A decade-long lawsuit against General Motors, involving faulty components, whistleblowers and an investigation by US prosecutors, has reignited with an investigation into the company’s in-house legal team.
The company’s lawyers, who are now under investigation for possibly concealing key evidence about GM vehicles, are the latest department to find themselves in the thick of a decade-long case involving allegations of whistleblowing, malpractice and a faulty ignition switch.
Earlier this summer GM recalled 3.16 million cars in the US after a decade-long legal fight over a faulty ignition switch that could make cars in motion effectively turn off while on the road. The recall came almost 10 years after the first cars with the faulty switch were sold.
In 2003 GM was sued by a former safety officer, who claimed unsuccessfully that management had failed to address issues in the construction of its vehicles.
Now some of the members of the company’s in-house legal team, which is led by general counsel Michael Millikin, are under investigation for concealing evidence from regulators and delaying the recall process.
A GM spokesperson said the company was cooperating with the investigation, which is focused only on specific parts of the legal department.
According to a report compiled by Reuters, at least 74 people died in General Motors cars in accidents with some key similarities to those that GM has linked to 13 deaths involving defective ignition switches. Such accidents also occurred at a higher rate in the GM cars than in top competitors’ models, the analysis showed.
In June former US attorney general Anton Valukas published the report of his internal investigation into the issue. The report revealed that the problems with the switch’s ability to keep the car running were well known by GM’s engineers at the earliest stages of production, although the circumstances where this error could happen were perceived to be rare, without understanding that this failing could cause car airbags not to deploy.
At the time of the report, GM had identified at least 54 frontal-impact crashes, involving the death of 13 people.
The Valukas report triggered an investigation by federal prosecutors, who are scrutinising the legal department to find out whether in-house lawyers were to blame for the lack of communication of the equipment malfunction.
The GM spokesperson confirmed that the in-house lawyers named in the report (which were blacked out pending a further investigation) were no longer working for the company.
In May, the National Highway Traffic Safety Administration (NHTSA), the agency that regulates US vehicle safety, fined GM $35m (£21m) for its tardiness in reporting an airbag problem in the Chevrolet Cobalt.
US district judge Jesse Furman has chosen claimant law firms Hagens Berman, Hilliard Muñoz Gonzales and Lieff Cabraser Heimann & Bernstein to represent hundreds of plaintiff complaints that were consolidated into one case by a panel of judges in Chicago in June. Hagens Berman partner Steve Berman and Lieff Cabrasar’s Elizabeth Cabraser have previous experience in a similar case against Toyota, suing the company over unintentional acceleration in vehicles.
GM, which filed for bankruptcy and was bailed out in 2009, has had to retain $50m owed to creditors pending the outcome of this lawsuit.
The company listed on the New York Stock Exchange in 2010, instructing firms including Davis Polk & Wardwell and Jenner & Block (20 August 2010).