GM, King & Spalding See Settlements As Well-Grounded Move - Law360

GM, King & Spalding See Settlements As Well-Grounded Move - Law360

By Sindhu Sundar

Law360, New York (September 9, 2015, 9:56 PM ET) -- General Motors Co. and its outside counsel King & Spalding LLP argue that their swift settlements of ignition switch cases are grounded in deep-rooted traditions in American litigation, which defense attorneys agree pose tough hurdles for multidistrict litigation plaintiffs who claim such tactics helped conceal GM's ignition switch defect.

The plaintiffs in the litigation consolidated in New York federal court have lobbed controversial accusations at the automaker and King & Spalding, attempting to cast doubt on their motives for using confidential settlements to resolve at least three injury lawsuits before GM's recall in 2014 of more than 2.6 million vehicles.

The plaintiffs claim this tactic of settling cases before revelatory information could surface through the discovery process indicates that GM and its attorneys colluded to hide the defect. And they argue that such conduct justifies invoking the crime-fraud exception to break the attorney-client privilege that shields communications between GM and its attorneys about the three cases. 

But GM and King & Spalding argued Friday that settling claims to avert discovery doesn't suggest fraud and even more crucially, that such settlement strategies are enshrined in American litigation philosophy. GM argued that the plaintiffs were using "the very act of litigating" as purported evidence of fraud, while Thomas Morgan, a professor emeritus at George Washington University Law School, wrote as an expert for King & Spalding that the law firm's conduct "should be an occasion for applause, not condemnation." 

And defense attorneys believe that plaintiffs face an uphill struggle to show that King & Spalding's settlement strategy in these cases was at odds with deeply cherished protections for attorneys to candidly assess their clients' liabilities and offer ways to minimize them. 

"If I'm not hiding anything, but I try to settle, I haven't done anything wrong," said Aaron Jacoby of Arent Fox LLP. "It's not in the timing of when to settle, even though that timing might cause something to look suspicious, that doesn't mean [the plaintiffs] have found anything." 

The plaintiffs have asked to see communications between King & Spalding and GM on issues including settlement decisions relating to three cases, including one by the parents of 29-year-old Brooke Melton, whose death in her 2005 Chevy Cobalt led to plaintiffs attorney Lance Cooper's breakthrough discovery of the ignition switch defect.

In July, the plaintiffs claimed that King & Spalding falsely told the Georgia state court overseeing the Melton case that GM didn't have documents relating to other similar ignition switch lawsuits, even though the same King & Spalding attorney in that case was involved in other ignition switch suits. In one of those other suits, the law firm allegedly alerted GM that it could face punitive damages claims if information about other GM defect suits surfaced. 

"New GM’s and [King & Spalding's] goal was to prevent the Meltons from obtaining evidence of 'GM’s conscious indifference and willful misconduct when it comes to the safety of its vehicles’ occupants,'" the plaintiffs had said in that motion, referencing a July 2013 letter from King & Spalding partner Philip Holladay to a GM in-house attorney at the time. The letter is in the MDL case record but in a sealed exhibit. 

The Meltons' case settled in fall 2013 for $5 million, but Cooper later challenged that settlement, arguing that GM had negotiated it without being forthcoming on discovery requests. GM subsequently settled that dispute, too, for a confidential amount.