GM Pulls Bid to Toss Case; Conflict With Criminal Deal

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By Martina Barash

Oct. 7 — General Motors Co.'s deferred-prosecution settlement with the Department of Justice over allegedly faulty ignition switches is starting to have an effect in product liability litigation against it (In re General Motors LLC Ignition Switch Litig. (Scheuer v. General Motors LLC), S.D.N.Y., No. 14-MD-2543, motion in limine filed 9/29/15).

Plaintiff Robert Scheuer recently forced the automaker to withdraw a spoliation motion seeking dismissal of his personal-injury case, according to Scheuer's attorney, Bob Hilliard of Hilliard Munoz Gonzales LLP.

The motion contradicted facts GM stipulated to when settling the criminal probe, Hilliard and two other plaintiffs' attorneys said in an Oct. 5 letter to U.S. Attorney Preet Bharara of the Southern District of New York.

GM had agreed not to take positions contrary to its DOJ stipulations in other litigation, the letter said. GM may consequently have violated the Sept. 16 deferred-prosecution agreement, the attorneys told Bharara.

GM immediately withdrew its spoliation motion in the civil case, Hilliard said in an Oct. 7 statement.

“We withdrew the motion that afternoon,” GM spokesman Jim Cain told Bloomberg BNA Oct. 7. The company is “reviewing it for consistency” with the stipulated facts and will be refiling it, he said.

GM will be asking for the same relief, Cain said—dismissal as a sanction for spoliation.

“We take our obligations under the deferred-prosecution agreement very seriously,” Cain said.

Jim Margolin, a spokesman for the U.S. Attorney's office, said he couldn't comment on the development.

Air Bag Issue Related to Power Loss?

Scheuer alleged he was driving his 2003 Saturn Ion when it was struck by another vehicle, according to GM's motion. The Ion left the road and struck a tree. Scheuer alleged his air bag failed to deploy.

A computer module in the car—destroyed along with the vehicle—would have provided evidence about whether the air bag's performance was related to an alleged ignition-switch defect, GM argued in its motion.

The Sept. 29 motion sought dismissal of Scheuer's case as a sanction for failing to preserve the vehicle.

But Hilliard, along with Steve W. Berman of Hagens Berman Sobol Shapiro LLP and Elizabeth J. Cabraser of Lieff Cabraser Heimann & Bernstein LLP, told the U.S. Attorney's office that GM stipulated that the sensing and diagnostic module (SDM) in Saturn Ions couldn't record information after power loss.

“Thus, although GM stipulated in its Agreement with the government that the Ion’s SDM is incapable of recording power mode status, it now argues in pending civil litigation that the Ion’s SDM would indicate” that status, they said in the letter.

GM agreed to pay $900 million as part of a deferred-prosecution agreement under which the U.S. will monitor some of the automaker's safety policies and the company must cooperate with the government, federal prosecutors in New York said Sept. 17.

GM was charged with conspiracy and wire fraud, claims that will be dismissed in three years if GM complies with the accord.

Richard C. Godfrey and Andrew B. Bloomer of Kirkland & Ellis LLP submitted the motion on behalf of GM.

To contact the reporter on this story: Martina S. Barash in Washington at mbarash@bna.com

To contact the editor responsible for this story: Jeffrey D. Koelemay at jkoelemay@bna.com

GM's motion is available at http://www.bloomberglaw.com/public/document/Fleck_et_al_v_General_Motors_LLC_Docket_No_114cv08176_SDNY_Oct_10.