Alex Jones must pay families of Sandy Hook shooting victims despite bankruptcy -- UPDATED

October 21, 2023

If you have been following the news about the lawsuit filed by the surviving families of the Sandy Hook school shooting against millionaire conspiracy theorist Alex Jones, you know that a Connecticut jury ordered Jones to pay $965 million in damages to 15 relatives of the victims.  Soon, Jones tried to weasel his way out of having to pay for the damages he caused by filing for bankruptcy.  

But I just learned that another judge has ruled that Jones can’t use bankruptcy protections to avoid paying money to the families of the victims. The Hill has more on the story here.

Unfortunately, it may be a while before the families see any of the money, but I hope they do sooner rather than later.  

UPDATE 10/27/23: Above the Law has an update and commentary here.

US Supreme Court denies cert in ignition switch defects case

Last year, the Court of Appeals for the Second Circuit ruled against General Motors' argument that it could not be liable for damages caused by ignition-switch defects because the products were made before it formed a new company following Chapter 11 bankruptcy.  For more information on the case go here and scroll down.  This decision was appealed to the Supreme Court and this week it was reported that the Court has refused to hear the appeal.  Now, the currently pending claims against GM will move forward. The claims have been estimated to be worth between $7 billion and $10 billion.

Court of Appeals for the 2nd Circuit holds GM can be liable for injuries caused before it filed for bankruptcy

Last year I wrote about the possibility that a large number of lawsuits filed against General Motors could be dismissed as a result of the fact that GM filed for bankruptcy in 2009.  To make a long story short, the issue was whether the “New GM” (after bankruptcy) would be responsible for the conduct of the “Old GM” (pre bankruptcy).  Go here for links to my older posts on this question. 

The issue is now back in the news because about 10 days ago, the Court of Appeals for the Second Circuit has decided that General Motors can't use its 2009 bankruptcy to fend off lawsuits over faulty and dangerous ignition switches exposes the automaker to billions in additional liabilities.  The Associated Press has the story here.   The Pop Tort has a comment on it here.

Plaintiffs suing General Motors over faulty ignition switches can seek punitive damages despite GM's reorganization after bankruptcy

Back in May I wrote about the possibility that a large number of lawsuits filed against General Motors could be dismissed following a ruling blocking lawsuits filed against GM over actions that predate its 2009 bankruptcy, declaring that “New GM” and “Old GM” are two different companies and that the new company is not liable for the actions of the old one.  The back story on that is here, here and here.  But the Chicago Daily Law Bulletin is reporting now that "[a] federal bankruptcy judge has ruled that people suing General Motors over faulty ignition switches can seek punitive damages that could cost the company millions of dollars or more.  When General Motors emerged from a 2009 bankruptcy, it became known as “New GM.” The new company essentially was shielded from liabilities of the old company that was left behind.  But Judge Robert Gerber in New York ruled Monday that employees and knowledge transferred from the “Old GM” to the new company. Plaintiffs, he ruled, can seek punitive damages if they can show that “New GM” knew of the faulty switches but covered it up."

G.M.’s Ignition Switch Death Toll Hits 100, but many claims may be dismissed because of the effect of the company's 2009 bankruptcy

The consequences of General Motors’ long-delayed recall of defective small cars hit a grim milestone recently, when the company’s compensation fund said it had approved the 100th death claim tied to faulty ignition switches. The toll far exceeds the 13 victims that G.M. had said last year were the only known fatalities linked to ignitions that could suddenly cut off engine power and disable airbags.  The New York Times has the full story here. However, a large number of lawsuits filed against GM may be dismissed following a recent bankruptcy court ruling blocking lawsuits filed against General Motors over actions that predate its 2009 bankruptcy, declaring that “New GM” and “Old GM” are two different companies and that the new company is not liable for the actions of the old one. AboutLawsuits has that story here.

Washington State Supreme Court decides "uncollectability" is not an element of a legal malpractice cause of action

As you probably know, if a legal malpractice claim is based on alleged negligent conduct in handling a litigation, the plaintiff has to argue that he/she would have won the original case had it not been for the negligent conduct of the defendant.  But what if the plaintiff does not show that he or she would have been able to actually recover compensation from the original defendant?

Addressing this issue for the first time in the jurisdiction, four days ago, the Washington State Supreme Court issued an opinion in a case called Schmidt v. Coogan, holding that the uncollectibility of the judgment in the underlying action is an affirmative defense that the defendant attorney must plead and prove.

In other words, in the malpractice case against the attorney, the plaintiff only has to argue that he or she would have won the original case.  The plaintiff will not have to show he or she would have been able to recover the compensation.  The defendant lawyer can, however, bring up the issue as a defense.

You can read the opinion here.

UPDATE (10/22/14):  As reported in the BNA/ABA Lawyer's Manual on Professional Conduct:

The Schmidt court acknowledged that it was departing from the majority view in holding that the uncollectibility of an underlying judgment is an affirmative defense that a malpractice defendant must prove, rather than holding that collectibility is an element the plaintiff must established as part of her prima facie case The lead opinion identifies Georgia, Iowa, Massachusetts and Nebraska as adhering to the traditional rule. See McDow v. Dixon, 226 S.E.2d 145 (Ga. 1976); Whiteaker v. State, 382 N.W.2d 112 (Iowa 1986); Jernigan v. Giard, 500 N.E.2d 806 (Mass. 1986); Eno v. Watkins, 429 N.W.2d 371 (Neb. 1988). California and Ohio courts also take that view. See Garretson v. Miller, 121 Cal. Rptr.2d 317, 18 Law. Man. Prof. Conduct 421 (Cal. Ct. App. 2002); Paterek v. Petersen & Ibold, 890 N.E.2d 316, 24 Law. Man. Prof. Conduct 315 (Ohio 2008).

States that depart from the traditional view include Alaska, Indiana, Maine, Michigan, New Jersey, New Hampshire, New York and Pennsylvania. See Power Constructors, Inc. v. Taylor & Hintze, 960 P.2d 20 (Alaska 1998); Clary v. Lite Machines Corp., 850 N.E.2d 423 (Ind. Ct. App. 2006); Jourdain v. Dineen, 527 A.2d 1304 (Me. 1987); Teodorescu v. Bushnell, Gage, Reizen & Byington, 506 N.W.2d 275 (Mich. 1993); Hoppe v. Ranzini, 385 A.2d 913 (N.J. 1978); Carbone v. Tierney, 864 A.2d 308, 20 Law. Man. Prof. Conduct 442 (N.H. 2004); Kituskie v. Corbman, 714 A.2d 1027 (Pa. 1998); Lindenman v. Kreitzer, 775 N.Y.S.2d 4, 20 Law. Man. Prof. Conduct 192 (N.Y. App. Div. 2004). See also Akin, Gump, Strauss, Hauer & Feld, LLP v. Nat'l Dev. & Research Corp., 299 S.W.3d 106, 25 Law. Man. Prof. Conduct 617 (Tex. 2010) (evidence that underlying damages “probably would have been paid” despite debtor's insolvency would be enough); Visvardis v. Eric P. Ferleger P.C., 873 N.E.2d 436, 23 Law. Man. Prof. Conduct 427 (Ill. App. Ct. 2007) (plaintiff must plead facts supporting inference that opponent in underlying case would have been able to pay some part of damages).

Court reopens case against GM even though plaintiffs had agreed to settlement

Last July I reported on an attempt to re open a case against GM based on an allegation that the plaintiffs would not have settled had they known that the GM witness lied during discovery and that the company covered it up.  As I said back then, Courts are usually reluctant to reopen lawsuits once they are settled but in this case the available documents helped the plaintiff's argument.  And last week, the court did authorize reopening the case.  Go to AboutLawsuits.com for more details.

NY Times article with details on the GM compensation fund

As you know by now, GM has announced a limited compensation fund for some of the victims of injuries caused by their defective cars.  I commented on it briefly here.  For more information, here is an article from the New York Times with a few more details.

One more problem looming for GM: what did they know back in 2009 during bankruptcy proceeding and other settled cases

A few days ago I commented on GM's proposed compensation fund and, among other things, noted that the fund would not take into account the fact that GM is protected from liability in certain lawsuits as a result f its bankruptcy in 2009.   A new story in Bloomberg from a few days ago suggests there is another reason for this.  According to the story, U.S. Bankruptcy Judge Robert Gerber recently stated in a hearing that plaintiffs in certain cases would have a stronger case if they could prove GM executives knew about the faulty ignition switch problems when testifying during its 2009 bankruptcy.  The judge is quoted as saying that "If they knew about it and intended to keep it from me, that might constitute fraud on the court.”  You can read the story here.  As I suggested in my previous post, GM is not acting out of the goodness of its heart.  It is trying to do damage control.

Meanwhile in a related story reported in the Chicago Daily Law Bulletin on July 3, the family of a woman who died in an accident related to the ignition switch defect is seeking to reopen a case it settled with GM back in October arguing the company committed fraud on the court in that litigation too. GM engineer who designed the switch lied under oath and the company covered it up.  They also argue that the company did not produce relevant documentation during discovery even when ordered by the judge.  It was not until after the case settled that relevant documents were revealed as part of Congressional hearings that the information was discovered.

About a month after that hearing, the plaintiffs filed a motion to reopen the case contending that they would not have settled had they known that the GM witness lied and that the company covered it up.

For obvious reasons, the plaintiffs have said they won’t settle with the recently announced fund administered by Ken Feinberg.  Punitive damages alone could far exceed the previously obtained million settlement.  Plus, the trial could finally bring out the details of GM's knowledge and conduct.

Courts are usually reluctant to reopen lawsuits once they are settled. But the documents now available could help the plaintiff's argument.  Needless to say, if the plaintiffs are successful in reopening the case, other cases could be reopened, and more plaintiffs are likely to take the company to court or expect bigger payments from the compensation fund.  GM should be very worried.

UPDATE (7/27/14):  GM had the case removed to federal court but the court later decided the case should have remained in state court.  For more information go here.

Chart on GM recalls

You are not alone if you have lost count of the many different recalls by GM.  But don't worry, someone prepared a chart.

GM announces compensation fund for some victims of injuries caused by their defective cars

At the same time GM has announced more recalls, it has announced a limited compensation fund for some of the victims of injuries caused by their defective cars. This is not surprising since there had been reports of GM hiring Ken Feinberg some time ago. (See here and here.)
 
I have not read the details of the compensation system so I will limit my comments to the reports I have seen in the press. First, the good news: According to Feinberg (as quoted in this article the day after he announced the compensation fund), the fund will pay $1 million for each death plus a calculation of lifetime earnings lost as well as $300,000 for a spouse and for each dependent. In addition, GM would not hold driver negligence against anyone who files a claim and it will not claim to be protected from having to compensate victims of accidents before its July 10, 2009 bankruptcy restructuring agreement. There will be no cap on the overall amount of money G.M. has agreed to spend on victims’ payments. Even families who have already settled lawsuits with G.M.related to the ignition switch defect would be eligible for payouts (after deducting the amount already received from the total).
 
Obviously accepting compensation from the fund means the victims will waive their right to sue. But this is not necessarily a bad thing if the compensation from the fund is equivalent to, or close enough to, that which the victims would expect to recover in a lawsuit. And, very importantly, Feinberg claims the victims would be able to collect their funds faster than if they chose to go through litigation.
 
This all sounds good, but there is always a catch. First, one thing the claimants give up when giving up their right to sue is the chance to recover punitive damages, which - given what we know now - you would expect would be huge if the cases ever get before a jury. Second, the compensation fund only applies to those who suffered injuries related to the 2.6 million cars recalled in February. When you consider that GM has recalled almost 30 million cars for a variety of defects, the fund actually only covers a small amount of cars and victims. Third, in order to qualify, claimants will have to prove that the defect was the proximate cause of their injury. This will not be easy. Many of the claimants will undoubtedly struggle to collect such evidence because they may no longer have the cars or the paperwork from accidents that took place years earlier. As a result, claimants will have to hire lawyers who will in turn have to gather the evidence necessary to prove their claims (including having to hire experts), all of which will likely result in expenses about as high as those they would incur if they were going to litigate the cases anyway. Finally, to help avoid these costs, Mr. Feinberg has said his team will help people complete their claims. This is the type of conduct that led a federal judge to find that it was misleading for Feinberg to call himself "neutral" or "independent" in administering BP's $20 billion oil spill victim compensation fund and that generated a big debate as to whether he acted unethically in the process. See here, here, here and here.
 
Of course, as is true of most things, the devil is in the details. It is possible the fund will turn out to be a great alternative to litigation and a fair way to resolve the claims. But if the deal sounds too good to be true, it probably is. GM would not be doing this if it did not think it was a great advantage to them in some way. They are not in the business of helping people. They are trying to save money and their reputation. (And a big part of those savings will come in the form of not having to pay for punitive damages.)
 
We will just have to wait and see. Meanwhile, the New York Times seems to be impressed. Here is an OpEd piece praising the compensation fund approach and an Editorial, which praises the program but says GM should do more.
 

More updates and a podcast on the GM continuing saga

Some headlines:

GM is recalling another 7.6 million vehicles

GM Settlements to be Paid for Accidents Where Airbags Did Not Deploy

Podcast:  GM Litigation Update

More updates on the GM debacle and now on other automakers too.

News and comments regarding General Motors keep piling up and none of it is good for the automaker.  I have been very busy this summer and haven't had time to keep up, so I will just provide you with links to some of the articles I have saved to read later.

June 14:  Secret settlements fueled GM's latest ethical inferno

June 16:  GM recalls another 3 million cars; also here and here

June 17:  Texas woman pleads guilty to manslaughter and later finds out fatal accident was caused by defective switch  (UPDATE:  prosecutor is now seeking pardon)

June 18: GM CEO faces criticism in House hearings (includes short video)

June 19:  Ex GM engineer explains how company rewards incompetence

June 19: Legal Ethics Forum:  GM's general counsel and CEO should resign or be fired

June 19: Chrysler ignition switch problems now subject of NHTSA probe

June 20: Ex employees on what it is like to work for GM

June 20: GM class action lawsuit for $10 Billion, here and here

June 23:  News of recalls by BMW and Toyota; also here.

More comments on the GM debacle

The debacle surrounding GM's car recalls, lawsuits and corporate culture has generated a great debate on issues related to torts, safety, litigation, the use of bankruptcy protection, alternative compensation funds and the role of lawyers.  Sadly, much of the debate shows we (whatever you interpret "we" to mean - society, lawyers, judges, regulatory agencies) have not learned important lessons from the past.   You really should take a few minutes and go to the following sites to read up on the issues (and make sure you read the comments too):

The Legal Ethics Forum reports (with links) that GM has fired lawyers as a result of an investigation.

Link to the report prepared by a lawfirm for GM.

"Shades of Enron: the Legal Ethics Implications of the General Motors Scandal"

New York Times article:  "G.M. Lawyers Hid Fatal Flaw, From Critics and One Another"

Richard Zitrin explains the connection between secrecy in litigation and the current issues

The PopTort on GM corporate culture

Article criticizing GM and its legal strategies

The PopTort has a short post on GM and its legal strategies here.

GM seeking protection from lawsuits

Now that there is a real possibility that GM will be sued for damages related to defective cars, GM is seeking a declaratory judgment from a bankruptcy court in New York that it is shielded from products liability suits concerning defects and crashes prior to July 2009, when GM exited bankruptcy. The New York Times has more on the story.

This is not surprising.  Back in 2009, I reported on the developing story regarding the company's bankruptcy and the debate over whether GM should be protected from litigation for injuries suffered prior to the bankruptcy proceeding.  Go here, scroll down for the posts and links to the story.  Note the posts are in reverse chronological order - the older ones are at the bottom).

Originally, GM wanted to be protected from all possible litigation, but after much debate, it agreed to assume responsibility for all future liability claims filed after the automaker emerges from bankruptcy.  However, it continued to claim it should be protected from claims for injuries that happened before 2009.  That's the protection it is now claiming.

Interestingly, back in 2009 during the debate on this issue, Chrysler initially wanted the same kind of protection but eventually it reversed course and agreed to accept product liability claims on vehicles built before the company exited bankruptcy.  GM evidently did not do this.

Professor Jonathan Turley has a comment on the issue here.

Will a criminal investigation of the oil spill affect civil cases?

Law.com is reporting that the U.S. Justice Department's decision to open a criminal investigation into the Gulf Coast oil spill is threatening to complicate scores of lawsuits brought by people seeking compensation for the disaster. Read the full story here. I think, though, that what is going to affect the civil claims the most is BP itself. I am very pessimistic about this. I fear BP will find a way to avoid paying compensation for the damages caused. It will claim caps, delay payments or make it difficult for people to access their payments (there are reports of this already) or, when all else fails, file for bankruptcy. I hope I am wrong.

Bankruptcy Judge has had enough

US Bankruptcy Judge Alan Jaroslovsky has had enough incompetent lawyers appearing in his courtroom; so he has given them the following notice: NOTICE TO BAR REGARDING INDIVIDUAL CHAPTER 11 CASES There has been a recent spate of individual Chapter 11 cases filed by attorneys who have neither the experience nor the education nor the competence to venture into Chapter 11. I believe that there are very few bankruptcy lawyers other than State Bar certified specialists who should be contemplating representation of Chapter 11 debtors in possession. I see rampant errors being made in issues relating to cash collateral, conflicts of interest, and compensation. The use of cash collateral without permission, even for necessary expenses, is usually fatal to Chapter 11 cases. There are procedures in place to obtain emergency permission to use cash collateral. If you don’t know them, you should not be taking Chapter 11 cases. A Chapter 11 is not just a big Chapter 13. If you represent a Chapter 11 debtor in possession, your client is the estate, not the debtor personally. Failure to understand this results in serious liability exposure. Forget about trying to fix your compensation. You will be paid what I allow, period. I suggest you not spend retainers until your fees are allowed to avoid having to return money you have already spent. I see frequent malpractice in individual Chapter 11 cases and I am quick to note it on the record. Your employment will not be approved unless you have substantial current malpractice insurance. If you are going “bare,” don’t even think about taking a Chapter 11 case. For the Judge's official home page go here. The link to this letter appears at the very bottom. Thanks to The Legal Profession Blog for the information.

Compensation fund created in Peanut Corp bankruptcy but not in Chrysler bankruptcy

As part of the bankruptcy proceedings for Peanut Corporation of America, which processed and distributed millions of pounds of contaminated peanuts, peanut butter and peanut paste that sickened people throughout the United States with salmonella poisoning, a federal judge has issued an order calling for the creation of a $12 million fund from insurance proceeds to compensate victims. For the full story go here. In reponse to this news item, the PopTort has published a comment here lamenting how Chrysler, GM, numerous pundits and even the Obama administration argued not too long ago that wiping out the rights of those injured by those companies’ faulty products before they emerged from bankruptcy was unavoidable and/or simply par for the course in any bankruptcy proceeding.

Chrysler wrongful death settlement approved by bankruptcy court

A bankruptcy judge has approved a $24 million settlement for the family of a California longshoreman who brought a wrongful death lawsuit against Chrysler before the company went bankrupt. Go here for the full story.