(Reuters) – General Motors was hit on Friday using what were the initial lawsuit associated with the recall of 1.6 million cars, as customers claimed their vehicles lost value because of ignition problems blamed for many fatal crashes.
The proposed class action, filed in federal court in Texas, said GM knew about the problem since 2004, but didn’t correct it, creating “unreasonably dangerous” conditions for drivers of the affected models.
“GM’s mishandling of the ignition switch defect….has adversely affected www.facebook.com the business’s reputation as a producer of safe, reliable vehicles with high resale value,” the lawsuit said.
The recall has resulted in government criminal and civil investigations, an interior probe by GM, and preparations for hearings by Congress. All ask why GM took way too long to manage a challenge it has said first stumbled on its attention in 2001.
A GM spokesman, Greg Martin, said the organization has apologized for how it handled the recall and that looking after customers was its first priority. He didn’t discuss the lawsuit.
The plaintiffs are seeking damages from GM including compensation for loss in the using their vehicles and repairs and diminished resale value. They are not claiming these were injured in accidents stemming from ignition problems.
The lawsuit is similar to claims faced by Toyota Motor Corp, which recalled more than 10 million vehicles starting in 2009. Toyota this past year received approval for a settlement valued at $1.6 billion to eradicate economic loss claims and is negotiating the settlement of countless personal-injury lawsuits.
GM announced the recall in February, despite learning of difficulties with the ignition switch in 2001 and issuing related service bulletins to dealers with suggested remedies in 2005.
GM said that if the ignition switch was jostled, a vital could switch off the car’s engine and disable airbags, sometimes while traveling at high speed. GM has said it received reports of 12 deaths and 34 crashes in the recalled cars.
The Center for Auto Safety, a watchdog group, on Thursday said that data from the National Highway Traffic Safety Administration showed 303 deaths occurred when airbags didn’t deploy in two of the models GM recalled. GM called the report “pure speculation” and the Insurance Institute for Highway Safety and the National Center for Trauma and EMS at the University of Maryland said the figure didn’t take into consideration whether airbags would be likely to deploy in certain crashes.
The plaintiffs in Friday’s lawsuit, Daryl and Maria Brandt, said they own a 2007 Chevy Cobalt, that has been one of several models recalled by GM. They said they’ve driven their car less than they otherwise would given that they feared being in an accident stemming from the ignition issues, based on the complaint.
Carl Tobias, a professor at the University of Richmond School of Law who specializes in products liability, said he didn’t expect GM will need to pay as much as Toyota did if it seeks to eliminate the economic loss claims.
The GM recall applied to older models and was significantly smaller set alongside the Toyota recall, although that may change since the investigations against GM continue, he said.
GM even offers offered owners of recalled vehicles $500 toward the purchase of a fresh GM vehicle, a concern that could mitigate any liability, he said.