General Motors Inks $120M Deal on Ignition-Switch Fiasco

GM’s Chevrolet HHR FlexFuel version (Photo by Mario Duran via Wikipedia)

MANHATTAN (CN) — Already $900 million in the hole, General Motors inked a $120 million deal Thursday with 49 states and the District of Columbia to settle claims over faulty ignition switches that were installed in several cars, allegedly as a cost-saving measure.

The latest settlement comes three years after GM recalled its 2005-10 Chevy Cobalts, Pontiacs and Saturns, along with several other cars, amid reports from drivers that these models spontaneously lost power on the road, resulting in collisions made more dangerous because the power outages also disabled vehicle brakes and air bags.

Revelations that GM had prior knowledge of the ignition defect that is believed to have caused these incidents prompted a flurry of litigation, including ongoing class actions as well as federal and state investigations.

New York Attorney General Eric Schneiderman blasted the Michigan-based auto giant for having “turned a blind eye for years” to the defects that would have it cost pennies to correct.

“New Yorkers should not have to worry about their steering or brakes failing or their airbags not deploying when they get behind the wheel,” Schneiderman said in a statement. “Today’s settlement ensures that drivers receive the transparency they deserve when they purchase a car.”

More than $4 million in settlement money will go to New York. Schneiderman noted that the 44-page consent decree also requires GM to ensure future safety.

The extensive agreement outlines GM’s obligations to honestly advertise the safety records of its cars and to maintain global organizations dedicated to vehicle safety and product integrity.

“Among its other functions, the Global Product Integrity organization will establish processes to identify and resolve potential safety issues in the design of GM Motor Vehicles and using Design for Failure Mode and Effect Analysis (or its functional equivalent) and/or strategies selected by GM to achieve the same or similar results,” the consent order states.

Thursday’s settlement comes two years after GM paid $900 million to settle with federal authorities, who have tied at least 15 deaths to ignition-switch-related collisions. 

The Center for Auto Safety has attributed more than 300 deaths to the glitch, a figure that GM disputes.

Of cases that have gone to trial, individual drivers have had little luck holding GM liable for their collisions.

In July, a federal jury rejected the case of Arizona resident Dennis Ward, who failed to pin his fender-bender on the switch.

Louisiana resident Lawrence Barthelemy struck out a year earlier in his attempt blame the defect for his injuries in a 15-car pileup on an icy Crescent City Connection Bridge.

Before then, Oklahoma postal worker Robert Scheuer’s case fell apart after GM accused him of perjury.

Two Texas lawsuits filed against GM in state court also ended in the auto giant’s favor.

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