General Motors Company (GM) wins major legal victory in “Park-It” lawsuit
General Motors Company (NYSE:GM) is in the midst of a major recall, but it won a legal battle on Thursday in Texas. General Motors was able to fend off a potential court order on Thursday when a federal judge denied a motion that would have forced it to advise the owners of the 2.6 million recalled small cars with a faulty ignition switch to keep the cars off the road until they are fixed.
GM plans to aggressively fight any legal action from incidents that took place before July 10, 2009, which is the date the company emerged from bankruptcy. The ruling of the “Park It” motion came from a Texas couple, named Charles and Grace Silvas.
The couple wanted compensation from for the lost value of their recalled 2006 Chevrolet Cobalt. Corpus Christi, Texas U.S. District Court Judge Nelva Gonzales Ramos denied the motion and said that the National Highway Traffic Safety Administration had primary jurisdiction over the issue.
“The court is of the opinion that NHTSA is far better equipped than this court to address the broad and complex issues of automotive safety and the regulation of automotive companies in connection with a nationwide recall,” said Ramos.
General Motors aggressively fought the motion and said that it was unnecessary. It said it would “confuse consumers and result in regulatory chaos.”
The reason for the recall is because of a defective switch. If the switch is jostled because of massive potholes and heavy keychains, the moving car could go into “accessory” power mode, which could potentially shut down power steering and brakes. It could also disable air bags. GM connected this issue to 31 accidents and 13 deaths.