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GENERAL MOTORS: 121 Ignition Switch Recall Suits Pending

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General Motors Company said in its Form 10-K Report filed with the
Securities and Exchange Commission on February 7, 2017, for the
fiscal year ended December 31, 2016, that through January 27,
2017, the Company was aware of 100 putative class actions pending
against GM in various federal and state trial courts in the U.S.
and 21 putative class actions pending in various Provincial Courts
in Canada alleging that consumers who purchased or leased vehicles
manufactured by GM or General Motors Corporation had been
economically harmed by one or more of the recalls announced in
2014 and/or the underlying vehicle conditions associated with
those recalls (economic-loss cases).

The Company said, “In 2014 we announced various recalls relating
to safety, customer satisfaction and other matters. Those recalls
included recalls to repair ignition switches that could under
certain circumstances unintentionally move from the “run” position
to the “accessory” or “off” position with a corresponding loss of
power, which could in turn prevent airbags from deploying in the
event of a crash.”

“In general, these economic-loss cases seek recovery for purported
compensatory damages, such as alleged benefit-of-the-bargain
damages or damages related to alleged diminution in value of the
vehicles, as well as punitive damages, injunctive relief and other
relief. There are also two civil actions brought by state
governmental entities relating to the 2014 recalls that seek
injunctive relief as well as civil penalties and attorneys’ fees
for alleged violations of state laws.

“Through January 27, 2017 we were aware of 284 actions pending in
various federal and state trial courts in the U.S. and 14 actions
pending in various Provincial Courts in Canada alleging injury or
death as a result of defects that may be the subject of recalls
announced in 2014 (personal injury cases). In general, these
personal injury cases seek recovery for purported compensatory
damages, punitive damages and other relief.

“During 2016, the U.S. District Court for the Southern District of
New York (the district court) and a Texas court administering a
Texas state multidistrict litigation scheduled a combined eight
ignition-switch personal injury cases for bellwether trials. None
of those resulted in a finding of liability against GM; juries in
two cases returned verdicts in favor of GM, a court dismissed one
case on summary judgment, plaintiffs dismissed two cases with
prejudice before trial, and the parties settled the remaining
three cases. The district court has scheduled additional personal
injury bellwether trials for 2017 and 2018. Each bellwether trial
will be tried on its facts and the result of any subsequent
bellwether trial may be different from the earlier bellwether

“On July 15, 2016 the district court granted in part and denied in
part GM’s motion to dismiss plaintiffs’ complaint seeking damages
for alleged economic loss relating to the ignition switch and
other recalls by GM in 2014. The district court dismissed
plaintiffs’ claims brought under the Racketeer Influenced and
Corrupt Organization Act (RICO), and those brought by any
plaintiff whose vehicle was not allegedly defective when sold. The
district court also rejected Plaintiffs’ broadest theory of
damages — that plaintiffs could seek recovery for alleged
reduction in the value of their vehicles due to damage to GM’s
reputation and brand as a result of the ignition switch matter.
The district court also held that plaintiffs did not have a common
basis for their claims across all defects and models to proceed as
a single class, and that the remaining claims may have to proceed
individually or in subclasses of vehicles affected by a common
defect. Further, the district court held that the named plaintiffs
may assert claims only on behalf of owners of the same vehicle
models that they themselves purchased (or leased) or models with
sufficiently similar defects, and that it will not specify the
specific permissible class claims until the class-certification
stage. Finally, the district court granted GM’s motion to dismiss
with respect to certain state law claims but denied it as to other
state law claims. The court held that the viability of state law
claims will depend on each state’s specific laws and plaintiffs’
specific factual allegations. While the ruling addressed post-
bankruptcy claims, we believe the district court’s legal holdings
should apply to limit plaintiffs’ pre-bankruptcy claims similarly.
On September 15, 2016, Plaintiffs filed a Fourth Amended
Consolidated Complaint amending their economic-loss claims. On
December 7, 2016 GM moved to dismiss certain claims in that
complaint as well.

“Because many plaintiffs in the actions described in the above
paragraphs are suing over the conduct of General Motors
Corporation or vehicles manufactured by that entity for
liabilities not expressly assumed by GM, we moved to enforce the
terms of the July 2009 Sale Order and Injunction (2009 Sale Order)
issued by the United States Bankruptcy Court for the Southern
District of New York (Bankruptcy Court) to preclude claims from
being asserted against us for, among other things, personal
injuries based on pre-sale accidents, any economic-loss claims
based on acts or conduct of General Motors Corporation and claims
asserting successor liability for obligations owed by General
Motors Corporation (successor liability claims). On April 15, 2015
the Bankruptcy Court issued a decision precluding claims against
us based upon pre-sale accidents, claims based upon the acts or
conduct by General Motors Corporation and successor liability
claims, except for claims asserting liabilities that had been
expressly assumed by us in the July 2009 Sale Agreement, and
claims that could be asserted against us only if they were
otherwise viable and arose solely out of our own independent post-
closing acts and did not in any way rely on acts or conduct by
General Motors Corporation. Plaintiffs appealed the Bankruptcy
Court’s decision and we cross appealed with respect to certain
issues to preserve our rights.

“On July 13, 2016 a three judge panel of the United States Court
of Appeals for the Second Circuit (Second Circuit) issued a
decision and judgment affirming in part, reversing in part, and
vacating portions of the Bankruptcy Court’s April 15, 2015
decision and subsequent judgment. Among other things, the Second
Circuit held that the 2009 Sale Order could not be enforced to bar
claims against GM asserted by either plaintiffs who purchased used
vehicles after the sale closing or against purchasers who asserted
claims relating to the ignition switch defect, including pre-
closing personal injury claims and economic-loss claims. The
Second Circuit also vacated that portion of the Bankruptcy Court
judgment enforcing the 2009 Sale Order against plaintiffs with
pre-sale claims based on defects other than the ignition switch
and remanded that issue to the Bankruptcy Court for further
proceedings. The Second Circuit denied our request for an en banc
review of the panel’s decision and judgment. On December 13, 2016
we petitioned for certiorari to the United States Supreme Court.
In 2014 GM voluntarily established the Ignition Switch Recall
Compensation Program (the Program), administered by an independent
administrator, which provided compensation for individuals who
died or suffered personal injuries (or for their families) as a
result of the ignition switch defect, both before and after
bankruptcy. The Program completed its claims review process in the
three months ended September 30, 2015, but continues to process
acceptances that require court approval and resolve liens related
to accepted claims. Accident victims (or their families) that
accept a payment under the Program agree to settle all claims
against GM related to the accident. As a result, certain pre-
closing personal injury claims relating to the ignition switch
defect were resolved through this program.