By Linda Sandler Apr 16, 2014 3:41 PM ET
General Motors Co. (GM)’s move to freeze ignition-defect lawsuits in California and Texas has solid legal precedent behind it and could help slash customer demands for compensation by billions of dollars.
GM asked federal judges in both states last week to delay litigation over the defect in several of its models until a U.S. bankruptcy judge in New York rules whether some accident victims’ claims can be brought without violating a sale order in its 2009 reorganization.
The aggressive legal strategy runs the risk of further damaging GM’s image with lawmakers and the public. Offsetting that impact is GM’s customer-focused hiring of lawyer Kenneth Feinberg to advise on how to compensate people who had accidents in recalled Cobalts, Saturns and other GM models. Feinberg ran funds for victims of the Sept. 11 terror attacks and the BP Plc oil spill in the Gulf of Mexico.
“They’re running on parallel tracks but the trains are going to different stations,” said Chip Bowles, a bankruptcy lawyer at Bingham Greenebaum Doll LLP, who called the freeze maneuver “clever.”
http://www.bloomberg.com/news/2014-...its-may-cut-customer-payouts-by-billions.html
General Motors Co. (GM)’s move to freeze ignition-defect lawsuits in California and Texas has solid legal precedent behind it and could help slash customer demands for compensation by billions of dollars.
GM asked federal judges in both states last week to delay litigation over the defect in several of its models until a U.S. bankruptcy judge in New York rules whether some accident victims’ claims can be brought without violating a sale order in its 2009 reorganization.
The aggressive legal strategy runs the risk of further damaging GM’s image with lawmakers and the public. Offsetting that impact is GM’s customer-focused hiring of lawyer Kenneth Feinberg to advise on how to compensate people who had accidents in recalled Cobalts, Saturns and other GM models. Feinberg ran funds for victims of the Sept. 11 terror attacks and the BP Plc oil spill in the Gulf of Mexico.
“They’re running on parallel tracks but the trains are going to different stations,” said Chip Bowles, a bankruptcy lawyer at Bingham Greenebaum Doll LLP, who called the freeze maneuver “clever.”
http://www.bloomberg.com/news/2014-...its-may-cut-customer-payouts-by-billions.html