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Eric T. Chaffin
Eric T. Chaffin
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Will GM Pay for Financial Losses Based on Perceived Value of Vehicles?

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General Motors (GM) continues to face an increasing amount of litigation concerning the ignition switch defect that led to the recall of millions of vehicles. Most recently, according to Bloomberg, the company was hit with a $10 billion class action lawsuit filed in the Southern District of New York on behalf of car owners who may suffer financial losses because of the decreased value of recalled vehicles.

At last count, 29 deaths have been linked to the ignition switch problem. That number may continue to rise as GM reviews applications to their settlement fund. Applications will be accepted until December 31, 2014.

Plaintiffs Seek to Recover Losses

So far this year, GM has recalled over 2.2 million vehicles with potentially faulty ignition switches. The malfunction occurs when the switch inadvertently turns to the “off” position, making it difficult to steer and potentially causing airbag failure during an accident. Though GM is in the process of contacting customers to repair the defect, the mishandling of the defect and the increasing litigation have cast a dark shadow on the quality of these vehicles.

In this class action lawsuit, plaintiffs claim that even the fixes don’t address the safety risks that the defect poses. Filed with 68 named plaintiffs from 40 different states, the case represents car owners who bought or leased one of GM’s recalled vehicles between July 2009 and July 2014 “and still have it, or sold it after mid-February when the recalls started, or had an accident that destroyed it after that date,” according to Bloomberg.

These car owners will most likely lose money when trying to trade in or resell their vehicles, plaintiffs claim, specifically because of the way GM handled the ignition switch defect. Aware of the problem since at least 2004, they failed to implement a recall until February 2014. Since then, evidence revealed in personal injury lawsuits has shown that the company had a culture of putting band-aid fixes on serious safety issues, as well as a tendency to ignore or hide the problem.

Plaintiffs wish to recover damages for these losses. GM, in turn, has promised to defend the quality and resale value of its vehicles.

Plaintiffs with Injuries More Likely to be Compensated

Have GM vehicles lost value on the market? The question is debatable. According to The Detroit Bureau, Kelley Blue Book, the Black Book, and ALG don’t show any decline in the value of GM cars or trucks. Black Book editor Ricky Beggs told the Bureau there had been no effect of residuals from the recalls. Meanwhile, GM’s sales rose 12.6 percent for the first five months of 2014.

Though it remains to be seen if plaintiffs will recover damages for financial losses, several of those who suffered personal injuries have already been compensated through GM’s settlement fund, and more will likely receive payments before the year is out. Plaintiffs who can show their injuries were related to the ignition switch defect stand a good chance of recovering at least some of what they deserve.