General Motors reached a settlement in the third of a series of critical trials over an ignition-switch defect that could make cars stall and lose power while driving.
Terms of the deal were not disclosed, but overall GM has spent more than $2 billion to pay government imposed fines, legal fees and individual settlements since the scandal broke into public view more than two years ago.
In a letter to U.S. District Judge Jesse Furman, GM’s lawyers, Richard Godfrey and Andrew Bloomer of Kirkland & Ellis LLP, said Thursday that plaintiff Nadia Yingling entered into a confidential term sheet and a final settlement is expected to follow soon.
But the fact the plaintiff agreed to a settlement is viewed by observers as a potential setback for remaining plaintiffs in the multidistrict litigation new pending in U.S. District Court in the Southern District of Manhattan.
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The settlement came after GM emerged victorious in two other cases connected to the litigation. The first case fell apart when evidence of misconduct by the plaintiff emerged and in the second a jury handed GM a victory after concluding the case simply wasn’t strong enough to merit a verdict against the automaker.
A total of six bellwether cases were scheduled for trial this year and so far GM has escaped from the litigation with little of no serious damage.
However, the ignition-switch defect has been linked to at least 124 deaths and GM Chief Executive Officer Mary Barra described the ignition-switch as a serious blow to the company’s reputation.
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As part of the resolution of the ignition-switch defect GM scandal, GM established a settlement process that allowed hundreds of claimants to resolve their claims out of court. GM hired Kenneth Feinberg to administer the claims process.
Barra also has used the scandal, which has led to the dismissal of 14 GM employees, to push through a re-organzation of GM’s engineering group and a wholesale change in the company’s protocols for handling recall and safety-related issues.
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The ignition-switch scandal, which put enormous pressure on GM and has been tremendously expensive, has been eclipsed in large measure by the scandal surrounding Takata airbags, which has involved nearly every automaker in world outside China and India as well as the Volkswagen emission-cheating scandal, which could ultimately cost far more for the VW to resolve.