Class-Action Lawsuit Brings More Trouble to GM

The woes of General Motors, one of the iconic “Big Three” U.S. automakers, continue. Following the announced recent recall of 1.6 million cars due to ignition problems, Reuters reported on Friday that the company was slapped with a major class-action lawsuit pertaining to the alleged flaws.

According to the suit, which was filed in a Texas federal court, GM had been aware of the problem since 2001, yet created an “unreasonably dangerous” situation for its customers. In addition a series of fatal crashes associated with the ignition flaws, the suit also references the alleged loss of resale value due to the problems and to the subsequent recall. According to Reuters, the lawsuit stated that "GM's mishandling of the ignition switch defect ... has adversely affected the company's reputation as a manufacturer of safe, reliable vehicles with high resale value."

Greg Martin, a GM spokesman, declined to comment on the lawsuit, but confirmed that the company had apologized for the handling of the recalls, and for the circumstances that led to it. The company has acknowledged that trouble with the ignition system became apparent as early as 2001, and gave dealers guidelines on how to deal with the problem, but no further action was taken.

The nature of the defect was that when the ignition switch was jostled, a key could inadvertently disable the engine and the airbags, even when the car was traveling at high speeds.

Reuters reports that, according to Martin, GM has “offered owners of recalled vehicles $500 toward the purchase of a new GM vehicle, a factor that could mitigate the company's liability.