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New Jersey Receives $4M In Multi-State General Motors Settlement

GM Chairman and CEO Mary Barra.
GM Chairman and CEO Mary Barra. Photo Credit: General Motors

Attorney General Christopher S. Porrino announced Thursday that New Jersey will receive $4.1 million as part of a multi-state settlement with General Motors (GM).

The settlement resolves allegations the company failed to disclose a deadly ignition switch defect that could have caused millions of GM car engines to suddenly shut off during normal operation.

The overall $120 million settlement -- involving 48 states and the District of Columbia -- concludes a multi-state investigation into GM’s conduct upon learning millions of its vehicles were equipped with an ignition switch that could fail while driving, rendering power brakes, steering, air bags and other key functions inoperative.

“General Motors’ conduct here was unconscionable. It put profit ahead of integrity and, more disturbingly, sat on its corporate hands as unwitting drivers and their passengers traveled throughout New Jersey – and throughout our nation -- in GM vehicles that had the potential to fail and become uncontrollable at highway speeds,” said Attorney General Porrino.

In 2014, GM issued seven vehicle recalls in response to unintended key-rotation-related and/or ignition-switch-related issues – issues that affected more than 9 million vehicles in the U.S.

The recalls involved a defective ignition switch that, under certain conditions, could move out of the “Run” position to the “Accessory” or “Off” position. If this occurred, the driver could have experienced a loss of electrical systems, including power steering and power brakes. If a collision occurred while the ignition switch was in the “Accessory” or “Off” position, the vehicle’s safety airbags might also fail to deploy, increasing the risk of serious injury or death in certain types of crashes in which the airbag was otherwise designed to deploy.

New Jersey and the other states allege that certain employees of GM and General Motors Corporation (which went through bankruptcy in 2009) knew as early as 2004 that the ignition switch posed a safety defect because it could cause airbag non-deployment. However, despite this knowledge, GM personnel decided it was not a safety concern and delayed making recalls.

The states also allege that GM continued to promote the reliability and safety of its motor vehicles equipped with this defective ignition switch, that these actions were unfair and deceptive, and that the automaker’s actions violated state consumer protection laws, including the New Jersey Consumer Fraud Act.

“Like any other business – large or small – auto makers have an obligation to represent the products they sell honestly, to ensure those products are safe, and to alert consumers when they discover a product defect that threatens consumer safety,” Porrino said.

“When they fail to do so, as was the case with GM, we are committed to holding them accountable.”

New Jersey was part of the multi-state executive committee that negotiated the settlement announced today. In addition to the monetary terms, the multi-state agreement with GM contains a variety of injunctive relief terms. GM has agreed to:

  • Not represent that a motor vehicle is “safe” unless they have complied with the Federal Motor Vehicle Safety Standards applicable to the motor vehicle at issue.
  • Not represent that certified pre-owned vehicles advertised by GM are safe, have been repaired for safety issues, or have been subject to rigorous inspection, unless such vehicles are not subject to any open recalls relating to safety or have been repaired pursuant to such a recall.
  • Instruct its dealers that all applicable recall repairs must be completed before any GM motor vehicle sold in the U.S. and included in a recall is eligible for certification and, if there is a recall on any certified pre-owned vehicle sold in the U.S., the required repair must be completed before the vehicle is delivered to the customer.

Assistant Attorney General John M. Falzone, of the Division of Law’s Affirmative Civil Enforcement Practice Group, andDeputy Attorney General Jeffrey Koziar of the Division of Law’s Consumer Fraud Prosecution Section handled the GM matter on behalf of the State.

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