GM could face ignition switch punitive damages

US judge on Monday said that General Motors Co may be liable for punitive damages in lawsuits it faces over an ignition switch problem that prompted the recall of millions of vehicles a year ago.

However, Gerber said that the company’s liability for punitive damages would be generally limited to its conduct or knowledge after its 2009 bankruptcy, or that which its employees “inherited” from the pre-bankruptcy predecessor.

While allegations based exclusively on the knowledge or conduct of Old GM will be barred, he added, New GM may also be liable for employee knowledge or documents it “inherited” from Old GM.

Bob Hilliard, attorney for the claimants, said he was pleased but not surprised by the ruling.

“The Judge considered GM’s arguments that it should not have to worry about punitive damages and disagreed”.

The ruling has the potential to open GM to large jury verdicts, because the company has admitted knowing about the faulty switches for a decade or more but failed to recall the cars until February of 2014. The defect has been linked to more than 100 deaths and more than 200 injuries.

In September, GM announced that it had reached agreements to settle about 1,380 injury and death cases for an undisclosed sum.

After initially denying the scandal, GM eventually recalled almost 30 million cars that could have the defective switches.

GM, as part of the bankruptcy restructuring, agreed to assume responsibility for future product-liability cases involving older vehicles, or those under the purview of Old GM. GM has in certain instances invoked this so-called bankruptcy shield to limit legal exposure on account of the defective switch, though the company waived it for victims applying to its compensation fund.

“A jury now will be allowed to hear evidence of GM’s cover-up and determine what monetary punishment to assess for so many needless deaths and injuries”, Hilliard said. Plaintiffs, he ruled, can seek punitive damages if they can show that “New GM” knew of the faulty switches but covered it up.

Earlier this year, Gerber ruled that his bankruptcy ruling in 2009 shielded GM from lawsuits stemming from crashes before New GM emerged from bankruptcy protection.

GM said the decision is not a victory for plaintiffs.

U.S. Bankruptcy Judge Robert Gerber said in a court filing Monday in Manhattan that the sale didn’t clearly make new GM responsible. The company still faces hundreds of death and injury cases that have yet to be settled.