The 10 Biggest GM Lawsuits in Company History
General Motors is among the largest automakers in the world. Its specialties are producing cars and trucks with a large selection of parts for upgrades and repairs. A segment also provides financing for consumers. In more than a century since its founding in 1908, GM achieved success as a reputable brand, but it’s had its share of legal issues. Here are the 10 biggest GM lawsuits in company history.
10. General Motors sued for failure to discloser mechanical defects in vehicles in 2018
Penalty amount: $7.28 million
GM experienced years of legal battles due to its knowledge of mechanical defenses in multiple vehicles it sold to the public without full disclosure about the life-threatening flaws. The legal action was filed by the Arizona Attorney General, claiming that GM committed consumer protection-related offenses by failing to take action when it knew some vehicles were sold with faulty ignition switches that had the potential to switch off while the vehicles were going down the road.
The defect placed the well-being and lives of drivers and their passengers and jeopardy, yet GM kept quiet about the issues and issued no warnings. The company wanted to save money by not issuing recalls that could have prevented injury and saved lives. The case was settled on March 7, 2018, with GM agreeing to pay a penalty of $7.28 million with $1 million in fines to the state of Arizona, and the rest of the settlement distributed to customers as restitution.
9. General Motors sued for failure to disclose mechanical defects in its vehicles in 2017
Settlement amount: $13.9 million
In 2017, a lawsuit was filed against GM, alleging GM knew about defects in some models of vehicles it sold to the public, including power steering components, braking systems, and airbag issues. The class-action lawsuit further contended that 275 people were injured because of the deceitful actions and 124 people lost their lives because of the defects. the Attorneys General for 49 states joined in the multistate litigation, accusing GM of knowingly selling vehicles with one or more potentially life-threatening defects, and concealing the information from the public to avoid their duty to recall the vehicles with dangerous flaws.
The legal action was filed in Orange County, California, representing plaintiffs from all but one state. The actions were classified as deceptive business practices and unfair competition. The action came on the heels of a previous lawsuit filed against GM in 2014, for failure to disclose knowledge of faulty ignitions and airbag systems, resulting in a $120 million penalty. The 2017 lawsuit was one of many related offenses for motor vehicle safety violations, deceptive practices, and other illegal and unethical behaviors. General Motors established a pattern of behaviors that put its customers at risk to save the money it would have cost for recalls and repairs, but in the end, their actions were more costly.
8. General Motors accused of competition-related offenses
Penalty: $15 million
The US Department of State Bureau of Political-Military Affairs accused General motors of export control violations that resulted in competition-related offenses. The State Department Directorate of Defense Trade Controls filed a civil case against GM, claiming that the company exported technical data, defense articles, and defense services to foreign person employees without authorization, violating the laws and regulations. The original penalty called for GM to pay ICE $1.5 million payments for five years, $2 million to the Department of State, $2 million to ICE, and a sum of $1.5 million per year to the Department for a total of $15 million in penalties.
Any violation of the agreement would result in an additional civil penalty of $10 million. The settlement was agreed upon on November 1, 2004. GM had sold competing foreign companies of the United States, Light Armored Vehicles that were controlled on the Munitions list for the United States. GM manufactured and delivered the unauthorized military vehicles to US competitors without express approval from the state Department. The actions of GM were out of line with anti-competitive laws, causing the company to commit a grievous error in bypassing the traditional request to proceed with approval.
7. GM sued for ERISA violations
Settlement amount: $37.5 million
A lawsuit was filed against General Motors in an Eastern District of Michigan court in a civil matter alleging the company committed benefit plan administration violations in the Pyrka et al v. General Motors Corporation et al case. The class-action litigation was filed in May 2005, alleging GM invested assets in a manner that breached their fiduciary duties to participants of the retirement plan by making unwise investments.
The motion was filed to enter the process of settlement to resolve the case in January of 2008. GM’s actions, if proven would result in ERISA violations regarding pension plans. Rather than continue to fight in court, GM offered the plaintiffs a settlement amount of $37.5 million. The motion was accepted on January 15, 2008, and the case was resolved on June 5, 2008, receiving final approval from the courts. the Pyrka class action lawsuit was one of the largest settlements GM settled for allegations of misconduct and mishandling of investment funds for pension accounts for GM workers.
6. GM held accountable for clean air violations
Penalty: $45 million
The Department of Justice confirms that General Motors was accused of selling 470,000 Cadillacs with illegal devices installed since 1991, that failed to meet requirements for emissions regulations. The devices GM installed allowed carbon monoxide emissions that exceeded the legal limit threefold. Investigators from the Environmental protection Agency discovered that the carbon controls were not up to the legal standards, resulting in violations of the Clean Air Act for car and truck emissions. The case is with the US Department of justice.
It’s estimated that over 100,000 tons of excess carbon monoxide pollution is in the environment because of the violations. This puts the general public at risk for health issues as a result of the excessive toxic emissions. However, they issue a judicial recall of 470,000 Cadillacs, making history the first ruling of its kind in the history of the courts. GM was ordered to pay a fine of $11 million, $25 million in a retrofit of offending vehicles and recall, and $8.75 million to be spent on projects to offset emissions for the offending vehicles.
5. GM sued for faulty ignition switches and settles in 2017
Settlement amount: $120 million
The Attorneys General in multistate litigation against General Motors announced a settlement with plaintiffs in a class-action suit that claimed GM sold consumers vehicles that were known to have defective ignition switches installed. The case was ongoing since 2014 when ignition switch failures cause the death of several people and injury to 124 claimants. It was one of the largest class-action litigations, with the attorneys general from 49 states representing the victims.
Investigations turned up evidence that suggested General Motors staff knew about the defects in the components since 2012 but failed to inform consumers about the deadly flaw until 2014. Their deception misled consumers into believing they were driving reliable and trustworthy vehicles. Several of GMs models had the part installed. However, the Attorney General referred to GMs failure to inform customers of the risk to their safety and well-being as a “blatant violation of the law, which threatened the lives of millions of Americans.” The problems with the ignition switch prevented airbags from safely deploying in the event of an automobile collision. However, the court also ordered General Motors to issue applicable recalls and to perform repairs on faulty parts in all vehicles with the part installed.
4. GM Settles penalties and legal fees in the faulty ignition switch litigation in 2020
Settlement amount: $154.5 million
Law 360 reports that drivers filed a lawsuit against General Motors in a southern district court of New York, alleging safety-related offenses. The plaintiffs claim the financial damage is from the faulty ignition switch in their GM vehicles that’s defective. The allegations were product safety violations and lost value of their automobiles because of faulty equipment, through the fault of GM. The original case relating to the faulty ignition switches commenced in 2014 after GM admitted they knew the systems were defective as early as 2012. General Motors paid the plaintiffs $120 million in restitution with an additional $34.5 million for expenses and legal fees. However, the class-action lawsuit was a multi-district case. The settlement resolved the issue in civil court on December 18, 2020.
3. General Motors Corporation securities fraud lawsuit
Settlement amount: $277 million
Labaton Sucharow reports that General Motors was the defendant accused of committing securities fraud in litigation filed in the Fall of s2005. Deka International SA and Deka Investment, both European pension funds, were the plaintiffs that alleged GM and its officers committed fraud by overstating the company’s income to investors. However, the overstatement estimated the income by several billions of dollars.
Representatives for the injured parties claimed that GM continued to provide inflated income statements for “six years.” Evidence of misclassifying cash flow as operating funds versus investment cash flow and other manipulations in the books made it appear that the cash flow was billions of dollars more than it was. Investors agreed to a settlement of $277 million from GM and $26 million from Deloitte to settle the case. However, the case gained approval by the courts on January 6, 2009, effectively resolving the legal liabilities for GM with the payment.
2. General Motors sued in New York State Teachers’ securities fraud litigation
Settlement amount: $300 million
GM faced a second securities fraud lawsuit. Ten years after the German pension funds sued GM, the New York State Teachers’ Retirement System filed a claim. This is in a class action lawsuit. Investors alleged that GM violated federal securities laws. They left out information about recall and product warranty liabilities.
Omitting information is a deceptive practice that placed GM in the hot seat for securities laws violations. The Court system established a deadline for claim filing for April 2, 2016. However, the ruling came after the New York State Teachers’ Retirement System agreed to a settlement of $300 million. This is to bring the action to a close. Final approval of the net settlement funds with the distribution of funds commencing in July 2019 and October 2021.
1. GM’s Nearly $1 Billion Ignition Switch Defect Settlement
Penalty amount: $900 million
General Motors agreed in a class-action lawsuit filed against the company by the National Highway Traffic Safety Administration. This is to resolve the legal issue with a nearly a billion-dollar settlement. The NHTSA investigated claims of GMs deceptive practices and referred their findings to the Justice Department. Fifteen deaths resulted from the issue, and numerous injuries occurred from the defect in General Motors vehicles. After the NHTSA investigations, sufficient evidence supported charges of criminal activities against GM leaders. The evidence suggested that GM knew about the defect in 2012. However, they failed to take any remedial actions or issue vehicle recalls until 2014.
Endurance Warranty confirms the lawsuit filed in the Southern District of New York, concluded in September 2015. The faulty switch interfered with the deployment of airbags in vehicle crashes. They misled consumers about the safety of GM vehicles because of their willful concealment of the defect. The settlement agreement included the stipulation of a $900 million forfeiture paid to the US government. However, an undisclosed amount of those funds goes to the victims and their families. As part of the settlement, General Motors admitted to its failure to disclose the deadly defect. They agreed to an independent monitor appointed by the courts to oversee the company’s reporting of safety issues. However, the courts deferred criminal prosecution contingent upon GM following all court orders on safety in the future.
