A New York federal court has reduced the scope of the General Motors ignition switch multidistrict litigation. In his opinion analyzing consumer protection laws in eight different states, District Court Judge Jesse Furman dismissed the devaluation claims, claims by Plaintiffs who bought their cars before GM’s 2009 bankruptcy or who claimed lost value in sales before the 2014 recall announcement, and the majority of the state law unjust enrichment claims. However, Judge Furman kept most of the Plaintiffs’ other state law claims and the claims for damages from time lost to repair intact. Judge Furman wrote:
In sum, many claims asserted by the named plaintiffs in this motion survive, but the court yet again rejects plaintiffs’ novel theory of damages – the brand devaluation theory – as impermissibly repleading claims previously dismissed with prejudice and, in any event, as insufficient as a matter of law.
In December GM moved to dismiss 64 named Plaintiffs from the states of Alabama, Illinois, Massachusetts, Michigan, New York, Pennsylvania, Texas and Wisconsin. GM said that six of those states – Alabama, Michigan, New York, Pennsylvania, Texas and Wisconsin – don’t recognize economic loss claims from an alleged defect that never manifested.
Judge Furman had dismissed the “brand devaluation” claims in July 2015 without prejudice, calling the damages theory “unprecedented and unsound.” In his latest opinion, Judge Furman said the Plaintiffs’ revised complaint had not corrected the defects, saying they had provided no reason why recovery should be limited to them and not all owners of all GM models. Judge Furman wrote:
Additionally, whether the claims are asserted on behalf of all GM car owners or some subset of that universe, the claims suffer from the more fundamental problems identified in the court’s earlier opinion – namely, that existing law does not provide a guarantee of both “the product’s resale value and the brand’s continuing good name.”
Judge Furman disagreed with GM on the lost time damages, saying the law in some states would support recovery and that a categorical dismissal was not justified, but he agreed the reorganized GM was not responsible for sales prior to 2009 and that the Plaintiffs could not blame GM for diminished resale value for sales before the defect became public knowledge. Judge Furman wrote:
That said, for reasons not discussed by the parties, it does not necessarily follow that the claims of all such plaintiffs must be dismissed in their entirety. “In theory, a plaintiff who purchased her car after the sale order, but sold it before the recall was announced, could still plead and prove damages in the form of out-of-pocket expenses and lost time.
Judge Furman went over each named Plaintiff’s state law claims in his order. Of the eight states, Judge Furman found only Illinois and Pennsylvania law supported the Plaintiffs’ unjust enrichment claims. In the case of Pennsylvania, only one of the claims of the two Plaintiffs from that state survived. In the other cases the claims were barred by the existence of a contract, the existence of other valid claims or a combination of both.
Some other claims involving either the class as a whole or for individual named Plaintiffs were also dismissed. However, the majority of the state law claims were allowed. The MDL is In re: General Motors LLC Ignition Switch Litigation, (case number 1:14-md-02543) in the U.S. District Court for the Southern District of New York.
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