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From Products Liability Law Daily, January 28, 2016

Order approving New GM ignition switch qualified settlement fund challenged; GM seeks dismissal

By Pamela C. Maloney, J.D.

Two days after seeking removal of the co-lead counsel in the multi-district litigation involving allegedly defective ignition switches installed in more than 30 million vehicles manufactured by General Motors, Lance Cooper, the Georgia attorney who uncovered the defect, asked presiding judge Jesse Furman to reconsider the order approving the establishment of the 2015 New GM ignition switch qualified settlement fund. On the same day, GM filed a motion for partial summary judgment. In his motion, Cooper again charged co-lead counsel Robert Hilliard with breach of fiduciary duty by failing to notify the Executive Committee for the MDL or any other MDL plaintiffs or their attorneys that he was engaged in settlement discussions that allegedly could limit GM’s financial exposure in the event a jury returned a substantial verdict against the automaker. In response to this second motion, Judge Furman (in a test only order) instructed Mr. Hilliard to respond to both motions in a single consolidated reply (In re: General Motors LLC Ignition Switch Litigation, January 27, 2016, Furman, J.).

Basis for reconsideration. Mr. Cooper charged that “the private and secretive settlement process set up by GM and Mr. Hilliard” excluded a number of plaintiffs whom he represents from the settlement negotiations and agreements, and made it more difficult for the remaining plaintiffs to receive full compensation for any harm caused by GM. He also reiterated charges made in his motion to remove Mr. Hilliard and his co-lead counsel with regard to the carving out of certain cases from the settlement agreement in order to (1) retain control over the MDL and (2) to be compensated for handling the bellwether trials after having settled many of his own clients’ claims. Cooper also alleged that in accordance with the Memorandum of Understanding, which set forth the terms of the settlement agreement, the agreement remains strictly confidential. According to Cooper, it would be in the best interests of all remaining plaintiffs to know the terms of that agreement so that they could use the information to evaluate their own claims when making a decision regarding whether to settle.

“Secret deal.” In his motion, Mr. Cooper encouraged the court to investigate a high-low agreement entered into between Hilliard and GM for all of Hilliard’s bellwether cases, asserting that an investigation was needed to determine if there was a quid pro quo support for that agreement. According to Cooper’s allegations, the agreement was not disclosed to the Executive Committee, any other attorneys representing MDL plaintiffs, or any of the MDL plaintiffs Hilliard represents in his capacity as a co-lead.

GM’s summary judgment motion. GM also filed a motion for partial summary judgment in the case of Barthelemy v. General Motors, LLC, on the basis of the following arguments: (1) the independent claim against GM under the Louisiana

Products Liability Act (“LPLA”) (Count I) failed as a matter of Louisiana law because GM LLC did not manufacture plaintiffs’ vehicle; (2) claims for fraudulent misrepresentation (Count II), negligence and gross negligence (Count III), violation of a seller’s obligations of delivery and warranty in connection with personal injury) (referred to by Louisiana statute as “redhibition”) (Count IV), and violation of the Louisiana Unfair Trade Practices Act (“LUTPA”) (Count V) were all preempted by the exclusivity provision of the LPLA; and (3) even if plaintiffs’ non-LPLA claims were not preempted by the LPLA’s exclusivity provision, the plaintiffs did not have viable non-LPLA claims as independent claims because (a) there was no evidence of reliance to support the fraud claim, (b) Louisiana law does not recognize a post-sale duty to warn as alleged in the negligence and gross negligence claims, and (c) there was no buyer-seller relationship to support the redhibition claim. GM also argued that punitive damages were not recoverable on any of the claims because Louisiana law does not allow punitive damages on those claims. GM filed a Memorandum in support of its summary judgment motion, along with a Statement of Undisputed Material Facts.

Stay orders. Judge Furman also granted New GM’s motion to stay appeals’ filed by the ignition switch plaintiffs’ from two bankruptcy court orders pending the U.S. Court of Appeals for the Second Circuit’s ruling on the bankruptcy court’s decision to permit plaintiffs who owned cars manufactured by Old GM to assert independent claims and seek punitive damages relating to those claims against New GM. However, the court refused to grant the stay in regard to two other appeals from those two bankruptcy court claims, one filed by the post-closing ignition switch accident plaintiffs and the Adams Plaintiffs, and the other by theBledsoe/Elliot/Sesay Plaintiffs; instead ordering the appellants in those appeals to file letter briefs showing cause why their appeals should not be stayed as well.

In support of its motion for a stay of those appeals, GM argued that the appeals should be stayed until the Second Circuit could resolve the general issue of which liabilities were assumed by New GM and which were retained by Old GM, which will have an impact on the validity of the bankruptcy court’s orders. The ignition switch plaintiffs countered that the bankruptcy court’s determination effectively was a successor liability claim in that the plaintiff’s claims focused on New GM’s own conduct during the initial months’ of its existence—a time when New GM could have and should have, but did not, disclose the ignition switch defect.

The case is No. 14-MD-2543 (JMF).

Attorneys: Catherine Danielle Tobin (Hilliard Munoz Gonzales LLP) for Lawrence Barthelemy. Andrew Baker Bloomer (Kirkland & Ellis LLP) for General Motors LLC. Lance Cooper (The Cooper Firm) for named plaintiffs

Companies: General Motors LLC

MainStory: TopStory SettlementAgreementsNews MotorVehiclesNews NewYorkNews

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