In re Gen. Motors LLC
| Decision Date | 15 July 2016 |
| Docket Number | 14-MD-2543 (JMF),14-MC-2543 (JMF) |
| Parties | IN RE: GENERAL MOTORS LLC IGNITION SWITCH LITIGATION This Document Relates To All Actions |
| Court | U.S. District Court — Southern District of New York |
[Regarding New GM's Partial Motion To Dismiss the Third Amended Consolidated Class Action Complaint]
INTRODUCTION ........................................................................................................................... 3
BACKGROUND ............................................................................................................................. 6
PROCEDURAL HISTORY ........................................................................................................... 10
LEGAL STANDARDS ................................................................................................................. 13
DISCUSSION ................................................................................................................................ 14
All defect-free cars are alike; each defective car is defective in its own way. This multidistrict litigation ("MDL"), familiarity with which is assumed, arose from the recall in February 2014 by General Motors LLC ("New GM") of General Motors ("GM") vehicles that had been manufactured with a defective ignition switch — a switch that could too easily move from the "run" position to the "accessory" and "off" positions, causing moving stalls and disabling critical safety systems (such as the airbag). Following that recall, New GM recalled millions of other vehicles, some for ignition switch-related defects and some for other defects. Thousands of MDL Plaintiffs have filed claims alleging that they or their loved ones were injured or killed as a result of accidents caused by one or the other of these defects. Those cases are proceeding on one track, with "bellwether" trials in individual cases having commenced earlier this year. On a separate track, Plaintiffs pursue claims for "economic losses." Specifically, Plaintiffs pursue recovery on behalf of a broad putative class of GM car owners and lessors, arguing that they and others have been harmed by a drop in their cars' value due to the revelations of GM's years-long cover-up of the ignition switch and other potentially fatal defects. Their operative complaint — the Third Amended Consolidated Complaint or "TACC" — runs to over a thousand pages and 4500 paragraphs, and includes claims under federal and state law brought by named Plaintiffs in all fifty states and the District of Columbia.
On February 24, 2016, New GM moved, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, to partially dismiss the TACC. New GM's motion was limited, not because it conceded that the TACC's other claims were valid, but because the scope of Plaintiffs' claims was likely to be affected by several appeals from rulings of the United States Bankruptcy Court for the Southern District of New York to the United States Court of Appeals for the Second Circuit — appeals that were decided just days ago. See In re Motors Liquidation Co., No. 15-2844-bk(L) (2d Cir. July 13, 2016).1 Prompted by the Court, the parties agreed that New GM's initial motion would focus on the claims of Plaintiffs from eight jurisdictions who purchased or leased New GM cars (and who were outside the scope of the Second Circuit appeal). This Opinion and Order is similarly limited to those claims. Thus, while it is a significant step in the MDL, much remains to be done — including, presumably, more Rule 12(b)(6) motion practice.
By their own admission, Plaintiffs pursue an unprecedented theory of damages, one that turns not on whether the vehicles at issue were sold with known, latent defects (many of the class members' cars were concededly not defective when sold), but rather on the alleged reduction in resale value of the vehicles due to damage to New GM's reputation and brand. For the reasons discussed below, the Court finds that that novel theory of damages is unsound in light of persuasive precedent interpreting consumer protection law and general principles of tort recovery. Put simply, the law does not treat as cognizable a consumer's interest in the continuing good reputation of a manufacturer that sells him or her a defect-free product that performs as warranted. That holding significantly curtails the scope of Plaintiffs' potential recovery under the TACC. So too does the Court's finding, discussed below, that Plaintiffs — regardless of whether their cars were sold with a defect — fail to plead a viable claim under the Racketeer Influenced and Corrupt Organizations ("RICO") Act, 18 U.S.C. § 1961, et seq., both because they fail to allege the existence of an "enterprise" within the meaning of RICO and because RICO does not recognize the injury alleged by most of the Plaintiffs in the TACC. Finally, recovery is further limited by the Court's conclusion below that named Plaintiffs may bring class claims only on behalf of plaintiffs whose cars were sold with sufficiently similar defects (for example, the same type of ignition switch defect).
That said, the Court concludes that New GM goes too far in contending that the claims of Plaintiffs who purchased or leased allegedly defective cars should largely be treated alike. Plaintiffs' state law claims (brought in...
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