King & Spalding Again Implicated In GM Ignition Switch MDL - Law360
Law360, Washington (December 17, 2015, 8:02 PM ET) -- King & Spalding LLPwas among the law firms that, with General Motors Co.’s insurance administrator, helped the auto giant conceal safety defects, drivers told a New York federal court Thursday in the massive multidistrict litigation over a GM ignition switch design.
“New” GM, its outside counsel King & Spalding, claims administrator ESIS Inc., lead engineers, and other unnamed parties formed an enterprise, as construed by the Racketeer Influenced and Corrupt Organizations Act, that illegally worked to conceal information about several deadly defects in General Motors Co. vehicles — especially the Delta-model ignition switch defect, according to a third amended complaint filed Thursday.
“[They] were all aware of a serious safety defect in the Delta ignition switch,” the new complaint says. “New GM hid the defect from [the National Highway Transportation Safety Administration], and K&S and ESIS went along with the cover-up and worked to confidentially settle all cases where evidence of the defect would be made public if the case did not settle.”
According to the third amended complaint, a King & Spalding attorney had become aware in October 2010 of a 25-year-old driver of a 2006 Chevrolet Cobalt who was killed after her air bag failed to deploy in a crash. In a letter to GM's in-house counsel, King & Spalding said other Cobalts had exhibited the same “anomaly,” which presented “clear evidence of defect,” Thursday's suit says.
Despite knowing GM was obligated to report the defect to authorities, King & Spalding declined to alert regulators or the public, or to investigate the matter further, according to the complaint. Instead, the firm “advised GM to suppress the facts of the case by quietly” settling, the drivers allege.
The law firm began representing the reorganized GM in 2010, in consumer protection cases related to the prebankrupt company’s vehicles, at which point the law firm began aiding — either “knowingly or unknowingly” — in GM’s scheme to conceal the defects from litigants and the public, the complaint says. Each profited from participating in the scheme, with New GM selling the affected vehicles and the other parties winning future business from the automaker, the suit says.
An NHTSA report in June 2015 reported that King & Spalding had warned GM about the defect but failed to disclose it. That same month, plaintiffs in the MDL filed a motion to compel documents from GM and the law firm, alleging that they conspired to conceal the ignition defect by quickly settling claims in order to avoid a recall.
A King & Spalding attorney representing GM in the MDL declined to comment Thursday. Other representatives for GM did not return messages seeking comment. Representatives for the plaintiffs did not return calls seeking comment.
Wednesday, a New York federal judge ruled the driver whose suit against GM will serve as the bellwether trial was allowed to present a statement of facts associated with GM’s $900 million criminal settlement reached with the U.S. Department of Justice in September.
The statement of facts that was part of a Sept. 16 deferred prosecutionagreement between New GM and the DOJ contained admissions about the ignition switch defect, New GM’s notice and knowledge of it, and the automaker’s failure to address the defect — all “highly relevant to facts of consequence at trial,” U.S. District Judge Jesse M. Furman said Wednesday, just weeks before bellwether plaintiff Robert S. Scheuer’s case is set to begin.
The use of the statement of facts as evidence in Scheuer’s Jan. 11 trial is not without stipulations, however, as Judge Furman ruled that one line of the document relating to two previous criminal cases is to be redacted.
Scheuer’s suit stems from an accident in May 2014, just months after GM sent a letter to the NHTSA proposing a recall based on defective ignition switches in vehicles such as Scheuer’s 2003 Saturn Ion.
Scheuer has said he received the recall letter from GM that month and took his vehicle to be repaired. As he waited on a replacement part, the mechanic advised him to remove all other keys from his car key chain while driving, which he did. But later in the month, another vehicle ran him off the road and his car hit a tree. Scheuer says his air bag failed to deploy because of the ignition switch defect, and he joined the MDL a few months later.
The plaintiffs are represented by Robert C. Hilliard of Hilliard Munoz Gonzales LLP, Steve W. Berman, Sean R. Matt and Andrew M. Volk of Hagens Berman Sobol Shapiro LLP, and Elizabeth J. Cabraser, Steven E. Fineman, Rachel Geman and Annika K. Martin of Lieff Cabraser Heimann & Bernstein LLP.
GM is represented by Richard C. Godfrey and Andrew B. Bloomer of Kirkland & Ellis LLP.
The case is In re: General Motors LLC Ignition Switch Litigation, case number1:14-md-02543, in the U.S. District Court for or the Southern District of New York.