GM Will Pay $900M for Ignition Switch Defect

By Christopher Coble, Esq. on September 17, 2015 | Last updated on March 21, 2019

It hasn't been a great year for General Motors. The auto manufacturer has been plagued with recalls and lawsuits regarding potentially deadly ignition switch defects. In all, GM's faulty ignition switch has been tied to at least 124 deaths.

Now the company is paying $900 million to the criminal charges related to the ignition switch. So where does GM go from here, and what will the settlement mean for existing civil lawsuits?

Criminal Charges

The defective ignition switch could slip out of the run position, which disabled certain safety features like air bags, power steering, and power brakes.GM acknowledged that employees were aware of the ignition switch problems almost ten years before it issued a recall on affected cars last year. As CEO Mary Barra explained to employees yesterday, "People were hurt and people died in our cars."

While the settlement ends criminal liability for GM itself, the Justice Department's investigation continues and U.S. Attorney Preet Bharara hasn't ruled out further criminal charges for individual employees. GM is essentially on probation -- the Justice Department will drop all the charges if the company continues to cooperate and meet reporting requirements over the next three years.

Civil Cases

GM also announced it reached a settlement in two civil class action lawsuits filed against the company, one from victims of the defect and the other from shareholders. While the company declined to disclose the settlement amounts, GM is deducting $575 million from its latest earnings reports.

At last count, there were over 4,000 civil claims regarding the ignition switch defect, and GM had already made 93 other settlement offers. All told, GM has recalled some 2.6 million cars. The deadline to file claims against GM was January 31 of this year, so, presumably, this brings GM's ignition switch liability to an end. Depending on the ongoing criminal investigation, that is.

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