June 18, 2014
GM’s exposure could top $10 billion, attorneys say.
SEATTLE – National consumer-rights law firm Hagens Berman Sobol Shapiro today filed a potentially precedent-setting class-action lawsuit against General Motors (NYSE: GM), claiming that the automaker’s troubled history – including more than 20 million recalled vehicles worldwide – has so impacted the GM brand that all GM car owners, not just those subject to the ignition switch recall, have suffered economic damage through loss of resale value, and deserve compensation.
The class action is the first suit of the lawsuits filed against GM to seek compensation based on the automaker’s damaged brand perception. If certified, the class would represent as many as 15 million GM car owners and put GM’s exposure at more than $10 billion, according to attorneys.
“GM came out of bankruptcy making claims that the company would produce high-quality, safe vehicles, a branding position that served GM well, and that consumers relied upon,” said Steve Berman, managing partner of Hagens Berman. “Now we know that contrary to those claims, GM was instead wallowing in a dysfunctional culture more concerned about hiding defects and safety flaws than living up to its purported brand promise.”
GM’s brand has been rocked by 40 recalls covering more than 20 million vehicles worldwide during the first six months of 2014, as noted in the complaint.
The complaint cites economic studies that show select, non-recalled GM vehicles have dropped in resale value.
“We gained a lot of experience examining the impact of recalls on the value of Toyota vehicles in the Toyota case, in which we were able to analyze the financial impact of Toyota’s large recall,” Berman said. “We used that experience to forensically examine the impact of GM’s recent actions on GM-branded vehicles, and the decreased value we have measured ranges from $500 to more than $2600 per vehicle and may go higher on some vehicles.”
The suit claims that GM’s intentional actions have economically harmed millions of owners of all GM brands through diminished resale value, among other damages.
If certified as a class, exposure to the litigation could top $10 billion.
“Had a purchaser of a 2010 Camaro known that the manufacturer had gone to such great lengths to hide safety defects on other GM cars, there is no way that purchaser would have paid full price,” Berman added. “The economic reality is that all GM owners are bearing the costs of GM’s actions.”
The 71-page complaint, filed on June 18, 2014 in the U.S. District Court for the Central District of California, covers vehicles sold after GM’s bankruptcy proceedings and accuses the automaker of misrepresentation, concealment and non-disclosure of “piecemeal” safety defects, and in turn, responsibility for the decrease of value in model year GM vehicles sold between July 10, 2009 and April 1, 2014.
The complaint seeks damages for a class of consumers including anyone who owns or has owned or leased a new or used GM-branded vehicle sold between July 10, 2009 and April 1, 2014, or sold a vehicle during this time period at a diminished price on or after April 1, 2014, excluding those whose vehicles were recalled for an ignition switch defect. Damages are sought on the grounds that GM concealed facts about its safety defects to consumers and did so to falsely assure purchasers and lessors of GM’s commitment to its brand promises, therefore leading many to purchase or lease vehicles without knowledge of the defects, according to the suit.
“GM’s egregious and widely publicized conduct, including the seemingly never-ending and piecemeal nature of GM’s recalls, has so tarnished the affected vehicles that no reasonable consumer would purchase them for what would otherwise be fair market value for the vehicles,” the complaint states.
Concerned consumers who have owned or leased any of the GM models sold during the affected period are encouraged to contact a Hagens Berman attorney by emailing GeneralMotors@HBSSlaw.com or calling 206-623-7292. Additional information about the investigation is available at www.hbsslaw.com/cases-and-investigations/cases/General-Motors-Diminution-of-Value.
About Hagens Berman
Hagens Berman Sobol Shapiro LLP is a consumer-rights class-action law firm with offices in nine cities. The firm has been named to the National Law Journal’s Plaintiffs’ Hot List seven times. More about the law firm and its successes can be found at www.hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.