Shareholder Files Class Action Lawsuit Against GM for Vehicle Recall Problems

While GM faces a federal investigation and a personal injury class action lawsuit related to their long-delayed vehicle recalls, a shareholder in the company has also filed a class action lawsuit alleging that the automotive manufacturer failed to disclose the ignition switch problems that have led to financial losses for the board.

“GM’s illegal and immoral activities during (2010 through March 2014) effectively eviscerated GM’s reputation for safety, quality, value and performance,” said the class action lawsuit which was filed by George Pio in U.S. District Court in Detroit. “Moreover, the news of the company’s recalls through a series of disclosures, and later reports of government criminal and civil investigations into the company, triggered a sharp decline in the company’s share price, wiping out billions in shareholder value.”

In February, GM issued a small vehicle recall notice for older model cars, citing a potential ignition switch problem. However, the company noted that they had received complaints of at least 31 injuries in crashes related to the ignition switch problem, and 13 wrongful deaths in vehicle crashes. Consumers and the federal government questioned the company, because the vehicle recall covered 2005 model year vehicles, meaning that the company potentially sat on the ignition switch problem for 10 years. The delayed vehicle recall could also have been in violation of disclosure agreements related to a federal bailout the company received after it filed for bankruptcy.

GM has issued vehicle recalls for 3.1 million vehicles in the last month alone.

The shareholder class action lawsuit was prompted by GM’s falling stock, which dropped 10 points in the week of March 21st. That represents $5 billion in shareholder value, lost because the company did not prioritize quality and safety.

“Despite being fully aware as early as 2001 of the severe and easily corrected defect in its cars, (GM) refused to engage the legally required recall and instead continued to sell millions of defective cars to U.S. consumers,” the suit says.

Federal Investigators Question GM’s Bankruptcy Terms and Delayed Vehicle Recall

While the shareholder class action has been filed, along with a dozen personal injury lawsuits related to the ignition switch vehicle recall, the US federal government is investigating whether the delayed vehicle recall is in violation of GM’s bankruptcy filing.

The automobile manufacturer filed for bankruptcy in 2009, but the vehicle recall covers model years up to five years before the company declared bankruptcy. Federal regulators allege that GM failed to fully disclose the problem, which means the company committed bankruptcy fraud and defrauded the federal government.

GM admitted to investigators from the Justice Department that it knew about ignition switch problems as early as 2001. Twice, the company said, it explored fixes for the problem, but failed to do so for 2004 and 2005 model year vehicles.

The National Highway Transportation Safety Administration announced on March 21st that it would conduct an internal audit on its own performance in providing safety and defect problems in GM’s vehicles. The NHTSA acknowledged that it failed, in this instance, to spot the defect trend.

The Strom Law Firm Can Help with Defective Products and Vehicle Recall Cases

If you have experienced a problem with a defective product in your automobile, especially if a defective part has led to an auto accident or personal injury, and a proper vehicle recall notice has not been issued, you may be entitled to compensation. The attorneys at the Strom Law Firm can help. We can help you with complicated auto insurance claims, and make sure you receive the compensation you deserve to help you with lost income and medical bills. We offer free, confidential consultations to discuss the facts of your case, so contact us today at (803) 252-4800.