General Motors Cannot Keep Ignition Switch Lawsuit Out of California State CourtDec 4, 2014
A federal judge in New York has remanded a lawsuit against General Motors over its faulty ignition switches back to California state court. GM had sought to keep the case in federal multidistrict litigation, claiming the case is subject to bankruptcy proceedings involving its predecessor, Old GM.
U.S. District Judge Jesse M. Furman granted the Orange County district attorney’s motion to remand. Judge Furman said the civil penalties available under California’s Unfair Competition Law and False Advertising Law were punitive and meant to ensure compliance, Law360 reports. “The monetary remedies available to plaintiff through the UCL and FAL are thus means of reaching the ultimate goal of such actions — deterring fraud and unfair trade practices by California corporations,” Judge Furman wrote.
California filed its suit in state court in June, and GM removed it to California federal court in August. The U.S. Judicial Panel on Multidistrict Litigation transferred the case to the MDL on Sept. 25, Law360 reports. In August, GM told a New York bankruptcy court that California’s suit involves liabilities against GM’s bankruptcy estate, not just against New GM, and this warranted the transfer to the MDL.
General Motors has been under intense scrutiny over its handling of the ignition switch problem, with Congressional, criminal, and safety regulatory investigations, as well as numerous lawsuits over deaths, injuries, and property damage. In cars equipped with the faulty switch, the ignition can unexpectedly move from the “run” position, turning off the engine and disabling air bags, power steering, and power brakes, the New York Times has reported. It took GM more than a decade to address the problem; the company did not recall affected cars until early this year.
In the bankruptcy proceeding, the “new” GM was absolved of any liabilities of the old company. Those liabilities come under the oversight of the New York bankruptcy court. GM argued that the California suit must stay in the New York Court because it involves liabilities in that category. In his ruling, Judge Furman said the case presented no federal questions because it was brought solely under state law, and he remanded the suit to Orange County Superior Court.