The court acknowledged significant litigation risks
The Ontario Superior Court of Justice approved a $12 million settlement in a class action lawsuit against General Motors (GM) over defective ignition switches in vehicles, which caused numerous accidents and fatalities.
The lawsuit, initiated by plaintiffs in 2014, alleged that GM was aware of the ignition switch defects as early as 2002 but failed to take action until 2014. The defects caused the ignition switches to unexpectedly move from the "on" position to "accessory" or "off," resulting in a loss of power steering, power braking, and airbags. Despite GM's denials of the allegations, the company agreed to a settlement after extensive mediation and negotiations.
The settlement involves separate payments: $12 million for the settlement fund to compensate class members and an additional $4.4 million for plaintiffs' legal fees, including taxes and disbursements. The legal fees, negotiated separately, do not impact the amount available to the claimants.
The class action covered three proceedings: one in Ontario and two in Quebec. In Ontario, an order in 2016 consolidated several related actions into one. The Quebec actions were judicially suspended pending the outcome of the Ontario case.
The defective vehicles recalled in February 2014 were claimed to have ignition switches prone to shifting out of the "run" position, which could disable essential systems like power steering and airbags. The plaintiffs contended that these defects made the vehicles inherently dangerous, leading to serious injuries and fatalities.
The settlement follows a similar case in the United States, where GM agreed to a $121 million settlement for similar claims. In Canada, the plaintiffs sought compensation for three groups: those injured or killed in accidents involving defective vehicles, family members with derivative claims, and those who suffered economic losses due to the defects.
The Superior Court recognized the significant litigation risks and challenges in proving GM's liability, particularly given the company's 2008 restructuring and the insolvency of its predecessor, General Motors Corporation. The proposed settlement reflects these risks, with compensation per vehicle owner expected to be modest.
Despite the modest compensation, the settlement provides substantive relief to claimants and avoids prolonged litigation. The court found the settlement reasonable, noting no objections and only a few opt-outs from the class members. The plaintiffs' counsel's fees were deemed fair, representing about 19 percent of the total recovery. The court's decision allows for the distribution of settlement funds to eligible claimants, bringing closure to a long-standing issue.
