Bankruptcies Leave GM, Chrysler Defect Victims in the Dust

"This was a commercial decision by the company, which we are confident will not interfere with the future viability of GM. While the U.S. Treasury was engaged in this process, GM was responsible for determining the best approach going forward," an administration official said.

Chrysler's decisions, meanwhile, were "consistent with conventional bankruptcy practice," according to the official.

"While unfortunate, the outcome would have been far worse had the government not intervened in the restructuring and Chrysler had liquidated," the official said.

Hope for Victims?

Critics like Doroshow argue that what makes the efforts of GM and Chrysler to scuttle the lawsuits particularly egregious is that the companies have received tens of billions in taxpayer funds via government aid.

"All the taxpayers in this country were asked to help bail out these companies," she said. "The ... very people who have helped bail the companies out, these taxpayers, are now seeing their rights extinguished."

There are, however, at least three potential sources of relief for consumers like Cole, though it's unclear which, if any, will pan out:

Appealing the Bankruptcy Judge's Decision: Steven Jakubowski, a lawyer for several GM victims, is appealing Sunday's GM order, arguing that the bankruptcy judge overstepped his authority in freeing GM of its product liability claims.

"All that we're asking is that the bankruptcy court effectively respect its jurisdictional boundaries," he said.

Jakubowski says the appeal is not intended to stop the GM bankruptcy proceedings, but rather to allow victims to pursue their lawsuits in their home states against the company after it emerges from bankruptcy.

He said he hopes to eventually have his appeal combined with that of Chrysler car accident victims for consideration by the Supreme Court, but that effort met a setback late yesterday after a judge ruled that the GM appeal could not go directly to the 2nd Circuit Court of Appeals.

Jakubowski told last night that he would instead pursue the appeal in district court, which is expected to result in a slower appeals process -- some 18 months longer, Jakubowski projected.

It's "taking the slow boat to China," he said.

Action by Congress: A bill proposed by Rep. Andre Carson, D-Ind., would force both GM and Chrysler to buy product liability insurance that would cover claims made against the companies for cars produced before their respective bankruptcies.

The legislation, introduced late last month, "would protect the fundamental rights of American consumers while not interfering with the bankruptcy proceedings of either automaker," Carson said in a written statement.

Carson named the bill the Jeremy Warriner Consumer Protection Act, in honor of an Indianopolis man whose legs were amputated after he nearly died in a traffic accident when his Jeep Wrangler erupted in flames.

Warriner had been scheduled to go into mediation with Chrysler, but the proceedings were cancelled after the automaker filed for bankruptcy.

Suing the Dealers: The bankruptcy proceedings don't preclude car accident victims from suing the dealers who sold them the cars, and that's exactly what Daniel T. DeFeo, the lawyer representing Terry Cole, said his client will do.

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