Connecticut Attorney General's Office
Press Release
Attorney General Announces New GM Owner Has Agreed To Significant Step To Protect Consumers From Defective Vehicles
June 29, 2009
The company initially said the reconstituted GM should have no liability for its predecessor's vehicles, meaning that owners of millions of GM cars and trucks on the road would be unable to sue the company if they were injured in an accident allegedly caused by a defect.
Blumenthal and other attorneys general convinced GM to reverse itself and agree that the new company could be sued for allegedly defective vehicles in accidents after the bankruptcy closed, likely to occur early next month. Blumenthal then led other attorneys general in winning an additional concession under which the new company accepted liability for defects causing accidents after the date of the bankruptcy petition filing, June 1.
The company has also agreed to honor state lemon laws, which provide additional protection, beyond the manufacturer's warranty -- including refunds or replacement vehicles.
"Newco is taking a U-turn -- agreeing to protect countless existing GM consumers who may face future catastrophic life-altering injury or death from defective vehicles," Blumenthal said. "These steps are profoundly important in providing real and meaningful means of victim redress and as critical precedents.
"GM initially sought to strip consumers of the right to sue its successor for defective vehicles already on the road, an unacceptable and unfair sacrifice of consumers' rights. Consumers killed or crippled in a crash caused by a defective vehicle must retain the ability to hold the new GM responsible and receive fair compensation. Allowing GM blanket immunity from product liability lawsuits for its predecessor's products -- many of which the new company will continue to produce -- is unfair not only to consumers, but also competitors who enjoy no similar protection.
"I am pleased that my office -- with an important assist from the U.S. Treasury Department and other attorneys general -- convinced the new GM to reverse itself and accept responsibility for any defective products made by its predecessor."
"We fought for this consumer victory -- but must continue the battle for consumers who deserve compensation for pending product claims involving GM vehicles. Although additional concessions are unlikely and existing claimants will probably be deemed unsecured creditors, I continue to believe that the new GM should have the same product defect obligations as its competitors.
"Today's significant step recognizes that taxpayers are enabling this deal, and should be helped, not hurt by the new corporation."
Last week Blumenthal urged the court to reject a proposed purchase agreement that would free Vehicle Acquisition Holdings LLC (Newco) of any liability for defective GM vehicles bought prior to the closing of the GM sale.
Blumenthal expressed appreciation to federal officials for helping convince the new GM to accept liability for its predecessor's products.
Blumenthal said he will continue to urge that Newco accept responsibility for pending claims, but called today's agreement a significant consumer victory.