August 7, 2019 / 3:56 PM / 3 months ago

GM wins victory in ignition switch defect litigation

NEW YORK, Aug 7 (Reuters) - General Motors Co persuaded the federal judge who oversees nationwide litigation over defective ignition switches to narrow claims by owners who said their vehicles lost value because of the defect, which has been linked to 124 deaths.

In a decision late on Tuesday afternoon, U.S. District Judge Jesse Furman said owners in three “bellwether” states — California, Missouri and Texas — could not seek damages based on the difference in value between what they paid for their defective vehicles and what the vehicles were really worth.

He said the owners’ failure to show the fair market value of their vehicles, despite testimony from an expert witness, created an “absence of evidence on an essential element” of their claims, making it impossible for a jury to assess damages.

The Manhattan-based judge also said that while damages could be measured by costs to repair defective vehicles, they could end up being zero if GM footed the bill.

Furman’s 44-page decision is a defeat for owners who said they suffered economic losses from buying vehicles they thought were defect-free, only to see the ignition switch problem hurt GM’s brand, reputation and ultimately resale values.

The decision could also affect other claims, and Furman said its substance made it “apparent” that a proposed Jan. 13, 2020 trial on claims from the bellwether states would not happen. He delayed the trial indefinitely.

Lawyers for the owners did not immediately respond on Wednesday to requests for comment. A GM spokesman had no immediate comment.

GM has recalled more than 2.6 million vehicles since 2014 over ignition switches that could cause engines to stall and prevent airbags from deploying.

The Detroit-based automaker has paid more than $2.6 billion in penalties and settlements, including $900 million to settle a U.S. Department of Justice criminal case.

That case was dismissed last September after GM honored its obligations under a three-year deferred prosecution agreement.

The nationwide litigation before Furman also covered well over 3,000 personal injury and wrongful death claims. A large majority have been resolved or dismissed.

The case is In re: General Motors LLC Ignition Switch Litigation, U.S. District Court, Southern District of New York, No. 14-md-02543. (Reporting by Jonathan Stempel in New York; Editing by Bernadette Baum)

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