General Motor's Motion-to-Dismiss ERISA Suit Denied

04/06/2006

DETROIT – Employees of embattled General Motors (NYSE:GM) won a victory today in court when a U.S. District Court judge refused the automotive giant's motion to dismiss a lawsuit claiming those in the company charged with overseeing employees' retirement accounts failed in their responsibility.

The suit, filed in the U.S. District Court for Michigan, claims that GM and plan fiduciaries ignored the company's dire financial problems and in doing so imprudently managed the two retirement funds, causing employee-investors to incur huge losses.

In the ruling, Judge Nancy Edmunds cites that GM had a duty to convey complete and accurate financial information about GM's true financial health to the plaintiffs, something the suit claims it failed to do.

The case involves two General Motors ERISA Plans - the Personal Savings Plan for Hourly Employees, and the Savings-Stock Purchased Program for Salaried Employees - both holding large amounts of General Motors stock.

"It is our belief that GM and the investment fund committee sold out GM employees, plain and simple, " said Steve Berman, co-lead counsel for the plaintiffs. "They stood motionless and mute while the stock's slide devastated the retirement savings of thousands."

The suit claims the defendants put the interests of GM ahead of the interests of the plan participants by continuing to offer GM stock as an investment option, matching employee contributions in GM stock and failing to diversify the stock fund when it was clear GM stock was not a prudent investment.

According to the suit, the members of the investment fund committee were also responsible for overseeing the horribly under-funded defined-benefit pension and healthcare plans. "That gave them first-hand knowledge of GM's problems early on," Berman added. "Even when analysts begin issuing 'sell' recommendations and the company's debt was reduced to junk status, the committee refused to take action for their employees.

Judge Edmonds granted State Street Bank's motion to dismiss charges against it.

Judge Edmunds appointed Steve Berman as co-lead counsel for the consolidation of three suits. The consolidated suit was filed May 13, 2005.

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Hagens Berman Sobol Shapiro LLP is a law firm with offices in Seattle, Cambridge, Chicago, Los Angeles, and Phoenix. The firm has developed a nationally recognized practice in class-action litigation. The firm is co-lead counsel in litigation to recover losses from Enron employees' retirement funds, and represented Washington and 12 other states in lawsuits against the tobacco industry that resulted in the largest settlement in the history of litigation. The firm also served as counsel in several other high-profile cases including the Washington Public Power Supply litigation, which resulted in a settlement of more than $850 million, and the $92.5 million settlement of The Boeing Company litigation. Other notable cases include litigation involving the Exxon Valdez oil spill, Average Wholesale Price Drug litigation, United Airlines litigation, Exxon Mobile Securities litigation, Louisiana Pacific Siding litigation, TAP Pharmaceutical's Lupron litigation, and SmithKline Beecham's Paxil Litigation.

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09/18/08: Case Settled

On June 5, 2008, the District Court granted final approval to the Settlement. However, on June 23, 2008, a Notice of Appeal from the Settlement was filed with the United States Court of Appeals from the Sixth Circuit. Ultimately, the settlement resulted in $37.5 million for General Motors ERISA plan participants and their beneficiaries in addition to significant revision of retirement plan administration.