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Judge tosses GM settlement on ignition switch




FILE PHOTO - The GM logo is seen at the General Motors Warren Transmission Operations Plant in Warren, Michigan October 26, 2015. REUTERS/Rebecca Cook/File PhotoBy Tina Bellon
NEW YORK (Reuters) - A federal bankruptcy judge on Thursday said a settlement agreement that would require General Motors Co (GM.N) to pay $1 billion (£720.5 million) in stock to car owners suing the company over faulty ignition switches was not enforceable.
Judge Martin Glenn of the U.S. Bankruptcy Court in New York said the agreement that car owners had reached with a trust that holds many GM liabilities from before its 2009 bankruptcy was not valid without signatures.
The claims stem from GM's 2014 recall of 2.6 million vehicles with defective ignition switches, including one linked to 124 deaths.
Lawyers for the car owners and the trust had agreed to a deal in August, but never signed the agreement. The trust walked away several days later, instead accepting GM's offer to help pay for the trust's defence against the car owners' claims.
Glenn blasted the lawyers of the trust in his Thursday order, saying their "dishonesty, or bad faith, was not lost" on him. But he said that despite the trust's last-minute turnabout, applicable law did not allow the enforcement of an unexecuted agreement.
Steve Berman, one of the lawyers representing the car owners, in a statement said his side was disappointed but saw a victory in the ruling nevertheless.
"Judge Glenn clearly thought the trustee and (law firm) Gibson Dunn acted in bad faith and we see therefore they both must be removed as trustee," Berman said, adding that plaintiffs would take up settlement talks with a new trustee.
GM declined to comment. A lawyer for the trust did not immediately respond to a request for comment.
Under the deal the plaintiffs lawyers worked out, GM would have been required to contribute $1 billion in stock to compensate car owners.
The settlement called for the trust to accept $10 billion in claims to resolve about 11.9 million allegations over economic loss and between 400 and 500 personal injury and wrongful death claims.
About 2.4 million claims, involving vehicles sold after GM's bankruptcy, would have remained pending in another court.
GM has already paid roughly $2.5 billion to settle ignition switch-related claims, including $900 million to settle a criminal probe by the U.S. Justice Department.

 

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Here's a Matt Farah review of the Cobalt. The interesting part is when he demonstrates the faulty ignition at 1:00.


From time to time, I still consider selling the Cruze and getting another Cobalt. This time though, I'd get the SS S/C the way I should have done it the first time. I'll just need to avoid red-light runners and hail storms then hopefully I could actually enjoy the car in a functional condition....
 

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2014 Cruze Diesel, 2007 Cobalt, 1981 Camaro Z28, 2017 Volt
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This part of the whole saga just happened, though.

I can't even count how many emails I have to come in and get the part fixed...trust me, if it was going to turn off on its own, it would have by now. With the amount of keys I used to keep on my carabiner, on the ignition key ring, the car being lowered, seeing multiple autocrosses, and a couple minor accidents...It's an '07, so it's quite likely it has the new part anyway...why would I want to change what isn't broke.
 

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How many people are pulling on their key chains like that in order to cause the problem? I mean, it looked to me like it took a pretty good tug to get the response they were looking for. You could probably get car makers to recall the wheel lugs if you constantly over-tighten the lug nuts and strip out the lugs and/or nuts too.

On a side note ... GM is trying to recall the "switchblade" key for my G8, according to the recall: "The driver's knee could inadvertently hit the key, causing the key to rotate from run to off ... and blah blah blah." I would LOVE to see how on earth someone was able to get their knee under the steering wheel in such a way as to come down from above on the edge of the key closest to the driver in order to rotate the key to the off position! My dirty mind leads me to believe there was more than driving going on whenever such an incident happened, and that someone's hand pulled on the key, causing the unintentional rotation. THAT seems more believable to me. GM has offered to let me keep my key as long as I sign a release of liability should that situation ever happen to my vehicle ... and I'm GLADLY keeping my switchblade key! Especially since there are hundreds of thousands of other switchblade keys out there in cars and none that I can remember have ever been recalled for such a ridiculous claim. I'd personally have to see it happen before I'd give up my key, and maybe not even then!
 

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2014 Cruze Diesel, 2007 Cobalt, 1981 Camaro Z28, 2017 Volt
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Yeah, the only people having problems with the key turning off were drunks, driving off the road surface, at high speeds, into trees - a crash they'd have not survived with an airbag.

And the switchblade keys was dumb, yes...my buddy had to get the "new" one in his 5th gen V6 Camaro DD he had at the time - he tried to get it to fail prior, and he basically had to knee the ever living **** out of the key, while moving his seat **** near into the dash. For all intents and purposes, it wasn't possible.

There's an easy mod to put the key right back into the fob, by the way.
 

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What a dumb company they are. I took my CTS-V in for the recall. They glued a plug into the oval ring slot of my keys. The plug has just one small centered hole for the key ring for less leverage on the lock. I ordered a key 2 months later, and it had the oval slot like the recalled keys. I hate big keychains, so it'll never be an issue for me.
 

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I know several people with massive key chains. Sometimes I steal them and start quizzing them on what key does what. They usually fail at about 90% of them.
 
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