This year is been marked by the start of trials regarding liability for accidents allegedly caused by General Motors’ faulty ignition switches. Signs of problems with the ignition switches were detected more than a decade ago, but these signs were missed and the problem grew into a major debacle. The first recall was announced in February 2014 and was expanded the number of times to address additional year old affected by the faulty ignition switches. In all, approximately 2.6 million vehicles were recalled by GM early 2014.
Two of the six so-called bellwether trials have already occurred. In the first matter, the lawsuit was dismissed after it came to light the plaintiffs had mischaracterized the damages in the matter and the plaintiffs use of a fraudulent check to purchase the home claimed that injuries from the accident caused them to lose. The second bellwether trial seemed to signal a short term victory for GM at the expense of potential long-term liability. In this matter, the jury determined that the ignition switch did not cause this particular accident, however, the jury did find that the vehicle was in a defective and dangerous condition due to the faulty ignition switch.
Now, a resolution in the third GM ignition switch trial has been reached.
How Did the Third GM Ignition Switch Trial Arise?
The third GM ignition switch trial originates with a 2006 Saturn Ion. The Saturn Ion was driven by 35-year old James Yingling of Pennsylvania. Mr. Yingling was apparently driving the vehicle when he lost control of it. The loss of control caused the vehicle to leave the roadway and crash into a steep ditch. When the vehicle left the roadway and crashed, the airbags did not deploy. Mr. Yingling was killed in the accident.
In a wrongful death lawsuit filed by his wife, she claims that the accident occurred because of the ignition switch defect and was made worse by the defect. She claimed that the ignition switch slipping from the run position to an idle or off position caused the vehicle to lose power resulting in the loss of numerous vehicle systems. Systems typically affected by the ignition switch defect include power steering, airbags, and other.
GM, Plaintiffs Settle the Case Before Trial
The third of the GM ignition switch trials had been added to the court docket and set to go to trial in May. However, on Thursday, GM’s law firm notified the federal court judge in overseeing the matter that a settlement had been reached and requested the case’s removal from the court docket. According to the letter the settlement that, “the parties have entered into [is] a confidential settlement term sheet designed to resolve all of the plaintiff’s claims.” This is another reasonably unexpected twist in this series of bellwether cases. The settlement is confidential and details regarding the terms or amount of settlement have not been divulged to the general public. Many are speculating as to why GM settled this matter after taking the two previous cases to trial.
Why Do Companies Settle Matters?
While we cannot say why GM decided to settle in this particular matter, we can discuss some reasons why companies and defendants shoes to settle in general terms. In some cases, a simple cost analysis may motivate the settlement. That is, the company may determine that the costs of trying the matter exceed the costs of the settlement. In the circumstances, a company may decide that is in their best interest to settle.
In other circumstances, defendants many pursue a strategy of trying the strong cases and settling the weak cases. Through a strategy of this type, companies can often rack up public jury verdicts and decisions in their favor while cases that are likely to impose significant liability are quietly and confidentially settled. Through this strategy, a company can often avoid unfavorable precedential or persuasive court decisions or determinations and minimize negative publicity.
There is certainly an array of other reasons and motivations that can motivate a company to settle a matter out of court. The above addresses only a narrow swathe of potential reasons why a company would choose to settle a matter in the lead-up to trial.