Arizona sues GM, saying it hid safety defects

Reuters

Published Nov 20, 2014 03:46AM ET

Arizona sues GM, saying it hid safety defects

(Reuters) - Arizona State filed a lawsuit against General Motors Co (N:GM), claiming the automaker put the public at risk by intentionally concealing safety defects to avoid the cost of recalls.

Arizona was seeking $3 billion from GM for defrauding state consumers, the New York Times reported.

Arizona Attorney General Tom Horne said in a statement that the civil penalties could be up to $10,000 per violation. Hundreds of thousands of car owners and lessees in Arizona had been driving unsafe vehicles, he said.

The recalls in the court filing include problems with faulty ignition switches, which could slip out of position, cutting power to air bags and brakes. The case also covers numerous other parts, including airbags, wiring, brake lights and seat belts.

GM is already running a compensation program for faulty ignition switches, with the company sending letters to notify more than 5 million current and former owners of eligible vehicles.

Many of the safety issues relate to GM cars before it fell into bankruptcy but the attorney general said the new GM was liable, as it had concealed the existence of many known safety defects.

GM was not immediately available for comment outside of regular U.S. business hours. In April, it filed a court motion to enforce a bar on lawsuits stemming from pre-bankruptcy issues in cars sold before its 2009 bankruptcy.

The Arizona case argued that consumers had lost money as GM vehicles had fallen in value after the revelation of 60 serious safety defects affecting 27 million U.S. vehicles.

"The systematic concealment of known defects was deliberate, as New GM followed a consistent pattern of endless 'investigation' and delay each time it became aware of a given defect," the attorney general argued in the case complaint.

"New GM was not born innocent," he said.