As part of the ongoing ignition switch litigation against General Motors (GM), the automaker has contended that it is not responsible for punitive damages related to the conduct of Old GM. Specifically, New GM has argued that as part of its purchase agreement related to the bankruptcy of Old GM, it did not agree to be responsible for punitive damages related to the conduct of Old GM. In a recent order by the United States Bankruptcy Court for the Southern District of New York, Judge Robert E. Gerber ruled that New GM could be responsible for punitive damages under certain conditions.
In the Bankruptcy Court’s Nov. 9, 2015, Order, the judge ruled that the Sale Order did not make New GM responsible for punitive damages related to Old GM’s conduct. However, punitive damages were available against New GM related to its own knowledge and conduct. The Court also discussed the imputation of Old GM’s knowledge to New GM, stating that the knowledge of Old GM personnel hired by New GM could be imputed to the new company. Knowledge of Old GM gained by New GM employees, formerly of Old GM, and the possession of Old GM’s records could be enough to impute knowledge to New GM. If proven, it could support punitive damages against New GM.
The judge also ruled that acts by New GM personnel or knowledge of New GM personnel, including any knowledge that the employees may have acquired while previously working at Old GM, may be imputed to New GM for purposes of supporting a claim for punitive damages.
The Bankruptcy Court Order goes on to state that as a matter of non-bankruptcy law, knowledge and information may be imputed to New GM as a consequence of documents in the company’s files. Such documents may be utilized as a predicate for the required knowledge, even though they came into existence before New GM purchased Old GM. These principles apply to any cases against New General Motors. The Bankruptcy Court also addressed those claims related to the ignition switch product liability claims and economic loss claims involving Old GM vehicles where punitive damages have been sought against New GM.
The judge ruled that for those vehicles, punitive damages could only be based on New GM’s knowledge or conduct as described above. No punitive damage claims may be based solely on Old GM’s knowledge or conduct. However, punitive damages claims may be based on Old GM’s knowledge or conduct that is “inherited” by New GM employees based on their tenure at Old GM or documents inherited from Old GM.
This new ruling by the Bankruptcy Court provides much-needed guidance on the issue of punitive damages against New GM, as it relates to those product liability claims associated with vehicles manufactured by Old GM and involving wrecks that occurred after the close of bankruptcy in June 2009. This new ruling makes it clear that punitive damages can be sought from New GM for vehicles manufactured by Old GM, under specific conditions. If you need more information on this matter, contact Ben Baker, a lawyer in our Personal Injury and Product Liability Section at 800-898-2034 or by email at Ben.Baker@beasleyallen.com.
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