A General Motors Co. (GM) lawyer demanded the widow of a car-crash victim drop a plan to seek punitive damages from the auto maker, even though the company’s government-brokered overhaul doesn’t bar plaintiffs from going after such legal penalties.
The GM lawyer in a March 3 email told a lawyer representing the widow of a man killed in a GM-made U-Haul truck that GM couldn’t be sued for punitive damages in the case. Other lawyers say that assertion stretches beyond what they believe is GM’s legal exposure in product-liability cases. Even so, after receiving the email, the widow’s lawyer abandoned plans to make a claim for punitive damages against GM.
Punitive damages are intended to punish corporations and others for reckless or intentional wrongdoing, such as selling products despite knowledge of their dangerous defects. Their goal is to deter future wrongdoing by the defendant or others poised to engage in misconduct.
The dispute highlights questions now arising over how much legal protection GM and Chrysler Group LLC have in certain product liability cases following 2009 government rescues that exceeded $70 billion. A bankruptcy judge allowed Chrysler to immunize itself from new punitive-damage claims arising from alleged manufacturing defects in vehicles sold before its restructuring. Chrysler’s immunity was the subject of a Page One article in The Wall Street Journal on April 5.
The skirmish in the widow’s case raises complex legal issues involving federal bankruptcy rules that sometimes allow companies to discard product liability or other risks, overruling state laws that give consumers rights to sue for damages.
GM received a $50 billion government rescue at the height of the financial crisis and then sold its best assets to the U.S. Treasury in a 2009 bankruptcy sale–making it a new auto maker legally divorced from the company that manufactured the U-Haul and millions of other vehicles. The newly formed GM posted a record $7.6 billion profit last year.
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