GM Will Pay $900 Million To Settle Defective Ignition Switch Claims

CHICAGO — (Mealey’s) General Motors LLC and the U.S. Department of Justice (DOJ) on Sept. 17 announced that they have reached a $900 million settlement of claims against the automaker pertaining to the company’s misleading of the government and the public with regard to faulty ignition switches in some of its vehicles that led to 124 deaths (United States of America v. $900,000,000 in United States Currency, No. 15-07342, S.D. N.Y.). 

(Verified complaint / settlement available.  Document #77-150923-013C.) 

Settlement

The U.S. attorney for the Southern District of New York filed a verified complaint in the U.S. District Court for the Southern District of New York today stating that General Motors Co. (GM) had entered into a deferred prosecution agreement with the United States in which it agreed to pay $900 million for the company’s concealment and wire fraud related to the defective ignition switches. 

According to the document, GM consents to the filing of a two-count information charging it with “engaging in a scheme to conceal a deadly safety defect from its U.S. regulator” in violation of 18 U.S. Code Section 1343, as well as a scheme to commit wire fraud. 

GM admits that it failed to disclose to its U.S. regulator and the public a potentially lethal safety defect that caused air-bag deployment in some of its vehicles. 

Civil Action

The company issued a statement on its website stating that it also settled civil actions related to defective ignition switches for $575 million and it has reached a memorandum of understanding potentially covering 1,380 individual death and personal injury claims.  Meanwhile, the six bellwether trials are not part of the memorandum of understanding and still remain on the docket, according to a letter sent to the District Court by attorneys for GM. 

Those claims pertain to lawsuits pending in the multidistrict litigation in the U.S. District Court for the Southern District of New York (In re:  General Motors LLC Ignition Switch Litigation, No. 14-md-02543, S.D. N.Y.). 

Under the deferred prosecution agreement filed today, GM agrees to continue its cooperation with various government agencies that have been investigating the case for three years and agrees to retain an independent monitor selected by the U.S. attorney general, which will review and assess the company’s policies, practices and procedures regarding compliance with federal regulations. 

The DOJ is represented by U.S. Attorney for the Southern District of New York Preet Bharara and Assistant U.S. Attorneys Jason H. Cowley and Alexander J. Wilson in New York.  GM is represented by Richard C. Godfrey, Mike Brock, Wendy Bloom and Andrew B. Bloomer of Kirkland & Ellis in New York.  The claimants are represented by Robert C. Hilliard of Hilliard Munoz Gonzales in Corpus Christi, Texas, and Thomas J. Henry of Corpus Christi.

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