News

General Motors hit with $10B lawsuit

General Motors hit with $10B lawsuit

RECALLS:According to a complaint filed on Wednesday with the federal court in Riverside, California, GM hurt customers by concealing known defects and valuing cost-cutting over safety, leading to roughly 40 recalls covering more than 20 million vehicles this year alone. Photo: Reuters

By Jessica Dye and Jonathan Stempel

(Reuters) – A new lawsuit says General Motors Co should compensate millions of car and truck owners for lost resale value, potentially exceeding $10 billion, because a slew of recalls and a deadly delay in recalling cars with defective ignition switches has damaged its brand.

According to a complaint filed on Wednesday with the federal court in Riverside, California, GM hurt customers by concealing known defects and valuing cost-cutting over safety, leading to roughly 40 recalls covering more than 20 million vehicles this year alone.

It said this has caused a variety of late-model vehicles to lose roughly $500 to $2,600 in resale value.

Hagens Berman Sobol Shapiro, which filed the lawsuit, said the case could be worth more than $10 billion, and is the first seeking to force GM to pay a potential 15 million car and truck owners, not just those whose vehicles were recalled, for damage to its brand and reputation.

A GM spokesman, Greg Martin, declined to comment on the lawsuit. He said that many customers and analysts recognized the strength of the GM brand and that the market recognition has resulted in increased sales, transaction prices and residual values.

The lawsuit painted a “disturbing picture” of GM’s approach to safety, including how “in truly Orwellian fashion” the largest U.S. automaker would encourage employees to avoid words such as “bad” and “failed,” and use euphemisms such as “issue” or “condition” rather than “problem” when discussing defects.

“GM’s egregious and widely publicized conduct and the never-ending and piecemeal nature of GM’s recalls has so tarnished the affected vehicles that no reasonable consumer would have paid the price they did when the GM brand meant safety and success,” the complaint said.

The plaintiff is Anna Andrews, a resident of La Quinta, California. She said she would not have bought her used 2010 Buick LaCrosse, or would have paid less for it, had GM done a better job of disclosing vehicle defects.

Her lawsuit seeks class-action status for people who owned or leased GM vehicles sold between July 10, 2009, and April 1, 2014, or who later sold such vehicles at cut-rate prices.

Vehicles affected by the earlier ignition-switch recalls are not included in the lawsuit. Thirteen deaths have been linked to those vehicles.

The case is Andrews v. General Motors LLC, U.S. District Court, Central District of California, No. 14-01239.

Recent Headlines

in National

Manufacturing, construction data point to sturdy U.S. growth

An overall view of the assembly line where the BMW X4 is made at the BMW manufacturing plant in Spartanburg, South Carolina March 28, 2014.

U.S. manufacturing activity hit a nearly 3-1/2-year high last month, a sign the economy entered the third quarter on strong footing.

in Lifestyle

Pistachios may help reduce diabetes risk

Pistachios are seen after sorting at a processing factory in Rafsanjan, 1,000 kilometers southeast of Tehran September 23, 2008.

For people who may be headed for type 2 diabetes, regularly eating pistachios might help turn the tide.

in Lifestyle

Triathlons popular with middle-aged athletes

Runners and bikers compete in the 34th annual Escape from Alcatraz Triathlon in San Francisco, California June 1, 2014.

Triathlons, the swim-bike-run races of varying lengths, are scaling the bucket lists of many middle-aged athletes.

in Sports

Indianapolis Colts owner pleads guilty to intoxicated driving

James Irsay, owner of the NFL's Indianapolis Colts, is pictured in this undated handout photo obtained by Reuters March 17, 2014.

Billionaire James Irsay, owner of the Indianapolis Colts, was arrested in March after failing roadside field-sobriety tests.

in Sports

Phillies’ Cole Hamels, bullpen combine for no-hitter

Sep 1, 2014; Atlanta, GA, USA; Philadelphia Phillies starting pitcher Cole Hamels (35) throws the ball against the Atlanta Braves in the second inning at Turner Field.

Cole Hamels set up a combined no-hitter for the Philadelphia Phillies as they beat the Atlanta Braves 7-0 at Turner Field in Atlanta.