Lawsuit that exposed GM's failure to disclose ignition switch problem settled for 2nd time

DETROIT – A Georgia lawsuit that helped expose General Motors’ failure to disclose a deadly defect in small-car ignition switches has been settled out of court for a second time.

Lawyers representing the parents of crash victim Brooke Melton announced the settlement Friday morning, but did not reveal terms.

Engineers hired by lawyers working for Ken and Beth Melton found that GM modified the switches after finding problems, but failed to disclose that in legal depositions or to government safety investigators. Later, congressional staffers found GM documents showing the company knew about switch problems for a decade, yet it failed to recall the cars until last year.

Brooke Melton, a 29-year-old pediatric nurse, died in a March 2010 crash near Atlanta when the ignition switch of her Chevrolet Cobalt slipped out of the run position. That shut off the car’s engine, causing it to lose power steering and brakes and disabling the air bags, the family’s lawsuit alleged. Melton’s Cobalt skidded into another vehicle.

In a statement, Melton family lawyers Lance Cooper and Jere Beasley said that Kenneth Feinberg, who was hired by GM to settle thousands of claims against the company over the faulty switches, played an “active role” in the settlement.

So far, Feinberg has reached settlement deals with families of 64 people killed in crashes caused by the ignition switches. He has come to terms with another 108 people who were injured. Of the 4,343 claims Feinberg received, 1,571 are under review and 742 have been denied. The rest are awaiting documentation. The automaker has set aside $400 million in its compensation fund and may pay out up to $600 million.

“But for the Meltons’ efforts, most of these injured drivers and passengers would not have received any compensation, much less fair and appropriate compensation from GM,” the lawyers’ statement said.

The lawyers scheduled a conference call Monday to discuss the case. Spokeswomen for both would not comment, and GM said it doesn’t comment on settlements to protect privacy of those making claims.

The Melton family settled the case for $5 million in 2013, but refiled it last May after documents sent to Congress showed that engineer Ray DeGiorgio signed papers telling switch maker Delphi Corp. to modify the switches, making it harder to turn them off. DeGiorgio made the change without changing the part number, making the modification difficult to track and giving rise to allegations of a coverup.

Carl Tobias, a law professor at the University of Richmond in Virginia, said the Meltons likely settled for far more than $5 million “given the revelations and adverse publicity.” GM, he said, probably settled to avoid further bad press, especially since there haven’t been many stories written about the switches so far this year.

The National Highway Traffic Safety Administration fined GM $35 million for failing to disclose the problem, and the U.S. Justice Department is investigating the case for possible criminal charges. GM conducted its own investigation that blamed the debacle on engineering ignorance and bureaucratic dithering, not a deliberate coverup. After the probe, 15 people were let go by the company.