General Motors Cannot Keep Ignition Lawsuit Out of California State Court

A New York federal judge has remanded a lawsuit against General Motors over its faulty ignition switches back to California state court.
GM sought to keep the case in federal multidistrict litigation, claiming it was subject to bankruptcy proceedings involving its predecessor, Old GM.

U.S. District Judge Jesse M. Furman granted the Orange County district attorney’s motion to remand, saying the civil penalties available under California’s Unfair Competition Law and False Advertising Law were punitive and meant to ensure compliance, Law360 reports. “The monetary remedies available to plaintiff through the UCL and FAL are thus means of reaching the ultimate goal of such actions — deterring fraud and unfair trade practices by California corporations — not the ultimate goal itself,” Judge Furman wrote.The state filed its suit over GM’s handling of the ignition-switch defect in state court in June, and GM removed it to California federal court in August. The U.S. Judicial Panel on Multidistrict Litigation transferred the case to the MDL on Sept. 25. In August, GM told a New York bankruptcy court that California’s suit involves liabilities against GM’s bankruptcy estate, not just against New GM, which warranted the transfer to the MDL, according to Law360.

When the company went through bankruptcy, New GM was absolved of any liabilities of Old GM. Those liabilities fall under the oversight of the New York bankruptcy court, and New GM said the California suit involves liabilities in that category, so it must stay in New York. Judge Furman also ruled that the case presented no federal questions because it was brought solely under state law, and remanded the suit to Orange County Superior Court.

General Motors has faces numerous investigations and lawsuits over it handling of the faulty ignition, which has been linked to 35 deaths, many serious injuries, and property damage. In cars equipped with the faulty switch, the ignition can unexpectedly move from the “run” position, cutting power to the engine and disabling power steering, power brakes, and air bags. It took GM more than a decade to address the problem of the cars with the faulty switches, according to the New York Times.





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