigan will receive $4.3 million.

“There is no denying having cars on the road with faulty ignition switches was dangerous,” said Michigan Attorney-General Bill Schuette in a statement. “Today’s settlement shows General Motors is taking responsibility and committed to moving forward and creating quality cars Michigan residents can trust.”

(To see more about GM and the ignition lawsuits, Click Here.)

To some observers, the handling of the ignition switch debacle has been the critical test of leadership by Mary Barra, the first woman to run a major auto company. Earlier this month she said the case served as “a moment in time where the company committed deeply to safety.”

(GM may abandon car keys entirely. Click Here for the story.)

There are still critics, and GM still faces some lawsuits from those who chose not to work through the compensation fund managed by Kenneth Feinberg. He also oversaw the 9/11 victims’ fund and is now running a program covering those who owned Volkswagen diesels equipped with engines rigged to illegally pass emissions tests.

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One Response to “GM Agrees to $120m Ignition Switch Scandal Settlement”

  1. jamie says:

    Then their are the Cobalt owners, the few of us alive after the crash were told we had to settle in 2008/09 because in the middle of our lawsuit GM filed bankruptcy and were shielded by it when they emerged and handed a 300,000 settlement based on fraud. I emailed Feinberg who set up the fund 10 years after my crash saying well you are qualified for this compensation but your first settlement based on fraud will be deducted from it leaving me with 200000. Barely puts a dent int my and my family of fours care being that I can no longer work due to memory deficits. Again I was told in 2015 they were shielded by the bankruptcy so I couldn’t refuse it. How is now they lifted the shield and now I am screwed unless my hired attorneys can help this lost cause.

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