Tony Rackauckas. (Courtesy photo)
A number of plaintiffs attorneys, hoping to jumpstart lawsuits over General Motors Co.’s ignition switch recalls, are challenging a court order that prevents them from pursuing their claims.
U.S. Bankruptcy Judge Robert Gerber has temporarily halted proceedings in consumer lawsuits filed over GM’s ignition-switch defect, which prompted recalls of 2.6 million vehicles this year. Plaintiffs lawyers in three cases, hoping to escape Gerber’s stay order, assert that their claims aren’t subject to decisions in GM’s bankruptcy. So far, their challenges have been unsuccessful.
“GM’s strategy in the bankruptcy court has closed the door to every court in America,” said Gary Peller, a professor at Georgetown University Law Center in Washington, one of the lawyers challenging the stay order. “This is a real abuse of the legal process.”
GM, represented by Arthur Steinberg, a partner at King & Spalding in New York, alleges the claims are subject to the bankruptcy proceeding because they involve cars, trucks or automobile parts made before 2009, when the company filed for Chapter 11 protection.
On May 16, Gerber, of the Southern District of New York, issued the stay, which remains in effect until he decides whether those lawsuits are barred under the terms of GM’s bankruptcy. GM has moved to toss out most of the ignition-switch cases on that ground. On Monday, Gerber delayed briefing on that issue.
On Tuesday, Orange County, Calif., District Attorney Tony Rackauckas sought to partially lift the stay so that he could seek remand of his case to Orange County Superior Court. Rackauckas sued GM on June 27 seeking civil remedies on behalf of California consumers with cars and trucks recalled over 35 defects, including the ignition switch.
“This action is a police-power action,” said Mark Robinson, a senior partner at Robinson Calcagnie Robinson Shapiro Davis Inc. who is working on the case with Rackauckas. “This is not something they should have removed.”
In another case, nine named plaintiffs claim they’re not subject to the bankruptcy proceeding because they bought their cars after 2009. Gerber disagreed on Aug. 4. “Our argument is that, once GM emerged from bankruptcy, anyone who bought their product isn’t covered by the bankruptcy sale order,” said Jeffrey Block, co-founding partner of Boston’s Block & Leviton, who brought the class action.
A third case, brought on behalf of a couple who owned two 2006 vehicles, asserts claims under the District of Columbia Consumer Protection Procedures Act. Peller, who represents the couple, argued their lawsuit is exempt from the bankruptcy stay because it involves GM’s conduct after 2009—namely, its failure to disclose safety defects.
“The Elliotts are not claiming when they bought their cars that they were tricked,” said Peller, referring to his clients, Lawrence and Celestine Elliott. “They’re claiming new GM was the wrongdoer. They knew their car was dangerous and failed to tell them. Their entire case is based on the conduct of new GM.”
Gerber, citing his ruling in the earlier case, rejected that argument on Aug. 12.
Plaintiffs attorneys in both cases said they would appeal Gerber’s decisions to U.S. District Judge Jesse Furman, who is overseeing more than 100 ignition switch lawsuits. On Aug. 15, Furman asked lawyers in both cases to come up with a schedule to address their appeals.
Contact Amanda Bronstad at firstname.lastname@example.org.