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California DA Targets GM with New Lawsuit

Maker accused of hiding defects, engaged in false, unfair advertising.

by on Jul.02, 2014

GM CEO Mary Barra is likely to have a number of legal battles on her hands over recalls.

The legal morass surrounding General Motors continues to get deeper despite this week’s announcement that it has established a special fund to compensate victims of crashes linked to a defective ignition switch.

In Orange County, in the heart of the intensely competitive Southern California new car market, the District Attorney’s office has brought a lawsuit against GM. The suit not only cites the defective ignition switch but also states GM has withheld information about nearly three dozen other defects. It also charges GM had engaged in unfair competition and false advertising in violation of California law when it failed to disclose those safety problems.

The Journal of Record!

The lawsuit was filed just weeks after a separate class action was initiated by a Seattle law firm claiming to represent owners of GM products who feel those vehicles have lost value because of GM’s recall blitz.

The new lawsuit, filed Friday in Orange County Superior Court, seeks civil penalties of between $2,500 and $5,000 for each violation, attorney’s fees and the costs of the suit, while also asking that GM be “permanently enjoined from committing any acts of unfair competition.”

(GM has targeted nearly every vehicle it makes for recall this year. Click Here for the story.)

The civil suit alleges GM failed to disclose and worked to conceal at least 35 vehicle defects, including faulty ignition switches and defective power steering and wiring harnesses, among others. It claims jurisdiction in Orange County because GM conducted business and affected consumers in the county and other parts of California.

“We must encourage all businesses to be fair and live up to safety standards, and must not allow those engaging in unfair practices to punish those businesses that don’t cut corners by compromising safety,” Orange County DA Tony Rackauckas said in a statement announcing the lawsuit. It seeks an order stopping GM from engaging in unfair business practices, restitution for California consumers and civil penalties.

“We have a lot of GM cars here in Orange County, a lot of people have these cars that are defective and it doesn’t seem to be anybody else is really having much of an effect on it,” he added. “I’m sworn to protect the public in this county and so that’s what I think I should do.”

(GM’s recall blitz helps US auto industry set new annual recall record – in just six months. Click Here for more.)

News of the suit came after GM revealed plan to pay between $20,000 and more than $5 million to those hurt or killed in crashes involving the 2.6 million vehicles recalled due to the ignition switch problem.

GM spokesman James Cain acknowledged that various parties have filed lawsuits against the company.

“We’ll respond to them all appropriately,” he said. “But our focus now is launching the compensation program for victims of ignition switch accidents and fixing vehicles that remain on the road,” he told the Los Angeles Times.

The DA’s suit accuses the company of knowing about defects in millions of cars since 2009. “But, to protect its profits and to avoid remediation costs and a public relations nightmare, GM concealed the defects and their sometimes tragic consequences,” the suit says.

(Click Here to find out more about GM’s new victims’ compensation fund.)

The Seattle firm Hagens Berman Sobol Shapiro, which already has filed a class action on behalf of GM vehicle owners, is working with the Orange County district attorney on the latest lawsuit. Rob Carey, a partner at Hagens Berman, said that while class-action suits are typically focused on consumers, the DA’s case will focus on “addressing the conduct that has occurred and making sure that conduct is penalized and deterred … so it doesn’t happen again.”

Last year, the DA’s office settled a $16 million suit it had filed against Toyota Motor Corp. it related to that company’s recall of vehicles at risk for unintended acceleration. Separately, Toyota settled another suit filed by Hagens Berman on behalf of owners who also claimed lost value with their vehicles.

(Paul A. Eisenstein contributed to this report.)

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3 Responses to “California DA Targets GM with New Lawsuit”

  1. Jorge says:

    Everybody wants to profit from GM’s ignition switch issues. It’s a dash to see who can steal the most cash from GM. SOS, DD.

  2. Leonard says:

    Nothing like a recall to get the money grabbing
    leeches out in force.

  3. Jorge says:

    It’s a sad, sad state of affairs in the U.S., IMO.