General Motors Announces Compensation

by | Published on Aug 22, 2014 | News

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General MotorsGeneral Motors has finally come up with a compensation plan for victims of the company’s ignition-switch failure that caused many fatal as well as non-fatal accidents and led to the recall of 2.6 million cars by the company, most of which were the Chevrolet Cobalt and Saturn Ion models. This was the news that plaintiffs’ attorneys were waiting to hear.

The plan covers families of people who’ve lost their lives in the accidents as well as those injured seriously and moderately. However, plaintiffs’ lawyers have been quick to point out that this program does not compensate much. Apparently there are still many who have not been attended to in the compensation program, forcing them to possibly turn to the court. This means there would be more lawsuits and legal processes for General Motors.

What’s Not Right with the Compensation

The compensation runs to millions of dollars, but plaintiffs aren’t satisfied. It turns out that many have been left unattended. To get the facts straight, GM has limited the compensation plan to cars that were recalled from February 2014 over the faulty ignition switch, which amounts to 2.6 million cars. However, there were additional recalls made by the company after that first batch. In June the company had recalled close to 3.2 million vehicles for replacing the ignition keys. In addition, there were over 500,000 Chevrolet Camaros recalled with ignition problems. More recently, the company also announced further recalls totaling 8.4 million cars.

Plaintiffs’ attorneys believe that the compensation plan must cover all these recalls and not just the initial ones, particularly since they involved the original ignition switch defect that put the lives of the owners at high risk.

Accidents Where Airbags Worked Are Not Included

GM’s compensation plans also do not include accidents in which the airbags worked. This would have been perceived to be not as risky as the ignition switch accidents that prevented the airbags from deploying. However that would discount the fact that other components such as the power steering failed even when the airbags deployed. Failure of the power steering is as dangerous as the airbags failing. By avoiding these accidents GM is cutting down its liability, according to plaintiffs’ lawyers, who believe those families should also be part of the plan.

The Bankruptcy

GM’s Mary Barra said that customers accepting the payout need to waive all their legal claims against General Motors. Plaintiffs’ attorneys, who unsuccessfully pushed to be part of the compensation plan citing punitive damages, believe that their clients in some of the states would go after those claims in court. It seems even tougher for consumers who were involved in ignition switch accidents prior to the company’s bankruptcy in 2009. GM barred such claims in bankruptcy court. In May 2014, GM moved to prevent the processing of class actions for consumers seeking economic damages including their cars’ lost value. This motion was objected to by the plaintiffs’ attorneys. In a hearing on May 2, 2014, GM and plaintiffs were ordered to decide upon a schedule for addressing issues such as the possibility of GM knowing about the defects in the ignition switch during its bankruptcy.

Both the parties have been ordered to zero in on the facts they agree upon and return to court. But any major decision would have to wait till GM begins claims processing on the 1st of August, 2014.

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