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From Products Liability Law Daily, June 12, 2015

Ignition switch MDL plaintiffs seek GM, attorney communications and work product

By John W. Scanlan, J.D.

The plaintiffs in multidistrict litigation over General Motors ignition switch defects have asked the MDL court in a motion to compel GM and King & Spalding LLC, GM’s outside counsel, to produce for in camera inspection certain attorney/client communications and work product generated by GM and King & Spalding. The plaintiffs asserted that GM committed a crime or fraud within the meaning of the crime-fraud exception and used the services of its attorneys to further the wrongdoing (In re General Motors LLC Ignition Switch Litigation, June 11, 2015).

Background. In a memorandum (with numerous redactions) supporting their motion, the plaintiffs asserted that GM and King & Spalding knew for years that the ignition switches had a safety-related defect, but conspired to conceal this knowledge by settling death and injury cases brought against GM. The law firm warned GM that evidence of the defects could lead to significant punitive damages, and advised the manufacturer to settle them confidentially before “the facts could be exposed.” The plaintiffs asserted that GM and the firm lied to the court and hid ongoing airbag investigation documents from discovery.

Further, the plaintiffs pointed out that GM had admitted that it violated federal law when it failed to notify NHTSA and owners and buyers of its vehicles of the safety-related defect, and asserted that the Department of Justice reportedly found evidence of criminal wrongdoing by GM in a cover-up of the defect.

Plaintiffs’ arguments. Under the crime-fraud exception, attorney-client communications and attorney work product made to further a crime or fraud are not privileged. According to the plaintiffs, “crime-fraud” is construed expansively in the Second Circuit and covers GM’s conduct because GM concealed a known safety defect and its communications with King & Spalding and the work product of both GM and the law firm were generated to further the crime-fraud. GM admitted that it had violated the law, and the plaintiffs argued that there was probable cause to believe that GM used the services of its attorneys to settle claims quietly rather than initiate a recall in order to further its wrongdoing.

The plaintiffs asserted that the law firm became aware of the safety defects when representing GM, but although it knew that GM was required by law to disclose and remedy the defect, it instead advised it to settle the claims confidentially in order to suppress the defects and prevent knowledge of them from being disclosed in a way that would allow the foundation to be laid for punitive damages against GM. The plaintiffs stated that they had obtained access to certain privileged communications between GM and King & Spalding, which they attached to the present motion (but redacted from the motion itself), that clearly showed that GM and the firm had worked together to conceal the defect from consumers, regulators, and litigants.

The plaintiffs argued that King & Spalding was a knowing participant in GM’s crime or fraud. The law firm violated its ethical obligations under the rules of professional conduct, which prohibits a lawyer from counseling or assisting its client in conduct the lawyer knows is criminal or fraudulent and requires a lawyer to withdraw from representation if representing the client will result in a violation of the conduct rules or the law. The firm’s litigation tactics and continued representation violated the professional conduct rules, justifying discovery of the law firm’s work product created to further its unethical conduct, the plaintiffs concluded.

The case is No. 1:14-md-02543-JMF.

Attorneys: Cassandra P. Miller (Edelman, Combs, Latturner & Goodwin LLC) for Ruby Woodward. Andrew Baker Bloomer (Kirkland & Ellis LLP), Anne M. Talcott (Schwabe Williamson & Wyatt, PC), and Arthur Jay Steinberg (King & Spalding LLP) for General Motors LLC. Andrew B. Bloomer (Kirkland and Ellis LLP) for General Motors Co., and General Motors Holding, LLC. Melissa M. Merlin (Husch Blackwell Sanders, LLP) for Continental Automotive Systems US, Inc. Johnnie E. Brown (Pullin Fowler Flanagan Brown & Poe) for Ramey Chrysler-Plymouth-Dodge, Inc. Ashley Willis Ward (Stites & Harbison, PLLC) for Stoneridge, Inc.

Companies: General Motors LLC; General Motors Co.; General Motors Holding, LLC; Continental Automotive Systems US, Inc.; Ramey Chrysler-Plymouth-Dodge, Inc.; Stoneridge, Inc.

MainStory: TopStory MotorVehiclesNews MotorEquipmentNews NewYorkNews

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