Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES NEWS: Putative class action against GM for violating TREAD Act and state consumer protection laws; replacement or buy-back costs sought, (Apr 3, 2014)

Law Firms Mentioned:Zimmerman Reed, PLLP

By Pamela C. Maloney, J.D.

A putative class action claiming that GM violated the Transportation Recall Enhancement, Accountability and Documentation Act (TREAD Act) and state consumer protection laws has been filed against General Motors in an Arizona federal district court, on behalf of all persons who currently own or lease one or more of following vehicles: 2005-2010 Chevrolet Cobalt, 2006-2007 Chevrolet HHR, 2006-2007 Pontiac Solstice, 2005-2007 Pontiac G5, 2003-2007 Saturn Ion, and 2007 Saturn Sky vehicles. The action also was brought on behalf of subclasses of Arizona, New York, and Michigan residents who own or lease one or more of the defective vehicles (Philip v. General Motors, LLC, April 1, 2014, Fischer, N.).

Background. Kyle Phillip, Evelyn Torres, and Kelly Kirkpatrick, named plaintiffs in this action, alleged that each of them were induced by GM’s fraudulent concealment and misrepresentations about the existence of a defect in the uniformly designed ignition switch, which is substantially similar for all of the defective vehicles. Each of the named plaintiffs alleged that he/she did not learn of the ignition switch defects until after the vehicle had been purchased, and that like any reasonable consumer, he/she would not have purchased the vehicle, would have paid less for the vehicle, would not have retained the vehicle, and/or would have demanded that GM correct the defects sooner but for GM’s fraudulent concealment of the defects and its deceptive practices which prevented these plaintiffs from taking any of these actions.

General allegations. The complaint stated that the vehicles in question were defective for multiple reasons including: (1) the ignition switches could inadvertently shut off the engine and vehicle electrical system during normal driving conditions; (2) when the engine and electrical system shut down, the power steering and brakes also shut down, creating a serious risk of accident; and (3) when the electrical systems shut down, the vehicle’s airbags were disabled, creating a serious risk of serious bodily harm or death if an accident occurred. These defects rendered the vehicles unreasonably dangerous, the complaint alleged. The complaint further stated that even though GM knew of the dangerous nature of the defects, the company failed to eliminate the defects or to provide an adequate warning of the potential safety risks. In addition, GM fraudulently concealed the defect and continued to advertise the vehicles as being safe and reliable.

The complaint stated that GM violated several federal laws including the TREAD Act (by failing to inform the National Highway Traffic Safety Administration (NHTSA) of the ignition switch defects and allowing cars to remain on the road with these defects) and the Magnuson-Moss Warranty Act. The complaint also set forth causes of action based on GM’s violations of the following state laws: the Arizona Consumer Fraud Act, the Michigan Consumer Protection Act, and New York’s Consumer Protection from Deception Practices Statute. Finally, the complaint included claims for fraudulent concealment, and breach of express and implied warranties

Remedies sought. The named plaintiffs sought actual, compensatory, and statutory damages/penalties for themselves and all class members, in addition to restitution, disgorgement and/or other equitable relief. The complaint also asked that GM be permanently enjoined from (1) performing or proposing to perform any of the alleged acts of unfair, unlawful, deceptive and/or fraudulent business practices, and (2) selling, offering to sell, or otherwise placing into the stream of commerce, dangerously defective vehicles. Finally, the plaintiffs asked the court to order GM to provide defect-free vehicles to all the members of the class, and that GM pay all costs associated with the replacement program, including all costs for parts and labor, or in the alternative, for an order that GM buy back the defective vehicles.

Previous filings. As reported previously in Products Liability Daily, there have been a number of cases filed against GM since the recall was announced:

Jaward v. General Motors LLC (March 19, 2014): A putative class action was filed in a Michigan federal district court, alleging claims for negligence and breach of both express and implied warranties, and seeking damages in an amount exceeding $5 million dollars. The class-wide allegations were that GM manufactured and sold the defective vehicles that all the class members purchased, that GM knew of the defects and took steps to conceal those defects from all class members, and that all the class members suffered damages in the form of diminution of value of the defective vehicles.
Smith v. General Motors LLC (March 24, 2014): A wrongful death action was filed in an Alabama state court on behalf of the Estate of Aubrey Wallace Williams, a 32-year-old mother of two, who was fatally injured when the ignition switch on her Cobalt failed resulting in a complete loss of power. The complaint alleged negligence claims as well as claims under the Alabama Extended Manufacturer’s Liability Doctrine. The complaint also alleged that the vehicle was uncrashworthy and that GM failed to warn the driver, other consumers, or the public in general about the unsafe and defective condition and design of the vehicle. In addition to General Motors, the complaint named Delphi Automotive Systems, LLC, the company that designed, manufactured, tested, marketed, and distributed the allegedly defective component parts, and Long-Lewis Ford of the Shoals, Inc., the dealership which sold the vehicle. In addition to wrongful death damages, the estate sought recovery of punitive damages.
Maciel v. General Motors, LLC (March 24, 2014): Another putative class action was filed in the federal court in San Francisco on behalf of members of both a nationwide class and statewide classes of consumers who purchased or leased one or more of the following vehicles: 2005-2010 Chevrolet Cobalt, 2006-2007 Chevrolet HHR, 2006-2007 Pontiac Solstice, 2005-2007 Pontiac G5, 2003-2007 Saturn Ion, and 2007 Saturn Sky vehicles. Like the Arizona class action filed on April 1, the allegations in the Maciel complaint focused on violations of the federal Magnuson-Moss Warranty Act, fraudulent concealment, and various state unfair competition laws, consumer warranty laws, false advertising laws, deceptive trade practices, and consumer protection statutes.

The case number is 3:14-cv-08053-DGC.

Attorneys: Charles S. Zimmerman, (Zimmerman Reed, PLLP) for Kyle Phillip

Companies: General Motors, LLC

News: StateUnfairTradePractices ArizonaNews