Motors Liquidation Company

1:09-bk-50026Nysb02.10.2014

Gesamter Gesetzestext

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
)
In re: 	) 	Chapter 11
)
MOTORS LIQUIDATION COMPANY, et. al., 	) 	Case No. 09-50026 (REG)
f/k/a General Motors Corp., et. al., 	)
) 	(Jointly Administered)
Debtors. 	)
ERRATA ORDER RE: DECISION WITH RESPECT
TO NO STAY PLEADING (PHANEUF PLAINTIFFS)
This matter having come up on the Court’s own motion, it is ORDERED:
1. 	That the Court’s Decision with Respect to No Stay Pleading (Phaneuf Plaintiffs),
dated July 30, 2014, is corrected in the respects noted below:
(a) 	Page 13, footnote 26: replace “Complaint” with “complaint”.
(b) 	Page 14, footnote 35: add period after “driving”.
(c) 	Page 16, footnote 42: add period after “prior orders”.
(d) 	Page 17, footnote 34: correct citation to 460 B.R. 592, replacing pinpoint
citation to page 595 with 598, and correcting parenthetical quotation to read “two non-
debtors, or that the Chapter 11 cases have been confirmed.”
2. 	Future references to this decision shall be to the decision as corrected, a copy of
which is attached as exhibit A.
Dated: New York, New York 	s/Robert E. Gerber
October 2, 2014 	United States Bankruptcy Judge
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EXHIBIT A
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UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------x
In re 	: 	Chapter 11
:
MOTORS LIQUIDATION COMPANY, et al., 	: 	Case No.: 09-50026 (REG)
f/k/a General Motors Corp., et al. 	:
:
Debtors. 	: 	(Jointly Administered)
---------------------------------------------------------------x
DECISION WITH RESPECT TO NO STAY
PLEADING (PHANEUF PLAINTIFFS) 1
APPEARANCES:
KING & SPALDING LLP
Attorneys for General Motors LLC
1185 Avenue of the Americas
New York, New York 10036
By: 	Arthur J. Steinberg, Esq. (argued)
Scott I. Davidson, Esq.
KIRKLAND & ELLIS LLP
Attorneys for General Motors LLC
300 North LaSalle
Chicago, Illinois 60654
By: 	Richard C. Godfrey, Esq.
Andrew B. Bloomer, Esq.
BLOCK & LEVITON LLP
Attorneys for Phaneuf Plaintiffs
155 Federal Street, Suite 400
Boston, Massachusetts 02110
By: 	Jeffrey C. Block, Esq. (argued)
Joel A. Fleming, Esq.
1 	This written decision memorializes and amplifies on the oral decision that I issued after the close
of oral argument at the hearing on this matter on July 2, 2014 (the “July 2 Hearing”). Because it
had its origins in the originally dictated decision, it has a more conversational tone. As a general
matter, it speaks as of the time I issued the original decision, though by footnote (see n.8), I’ve
updated it to describe an event that took place after I dictated the original decision.
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FINKELSTEIN, BLANKINSHIP, FREI-PEARSON & GARBER, LLP
Attorneys for Phaneuf Plaintiffs
1279 Route 300
Newburg, New York 12551
By: 	Todd Garber, Esq.
ROBERT E. GERBER
UNITED STATES BANKRUPTCY JUDGE:
In February 2014, General Motors LLC (“New GM”) announced ignition switch
defects in Chevy Cobalts and Pontiac G5s going back to the 2005 model year—at least
seemingly in material part before the chapter 11 filing of Reorganized Debtor General
Motors Corporation, now called Motors Liquidation Corp. (“Old GM”), from whom
New GM purchased the bulk of Old GM assets in a section 363 “free and clear” sale2 in
July 2009.3 The 2014 announcement came many years after ignition switch issues were
first discovered by at least some personnel at Old GM. Very nearly immediately after
New GM’s announcement, a large number of class actions (and to a lesser extent,
individual lawsuits) relating to those defects, referred to here as the “Ignition Switch
Actions,” were commenced against New GM.
At the time of the 363 Sale, New GM assumed many, but much less than all, of
Old GM’s liabilities.4 Focusing on that distinction, in April 2014, New GM filed a
2 	I approved the sale—referred to here as the “363 Sale”—by order dated July 5, 2009 (the “Sale
Order”) (ECF No. 2968), and the sale closed a few days thereafter.
3 	In a February 2014 letter to the National Traffic and Highway Administration, New GM made
reference to 2005–2007 model year Chevy Cobalts, and 2007 model year Pontiac G5s. Defective
ignition switches, manufactured at a time yet to be determined (before the 363 Sale, after the 363
Sale, or both), may also have been installed in other vehicles, including those in other (and
possibly later) model years, including some after the 363 Sale. I make no findings as to any of
these matters at this point in time; I merely identify them as matters that may eventually need to be
stipulated to or otherwise resolved.
4 	The Old GM liabilities assumed by New GM, on the one hand, and not assumed, on the other,
were described in the 363 Sale’s underlying sale agreement, captioned “Amended and Restated
Master Purchase and Sale Agreement,” often referred to by the parties as the “ARMSPA,”
“MPA,” or “MSPA.” As in the past—because, as I’ve repeatedly noted, all but the most common
acronyms are singularly unhelpful to those who haven’t been living with a case—I instead use the
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motion before me (the “Motion to Enforce”)5 to enforce the free and clear provisions of
the Sale Order—contending (though these contentions are disputed) that most, if not all,
of the claims in the Ignition Switch Actions related to vehicles or parts manufactured and
sold by Old GM; that the Ignition Switch Actions assert liabilities not assumed by New
GM; and that the Sale Order’s free and clear provisions proscribe such claims. At very
nearly the same time, counsel for one group of plaintiffs—the “Groman Plaintiffs”—
commenced a class action adversary proceeding in this Court (the “Groman
Adversary”) 6 seeking a declaration that their claims were not so proscribed.
In this jointly administered proceeding in which I address issues in New GM’s
Motion to Enforce and the Groman Adversary,7 I must determine whether one out of
88 Ignition Switch Actions—brought by a group of plaintiffs (the “Phaneuf Plaintiffs”),
suing on their own behalf and on behalf of a purported class—should be allowed to
proceed when the plaintiffs in every other Ignition Switch Actions agreed to stay their
actions while the issues in the Motion to Enforce were being litigated.8
more descriptive term “Sale Agreement.” See, e.g., Castillo v. Gen. Motors LLC (In re Motors
Liquidation Co.), 2012 Bankr. LEXIS 1688, at *13 n.25, 2012 WL 1339496, at *5 n.25 (Bankr.
S.D.N.Y. Apr. 17, 2012) (Gerber, J.), aff’d, 500 B.R. 333 (S.D.N.Y. 2013) (Furman, J.) (“The Sale
Agreement was more formally entitled ‘Amended and Restated Master Purchase and Sale
Agreement,’ and referred to more than occasionally as the ‘ARMSPA.’ By reason of the Court's
dislike of acronyms, which rarely are helpful to anyone lacking intimate familiarity with the
subject, the Court simply says ‘Sale Agreement’”).
5 	ECF No. 12620.
6 	Adv. No. 14-01929.
7 	I determined early on that the largely overlapping issues in the contested matter that resulted from
New GM’s Motion to Enforce and the Groman Adversary should be heard together in this Court.
For brevity I’ll hereafter refer to the Motion to Enforce as a shorthand means to collectively refer
to both.
8 	At the time I orally ruled with respect to the Phaneuf Plaintiffs’ issues at the July 2 Hearing, they
were the only plaintiff group that had declined to stipulate to stay its Ignition Switch Action. In
proceedings later that day, I granted leave to two initially pro se individual plaintiffs (the “Elliott
Plaintiffs”), who had so stipulated but later retained counsel, to be relieved of the stipulation they
had agreed to while pro se. Thus, after having delivered my oral decision on this matter, I now
have one more group of plaintiffs seeking to proceed before all of the others.
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Some of the issues that I’ll later need to decide may turn out to be difficult, but
those here are not. I rule that the Phaneuf Plaintiffs should be treated no differently than
those in the 87 other Ignition Switch Actions who agreed to voluntary stays, with
adherence to the orderly procedures in this Court that were jointly agreed to by counsel
for those other plaintiffs and New GM. The Phaneuf Plaintiffs’ complaint alleges matters
that, on their face, involve matters preceding Old GM’s chapter 11 filing and 363 sale,
with respect to which the Sale Order’s “free and clear” injunctive provisions, at least in
the first instance, apply. And the Phaneuf Plaintiffs would not be prejudiced at all, much
less materially, by litigating their needs and concerns along with the other New GM
consumers raising substantially identical claims. Though injunctive provisions are
already in place and thus a preliminary injunction is unnecessary, New GM has also
shown an entitlement to a preliminary injunction staying the Phaneuf Plaintiffs from
proceeding with their litigation elsewhere while the issues here are being determined.
My Findings of Fact, Conclusions of Law, and bases for the exercise of my
discretion follow.
Findings of Fact
As previously noted, very nearly immediately after New GM’s public
announcement of the ignition switch defects, a very large number of Ignition Switch
Actions were commenced against New GM. Although back in 2009, New GM had
voluntarily undertaken to assume liability for death, personal injury, and property damage
arising from accidents and incidents after the 363 Sale, these lawsuits were for something
else—for “economic loss,” which I understand to cover (possibly among things) claims
for alleged diminishment in value of affected vehicles, out of pocket expenses,
inconvenience, and, additionally, punitive damages, RICO damages, and attorneys fees.
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A. The Context of this Controversy
Very shortly after it filed its Motion to Enforce, New GM sought a conference
with me to establish procedures to manage the litigation of its motion. With the Groman
Adversary also having been filed, and with additional similar litigation foreseeable, I
granted new GM’s request for the conference. I solicited comments from interested
parties with respect to the agenda for that conference, and held an on-the-record
conference on May 2 (the “May 2 Conference”). By the time of the May 2 Conference,
I understood there to be about 65 Ignition Switch Actions; I’m informed that their
number has now reached 88.
To deal with the very large number of plaintiffs’ attorneys who might be impacted
by any rulings I might issue, I asked them to designate a smaller group of their number
who’d speak on their behalf. The plaintiffs’ lawyers community did so. They designated
the law firms of Brown Rudnick, LLP; Caplin & Drysdale, Chartered; and Stutzman,
Bromberg, Esserman & Plifka, PC (whose practices include the representation of tort and
asbestos plaintiffs in bankruptcy courts) to speak on their behalf; those three firms came
to be known as the “Designated Counsel.” And at the May 2 Conference, it became
apparent that this controversy had the potential to impact prepetition creditors of Old
GM, who, under Old GM’s reorganization plan, had become unit holders (“Unit
Holders”) in a General Unsecured Creditors Trust—referred to colloquially as the “GUC
Trust”—which, among other things, would quarterback objections to claims on behalf of
Old GM unsecured creditors, whose recoveries might be diluted by others’ claims against
Old GM. Thus I determined that I should give counsel for the GUC Trust and Unit
Holders the opportunity to be heard as well. Though I provided means for other
plaintiffs’ counsel to be heard to the extent that the Designated Counsel didn’t
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satisfactorily present the others’ views, I ruled that I should primarily hear from
Designated Counsel to avoid duplication and to allow the issues to be decided in an
orderly manner.
At the May 2 Conference, with knowledge of the injunctive provisions of the Sale
Order, I determined that while the litigation process was underway in this Court,
plaintiffs in Ignition Switch Actions would either
(i) agree to enter into a stipulation (“Stay Stipulation”) with New GM
staying the Ignition Switch Actions they’d brought elsewhere, or
(ii) file with the Bankruptcy Court a “No Stay Pleading”—as later
defined in a heavily negotiated scheduling order (the “May 16 Order”)9 I signed
after the May 2 Conference—setting forth why they believed their Ignition Switch
Actions should not be stayed.
The May 16 Order further provided that after September 1, any party may request that I
“modify the stay for cause shown, including based on any rulings in this case, or any
perceived delay in the resolution of the Threshold Issues.”10
9 	ECF No. 12697.
10 	The “Threshold Issues” are:
a. Whether Plaintiffs’ procedural due process rights were
violated in connection with the Sale Motion and the Sale
Order and Injunction, or alternatively, whether Plaintiffs’
procedural due process rights would be violated if the Sale
Order and Injunction is enforced against them (“Due Process
Threshold Issue”);
b. If procedural due process was violated as described in (a)
above, whether a remedy can or should be fashioned as a
result of such violation and, if so, against whom (“Remedies
Threshold Issue”);
c. Whether any or all of the claims asserted in the Ignition
Switch Actions are claims against the Old GM bankruptcy
estate (and/or the GUC Trust) (“Old GM Claim Threshold
Issue”); and
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On June 9, the Ignition Switch Actions, which were brought in many judicial
districts in the United States, were transferred, under 28 U.S.C. § 1407, upon a decision
of the Judicial Panel on Multidistrict Litigation11 to the United States District Court for
the Southern District of New York. They’re now pending in this district for pretrial
purposes before the Hon. Jesse Furman, United States District Judge. Each of Judge
Furman and I has granted comity to the other, and he has entered a scheduling order in
his court that accomplishes his needs while respecting mine.12 By a subsequent MDL
Panel order, the Phaneuf Plaintiffs’ action is before Judge Furman too.
Plaintiffs in 87 out of 88 Ignition Switch Actions agreed to enter into stay
stipulations.13 But the Phaneuf Plaintiffs declined to do so. Instead, they filed a No Stay
Pleading, contending that they are asserting only post-sale claims, and thus that their
claims should be treated differently. They argue that they should be allowed to proceed
with their action even while the Motion to Enforce is pending.
d. If any or all of the claims asserted in the Ignition Switch
Actions are or could be claims against the Old GM bankruptcy
estate (and/or the GUC Trust), should such claims or the
actions asserting such claims nevertheless be
disallowed/dismissed on grounds of equitable mootness
(“Equitable Mootness Threshold Issue”).
11 	See In re General Motors LLC Ignition Switch Litigation, --- F.Supp.2d ---, 2014 U.S. Dist.
LEXIS 79713, 2014 WL 2616819 (J.P.M.L June 9, 2014) (“JPML Decision”).
12 	Order No. 1, In re General Motors LLC Ignition Switch Litigation, No. 14-MC-2543 (S.D.N.Y.
June 24, 2014), ECF No. 3 (the “June 24 Order”).
13 	But see n.8 above, with respect to the Elliott Plaintiffs’ request, which I granted, to withdraw from
their earlier stipulation.
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B. The Sale Agreement and Sale Injunctions
As noted above, the Sale Agreement and Sale Order set out Old GM liabilities
that New GM would assume and not assume. 14 Under the Sale Agreement, New GM did
not assume liability for most “Product Liability Claims” (as there defined).15 But New
GM expressly assumed responsibility for claims for death, personal injury or damage to
property caused by “accidents or incidents” first occurring after the 363 Sale,16 even if
such might otherwise be claims against Old GM.17
Under the Sale Agreement (and the Sale Order, which had corresponding
provisions), New GM also took on, as additional Assumed Liabilities, some, but not all,
claims other than for death, personal injury or property damage caused by accidents or
incidents. In addition, the Sale Order included several injunctive provisions. Relevant
provisions of the Sale Order follow.
1. Sale Order Provisions re Assumed Liabilities
Under the Sale Order (and as described with greater precision there), New GM
assumed Old GM’s obligations under express warranties (colloquially referred to as the
“glove box” warranty) that had been delivered in connection with the sale of vehicles and
14 	Liabilities New GM agreed to assume were called “Assumed Liabilities,” in each of the Sale
Agreement and Sale Order. Those New GM did not assume (and that Old GM retained) were
called “Retained Liabilities.”
15 	See Sale Agreement § 2.3(a)(ix) (as amended on June 30, 2009 (see pages 111–12 of ECF No.
2968-2)).
16 	Id.
17 	See generally In re Motors Liquidation Co., 447 B.R. 142, 149 (Bankr. S.D.N.Y. 2011) (Gerber,
J.) (“GM-Deutsch”) (construing the “incidents” portion of the “accidents or incidents” language
(in the context of claims against New GM by the estate of a consumer who had been in an accident
before the 363 Sale, but died thereafter) as covering more than just “accidents,” but covering
things that were similar, such as fires, explosions, or other definite events that caused injuries and
resulted in the right to sue).
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vehicle parts prior to the 363 Sale.18 But New GM did not assume responsibility for
other alleged warranties, including implied warranties and statements in materials such as
individual customer communications, owner’s manuals, advertisements, and other
promotional materials.19
The Sale Order also provided that except for the Assumed Liabilities expressly set
forth in the Sale Agreement, New GM would not “have any liability for any claim that
arose prior to the Closing Date, relates to the production of vehicles prior to the Closing
Date, or otherwise is assertable against the Debtors or is related to the Purchased Assets
prior to the Closing Date.”20 And it went on to say that:
The Purchaser [New GM] shall not be deemed, as a
result of any action taken in connection with the
MPA [Sale Agreement] or any of the transactions or
documents ancillary thereto or contemplated
thereby or in connection with the acquisition of the
Purchased Assets, to:
(i) be a legal successor, or otherwise
be deemed a successor to the Debtors (other
than with respect to any obligations arising
under the Purchased Assets from and after
the Closing);
(ii) have, de facto or otherwise,
merged with or into the Debtors; or
(iii) be a mere continuation or
substantial continuation of the Debtors or
the enterprise of the Debtors.
18 	See Sale Order ¶ 56. New GM also assumed Old GM obligations under state “lemon law”
statutes—which generally require a manufacturer to provide a consumer remedy when the
manufacturer is unable to conform the vehicle to the warranty, as defined in the applicable statute,
after a reasonable number of attempts as further defined in the statute—and other related
regulatory obligations under such statutes. Id.
19 	Id.
20 	Sale Order ¶ 46.
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Without limiting the foregoing, the Purchaser shall
not have any successor, transferee, derivative, or
vicarious liabilities of any kind or character
for any claims, including, but not limited to, under
any theory of successor or transferee liability, de
facto merger or continuity, environmental, labor and
employment, and products or antitrust liability,
whether known or unknown as of the Closing, now
existing or hereafter arising, asserted, or unasserted,
fixed or contingent, liquidated or unliquidated.21
The Sale Order also provided:
Except for the Assumed Liabilities, or as expressly
permitted or otherwise specifically provided for in
the MPA or this Order,
the Purchaser shall have no liability or
responsibility for any liability or other obligation of
the Sellers [Old GM and its Debtor subsidiaries]
arising under or related to the Purchased Assets.
Without limiting the generality of the foregoing,
and except as otherwise specifically provided in this
Order and the MPA,
the Purchaser shall not be liable for any claims
against the Sellers or any of their predecessors or
Affiliates, and
the Purchaser shall have no successor, transferee, or
vicarious liabilities of any kind or character,
including, but not limited to, any theory of antitrust,
environmental, successor, or transferee liability,
labor law, de facto merger, or substantial continuity,
whether known or unknown as of the Closing, now
existing or hereafter arising, whether fixed or
contingent, asserted or unasserted, liquidated or
unliquidated, with respect to the Sellers or any
obligations of the Sellers arising prior to the
Closing.22
21 	Sale Order ¶ 46 (reformatted for readability).
22 	Sale Order ¶ 48 (reformatted for readability).
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2. Sale Order Injunctive Provisions
Importantly for this matter, the Sale Order also included injunctive provisions.
The first of them provided, in relevant part:
Except as expressly permitted or otherwise
specifically provided by the MPA or this Order,
all persons and entities, including, but not limited to
. . . litigation claimants . . .
holding . . . claims . . . of any kind or nature
whatsoever, including rights or claims based on any
successor or transferee liability, against . . . a Seller
. . .
arising under or out of, in connection with, or in any
way relating to, the Sellers, the Purchased Assets,
the operation of the Purchased Assets prior to the
Closing, or the 363 Transaction,
are forever barred, estopped, and permanently
enjoined (with respect to future claims or demands
based on exposure to asbestos, to the fullest extent
constitutionally permissible)
from asserting against the Purchaser, its successors
or assigns, its property, or the Purchased Assets,
such persons’ or entities’ . . . claims . . . , including
rights or claims based on any successor or
transferee liability.23
The second injunctive provision provided, in relevant part:
Effective upon the Closing and except as may be
otherwise provided by stipulation filed with or
announced to the Court with respect to a specific
matter or an order of the Court,
all persons and entities are forever prohibited and
enjoined
23 	Sale Order ¶ 8 (reformatted for readability).
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from commencing or continuing in any manner any
action or other proceeding, whether in law or
equity,
in any judicial, administrative, arbitral, or other
proceeding against the Purchaser . . . or the
Purchased Assets, with respect to any
(i) claim against the Debtors other than
Assumed Liabilities, or
(ii) successor or transferee liability of the
Purchaser for any of the Debtors, including,
without limitation, the following actions:
(a) commencing or continuing any
action or other proceeding pending
or threatened against the Debtors as
against the Purchaser, or its
successors, assigns, affiliates, or
their respective assets, including the
Purchased Assets;
. . . .
(e) commencing or continuing any
action, in any manner or place, that
does not comply, or is inconsistent
with, the provisions of this Order or
other orders of this Court, or the
agreements or actions contemplated
or taken in respect thereof . . . . 24
C.. The Phaneuf Plaintiffs’ Claims
The Phaneuf Plaintiffs’ complaint alleges that after the 363 Sale (which it will be
recalled took place in July 2009), at various times in the period from November 2009 to
September 2010, Phaneuf Plaintiffs:
 	Lisa Phaneuf purchased a 2006 Chevy HHR;
 	Adam Smith purchased a 2007 Pontiac Solstice; and
24 	Sale Order ¶ 47 (reformatted for readability).
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 	Catherine and Joseph Cabral purchased a 2007 Chevy Cobalt.25
Each was a vehicle manufactured by Old GM.26
But the Phaneuf Plaintiffs’ Ignition Switch Action was brought against New GM.
New GM was sued as alleged “successor in interest” to Old GM,27 and the Phaneuf
Plaintiffs repeatedly rely on alleged conduct of Old GM, in part by referring to the two
entities collectively,28 and in part by specific reference to acts undertaken by Old GM
before New GM was created. In seven places in their complaint, the Phaneuf Plaintiffs
speak of acts that took place in February 2005;29 April 2005;30 June 2005;31 March
25 	See Phaneuf Compl. ¶¶ 8, 9, 15, ECF No. 12698-10 (“Compl.”).
26 	The Phaneuf Plaintiffs’ complaint suggests that others in their group—Mike Garcia, who bought a
2010 Cobalt; Javier Delacruz, who bought a 2009 Cobalt (in September 2009, which conceivably
could have been manufactured after the July 2009 363 Sale); Steve Sileo, who bought a 2010
Cobalt; Steven Bucci, who bought a 2009 Cobalt (in November 2009, which, like Delacruz’s
Cobalt, conceivably could have been manufactured after the July 2009 363 Sale); and David
Padilla, who purchased a 2010 Cobalt (see Compl. ¶¶ 10–14)—might have purchased vehicles
manufactured by New GM, rather than Old GM, and that they thus might have factual
circumstances that distinguish them from Phaneuf, Smith, and the Cabrals. But all of the Phaneuf
Plaintiffs sue under a common complaint. In the briefing to follow, Garcia, Delacruz, Sileo, Bucci
and Padilla, like others, will be free to flesh out the facts with respect to the manufacture of their
vehicles, and to point out any factual distinctions that might be warranted.
27 	See Compl. at page 1, before the beginning of numbered paragraphs (“Plaintiffs . . . allege the
following against Defendant General Motors LLC (‘New GM’) successor-in-interest to General
Motors Corporation (‘Old GM’) (collectively, the ‘Company,’ or ‘GM’)”) (emphasis added).
28 	The Phaneuf Plaintiffs’ effort to treat Old GM and New GM as a single entity is inappropriate, as
a matter of bankruptcy law, if not as a matter of other law as well. As if it cures the deficiency,
the Phaneuf Plaintiffs continue, in a footnote:
Any reference to “GM” relating to a date before July 10, 2009
means Old GM. Any reference to “GM” relating to a date
after July 10, 2009 means New GM. Any reference to “GM”
that does not related to a specific date means Old GM and
New GM, collectively.
Compl. n.2. That tactic underscores the Phaneuf Plaintiffs’ efforts to muddy the distinctions
between the two entities, and to impose liability on New GM based on Old GM’s conduct.
29 	See Compl. ¶ 26 (“In 2005, for example, GM launched the ‘Only GM’ advertising campaign. . . .
‘Safety and security’ were the first two features highlighted in the Company’s February 17, 2005
press release describing the campaign.”).
30 	Id. ¶ 27 (“Similarly, an April 5, 2005 press release about the ‘Hot Button marketing program’
stated that the ‘Value of GM's Brands [Was] Bolstered By GM's Focus On Continuous Safety’
and explained that the Hot Button program was ‘intended to showcase the range of GM cars,
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2005; 32 November 2005;33 April 2006;34 and as early as 2003. 35 Each of those acts took
place before the formation of New GM, and would have been more candidly described in
the Phaneuf Plaintiffs’ complaint if, in each instance, the reference to “GM” were to “Old
GM.” The allegations do not describe actions taken by New GM.
I don’t now make any finding as to any respects in which New GM might be
liable for its own post-sale conduct, or whether the Sale Order (or any part of it) should
be invalidated, by reason of due process concerns or any of the other matters that
Designated Counsel will be briefing in the upcoming weeks. 36 But I do find the Phaneuf
Plaintiffs’ efforts to merge pre- and post-sale acts, and to place reliance on the alleged
conduct of Old GM, especially collectively, are much more than sufficient for me to find
that the Phaneuf Plaintiffs place material reliance on Old GM actions that took place
before the Sale Order, and assert claims with respect to vehicles that were manufactured
before the 363 Sale. Thus I find as a fact, or mixed question of fact and law, that the
trucks and SUVs that offer drivers continuous safety-protection before, during and after a
vehicle collision.’”) (hyphen in original).
31 	Id. ¶ 28 (“On June 14, 2005, GM issued a press release stating that ‘Safety [Was The] No. 1
Concern For Women At The Wheel’ . . . .”).
32 	Id. ¶ 29 (“In a statement aired on Good Morning America on March 7, 2005, a GM
spokesperson stated that ‘the [Chevrolet] Cobalt exceeds all Federal safety standards that
provide - significant real-world safety before, during, and after a crash.’” (alteration and
hyphen in original).
33 	Id. ( “ In November 2005, GM ran radio advertisements stating that ‘One of the best things to
keep you [and your] family safe is to buy a Chevy equipped with OnStar . . . from Cobalt to
Corvette there’s a Chevy to fit your budget.’”) (alterations in original).
34 	Id. ¶ 41 (“In April 2006, GM attempted to fix the Ignition Defect by replacing the original detent
spring and plunger with a longer detent spring and plunger.”).
35 	Id. ¶ 45 (“[I]n 2003, a GM service technician observed the Ignition Defect while he was
driving.”).
36 	I likewise don’t make a finding now as to the significance of the pre- or post-sale timing of the
design or manufacture of parts that might have gone into vehicles that were built pre- or post-sale.
I assume that issues of that character will be addressed by Designated Counsel, New GM, and
others in the briefing in the upcoming weeks, and those parties deserve to be heard before I make
any decisions in that regard.
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threshold applicability of the Sale Order—and its injunctive provisions—has easily been
established in the first instance, at least for the purposes of the Phaneuf Plaintiffs’
claims.37
Discussion
In that factual context, I rule that the Phaneuf Plaintiffs’ claims will be treated the
same as those in the other 87 Ignition Switch Actions. The stay already imposed by the
injunctive provisions of Paragraphs 8 and 47 of the Sale Order (and that I may also
impose by preliminary injunction) will remain in place insofar as it affects the Phaneuf
Plaintiffs’ complaint—subject to the right, shared by all of the other plaintiffs in the
Ignition Switch Actions, to ask that I revisit the issue after September 1.
A. Applicability of the Sale Order
Paragraph 8 of the Sale Order provides, among other things, that all persons and
entities “are . . . enjoined . . . from asserting against the Purchaser [New GM] . . . such
persons’ or entities’ . . . claims . . ., including rights or claims based on any successor or
transferee liability.”
Similarly, Paragraph 47 of the Sale Order provides, among other things, that all
persons and entities “are . . . enjoined from commencing or continuing in any manner any
action or other proceeding . . . against the Purchaser . . . with respect to any (i) claim
against the Debtors other than Assumed Liabilities, or (ii) successor or transferee liability
of the Purchaser for any of the Debtors . . . .”
37 	That is not to say, of course, that what the Sale Order says will be the end of the inquiry, either in
the Phaneuf Plaintiffs’ case or in the case of the other 87 Ignition Switch Actions. By reason of
the due process contentions that the other litigants will address, or otherwise, the Sale Order may
turn out to have exceptions or self-destruct. But for now it’s in place.
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I’ve found as a fact—based on the Phaneuf Plaintiffs’ complaint’s express
reference to New GM as the “successor in interest” to Old GM,38 and the facts that at
least three of them purchased cars manufactured before the 363 Sale;39 that their
complaint (apparently intentionally) merges pre- and post-sale conduct by Old GM and
New GM; 40 and that their complaint places express reliance on at least seven actions by
Old GM, before New GM was formed 41 —that at least much of the Phaneuf Plaintiffs’
complaint seeks to impose liability on New GM based on Old GM’s pre-sale acts.
Efforts of that character are expressly forbidden by the two injunctive provisions just
quoted. Though I can’t rule out the possibility that a subset of matters the Phaneuf
Plaintiffs might ultimately show would not similarly be forbidden, at this point the Sale
Order injunctive provisions apply. And it need hardly be said that I have jurisdiction to
interpret and enforce my own orders,42 just as I’ve previously done, repeatedly, with
respect to the very Sale Order here.43
38 	See page 13 & n.27 above.
39 	See pages 12–13 & n.25 above.
40 	See page 13 & n.28 above.
41 	See pages 13–14 & nn.29–35 above.
42 	See Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151 (2009) (“Travelers”) (“[A]s the Second
Circuit recognized . . . the Bankruptcy Court plainly had jurisdiction to interpret and enforce its
own prior orders.”); see also In re Lyondell Chem. Co., 445 B.R. 277, 287 (Bankr. S.D.N.Y. 2011)
(Gerber, J.) (same).
43 	See Castillo v. Gen. Motors LLC (In re Motors Liquidation Co.), 2012 Bankr. LEXIS 1688, at
*17, 20, 31, 50, 2012 WL 1339496, at *6–7, 9, 14 (Bankr. S.D.N.Y. April 17, 2012) (Gerber, J.),
aff’d, 500 B.R. 333 (S.D.N.Y. 2013) (Furman, J.) (interpreting the Sale Order, among other
extrinsic evidence bearing on the intent of Old GM and New GM in entering into the Sale
Agreement, to aid in determining whether New GM assumed Old GM’s settlement with the
Castillo Plaintiffs); Trusky v. Gen. Motors LLC (In re Motors Liquidation Co.), 2013 Bankr.
LEXIS 620, at *4, 11–24, 2013 WL 620281, at *1, 4–8 (Bankr. S.D.N.Y. Feb. 19, 2013) (Gerber,
J.) (construing the Sale Order, and then remanding the remainder of a controversy, involving
issues unrelated to the Sale Order, to the Eastern District of Michigan); GM-Deutsch, discussed at
n.17 above.
Other judges in the Southern District of New York, at both the District Court and Bankruptcy
Court levels, have recognized this as well. See, e.g., In re Grumman Olson Indus., Inc., 467 B.R.
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Thus unless and until I rule, after hearing from counsel in the other 87 Ignition
Switch Actions, that I should not enforce the Sale Order, in whole or in part (or that with
respect to any particular matters, the Sale Order does not apply), the Phaneuf Plaintiffs
remain enjoined under it. As the Supreme Court held in Celotex,44 persons subject to an
injunctive order issued by a court with jurisdiction are expected to obey that decree until
it is modified or reversed, even if they have proper grounds to object to the order.
Then even assuming (though this is debatable) that I could deprive New GM of
the benefits of the Sale Order’s injunctive provisions in the exercise of my discretion, I
am not prepared to do so now. I have 88 Ignition Switch Actions before me—in most of
which parties are likely to make similar contentions. Under section 105(d) authority45
694 (S.D.N.Y. 2012) (Oetken, J.), aff’g, 445 B.R. 243, 247–50 (Bankr. S.D.N.Y. 2011) (Bernstein,
C.J.) (“Grumman Olson”) (confirming that a bankruptcy judge can interpret the scope and effect
of his or her court’s prior sale order, post-confirmation, and as between non-debtors (citing Luan
Inv. S.E. v. Franklin 145 Corp. (In re Petrie Retail, Inc.), 304 F.3d 223, 228–31 (2d Cir.2002)
(holding that Bankruptcy Court could exercise continuing postconfirmation jurisdiction over non-
debtor parties, in part because “the dispute . . . was based on rights established in the sale order”
and noting that a “bankruptcy court retains post-confirmation jurisdiction to interpret and enforce
its own orders”))); In re Old Carco LLC, 505 B.R. 151, 159 & 163 n.17 (Bankr. S.D.N.Y. 2014)
(Bernstein, C.J.) (“the Court retains bankruptcy jurisdiction under 28 U.S.C. § 1334 to interpret its
prior sale order even when the dispute involves non-debtor third parties”); see also Moelis Co.
LLC v. Wilmington Trust FSB (In re Gen. Growth Props., Inc.), 460 B.R. 592, 598 (Bankr.
S.D.N.Y. 2011) (Gropper, J.) (“A bankruptcy court always has jurisdiction to interpret its own
orders. It does not matter that the State Court Action is purportedly between two non-debtors, or
that the Chapter 11 Cases have been confirmed.”) (citation omitted).
44 	Celotex Corp. v. Edwards, 514 U.S. 300, 306–07 (1995).
45 	Bankruptcy Code section 105(d) provides:
The court, on its own motion or on the request of a party in
interest—
(1) shall hold such status conferences as are
necessary to further the expeditious and economical
resolution of the case; and
(2) unless inconsistent with another provision of
this title or with applicable Federal Rules of
Bankruptcy Procedure, may issue an order at any
such conference prescribing such limitations and
conditions as the court deems appropriate to ensure
that the case is handled expeditiously and
economically . . . .
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given to me by Congress, I established an orderly process, with input from Designated
Counsel and counsel for New GM, the Groman Adversary Plaintiffs, the GUC Trust and
others by which I can fairly address these issues. It would be grossly unfair to the
plaintiffs in the 87 Ignition Switch Actions who stipulated to stay their cases to give a
single litigant group leave to proceed on its own. My efforts to manage 88 cases, with
largely overlapping issues, require that they proceed in a coordinated way.
There is no basis in law or equity, or logic, for the notion that I should except one
plaintiff group from the process to which the other 87 litigant groups are bound. Making
an exception for the Phaneuf Plaintiffs would be monumentally bad case management.
During the July 2 Hearing, we had lengthy discussion as to what would make the most
sense in managing the issues in this case—which are in many respects difficult ones.
Except for the limited purpose of having concluded that the Phaneuf Plaintiffs’ complaint
raises contentions forbidden, in the first instance, by the Sale Order, I need to minimize
piecemeal rulings now, by me or by any other judge—assuming that he or she would
disregard express provisions in the Sale Order giving me exclusive jurisdiction to decide
the matters before me now. 46 Nor should I simply let the Phaneuf Plaintiffs’ claims
proceed without the scrutiny that all of the other Ignition Switch Action claims will
undergo.
I’ve determined that the Sale Order applies in the first instance. The procedures
established by my earlier orders are necessary to ensure the fair adjudication of the issues
before me. The Phaneuf Plaintiffs have not come close to making a sufficient showing as
46 	See Sale Order ¶ 71 (“This Court retains exclusive jurisdiction to enforce and implement the terms
and provisions of this Order, the MPA, . . . and each of the agreements executed in connection
therewith, . . . including, but not limited to, retaining jurisdiction to . . . (c) resolve any disputes
arising under or related to the MPA, except as otherwise provided therein . . . .”).
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to why I should make an exception for them—nor for allowing them to proceed ahead of
the other 87 Ignition Switch Actions.
B. Preliminary Injunction
Additionally, I determine that even if the Sale Order lacked the injunctive
provisions it has, it would be appropriate to enter a preliminary injunction protecting New
GM from the need now to defend claims that, under the Sale Agreement and Sale Order,
it did not assume, and preventing the piecemeal litigation of the Phaneuf Plaintiffs’
claims ahead of all of the other lawsuits similarly situated.
The standards for entry of a preliminary injunction in the Second Circuit, as set
out in its well-known decision in Jackson Dairy47 and its progeny,48 are well established.
As stated in Jackson Dairy, “the standard in the Second Circuit for injunctive relief
clearly calls for a showing of (a) irreparable harm and (b) either (1) likelihood of success
on the merits or (2) sufficiently serious questions going to the merits to make them a fair
ground for litigation and a balance of hardships tipping decidedly toward the party
requesting the preliminary relief.”49 Those requirements are easily met here.
1. Irreparable Harm
Here, irreparable injury, in terms of the case management concerns and prejudice
to the litigants in the other 87 actions, has been established. It’s foreseeable, if not
obvious, that at least many of the 87 other litigants will present issues that the Phaneuf
Plaintiffs now present.
47 	Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70 (2d Cir. 1979) (“Jackson Dairy”).
48 	See, e.g., Christian Louboutin S.A. v. Yves Saint Laurent Am. Holdings, Inc., 696 F. 3d 206, 215
(2d Cir. 2012) (applying the Jackson Dairy standard, though not citing Jackson Dairy directly);
UBS Fin. Servs., Inc. v. W. Va. Univ. Hosps., Inc., 660 F.3d 643, 648 (2d Cir. 2011) (citing
Jackson Dairy); Citigroup Global Mkts., Inc. v. VCG Special Opportunities Master Fund Ltd., 598
F.3d 30, 35 (2d Cir. 2010) (same).
49 	Jackson Dairy, 596 F.2d at 72.
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And when actions raise overlapping issues, even if they’re not wholly congruent,
coordinated disposition is essential.50 The facts that the Phaneuf Plaintiffs present may
not appear in every one of those 88 cases. But the chances that similar facts will not be
present in at least many of them are remote. I well understand the desires of litigants to
get their cases moving as quickly as possible. But those desires are insufficient to trump
the normal case management concerns that I and most other judges have.
Indeed, these concerns underlie why MDL proceedings, like the one before Judge
Furman, come into being. For reasons that would be obvious to most, the MDL Panel
determined that Ignition Switch Actions should be handled by a single judge for
coordinated or consolidated pretrial proceedings. Irreparable injury in terms of case
management concerns, for each of me and Judge Furman (not to mention prejudice to the
litigants in the other 87 actions), would plainly occur if I were to allow the Phaneuf
Plaintiffs to proceed before all of the others.
Judge Furman’s case management concerns were apparent in his June 24 Order,51
which, among other things, set up his cases for adjudication in an orderly way,52 just as I
50 	Exemplifying this is the Phaneuf Plaintiffs’ reliance on the Bankruptcy Court and District Court
decisions in Grumman Olson, see n.43 above, 445 B.R. 243 (Bankr. S.D.N.Y. 2011) (Bernstein,
C.J.), and 467 B.R. 694 (S.D.N.Y. 2012) (Oetken, J.), respectively. I have no doubt whatever that
in the subsequent proceedings before me in connection with the other 87 Ignition Switch Actions,
Designated Counsel will place reliance on one or both of those cases, and that New GM will
argue, in contrast, that in respects relevant here, those cases are distinguishable or wrongly
decided. (The GUC Trust may also wish to be heard on the Grumman Olson cases, though its
likely position is less obvious.) That is exactly why the Phaneuf Plaintiffs’ contentions should not
be heard on their own, and why I should not be making early judgments on the merits of the issues
now—especially before Designated Counsel, New GM, the GUC Trust and any others with
differing views have had a chance to be heard.
51 	See n.12 above.
52 	See, e.g., June 24 Order at Section XI, regulating motion practice (providing that “[a]ny and all
pending motions in the transferor courts are denied without prejudice, and will be adjudicated
under procedures set forth in this Order and subsequent orders issued by this Court”); id. at
Section XII, regulating discovery (providing that “[p]ending the development of a fair and
efficient schedule, all outstanding discovery proceedings are suspended until further order of this
Court, and no further discovery shall be initiated,” but further providing that the June 24 Order
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did. Each of us recognizes the need for coordinated proceedings in a matter of this size
and complexity.
2. Sufficiently Serious Questions Going to the Merits
But I don’t need to, and should not, make a finding of likelihood of success on the
merits. That would require me to decide too much at this time, to the potential prejudice
of the plaintiffs in the other 87 Ignition Switch Actions, New GM, and the GUC Trust. I
need not address likelihood of success because, as I’ve previously noted, serious
questions going to the merits provide an alternate basis for the entry of a preliminary
injunction, when coupled with the requisite tipping of hardships.
New GM has easily shown serious issues going to the merits with respect to relief
from this Court, though it is premature for me to go beyond such a narrow finding. It
now appears, from the preceding discussion, that at least many of the Phaneuf Plaintiffs’
claims were not assumed by New GM. It’s possible that the Phaneuf Plaintiffs or others
could eventually establish that a subset of their claims would fall outside of the Sale
Order’s scope, but New GM has already made at least a prima facie showing that it did
not assume a significant portion of the Phaneuf Plaintiffs’ claims. Similarly, while we
know that other Ignition Switch Action plaintiffs will want to be heard on whether due
process concerns place constraints on New GM’s ability to rely on the Sale Order, the
starting point is the Sale Order itself. New GM has shown serious issues going to the
merits with respect to the protection it was granted under the express language of that
order, which would remain unless and until due process (or other) concerns make some
or all of the Sale Order’s protections drop out of the picture.
would not “preclude any discovery that is agreed or ordered to facilitate matters in the Bankruptcy
Court, provided that to the extent any discovery is undertaken in the Bankruptcy Court, it shall be
coordinated with this Court.”) (italics in original).
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3. Balance of Hardships
Finally, I turn to the balance of hardships. 	That too weighs in New GM’s favor.
The hardship to New GM if it were forced to litigate against the Phaneuf Plaintiffs
on one track, and the other 87 actions, on another, would be significant. New GM would
have to defend largely similar claims in multiple forums, thus exposing it to both
unnecessary expense and the possibility of inconsistent results. And New GM, the non-
bankruptcy court and I would all be prejudiced by confusion with respect to which issues
could be decided in the non-bankruptcy court, and which would have to be decided here.
There also could be prejudice to the plaintiffs in the other 87 Ignition Switch Actions,
who might be affected (presumably not by res judicata or collateral estoppel, but still by
stare decisis) by adverse rulings in the non-bankruptcy court. And there would be
significant prejudice to my case management needs, as the extensively negotiated
coordinated mechanism for dealing with 88 separate actions, with coordinated briefing of
threshold issues, was cut away.
By contrast, by being treated the same as the plaintiffs in the other 87 actions, the
Phaneuf Plaintiffs would not be harmed in any material respect. Their effort to proceed
going it alone rests on the notion that another federal judge—here, Judge Furman—
would consider it productive to allow one plaintiff group to move forward in its action
while 87 others are stayed, pending the determination in this Court of critical threshold
issues that will determine what claims may, and what claims may not, be asserted in light
of the Sale Order. That premise is unrealistic.
Reasons cited by the Multidistrict Panel in sending the Ignition Switch Actions to
New York included its recognition that I “already [have] been called upon by both
General Motors and certain plaintiffs to determine whether the 2009 General Motors
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bankruptcy Sale Order prohibits plaintiffs’ ignition switch defect lawsuits.”53 Proceeding
without regard to the agreed-on mechanisms for determining those issues in this Court
would frustrate the purpose for which the Ignition Switch Actions were sent here. And
there is little or no basis for the Phaneuf Plaintiffs’ assumption (or hope) that Judge
Furman would deprive me of the ability to do my job.
To the contrary, Judge Furman has been highly sensitive to the Bankruptcy
Court’s needs and concerns. His first order provided that while he might appoint lead
and liaison counsel before I ruled, he would be open to consideration as to whether such
appointment should be amended if “the Bankruptcy Court rules that some, but less than
all, of the claims now pending here may be asserted.”54 He asked counsel appearing
before him to address, among other things, “the extent to which proceedings in this Court
should proceed before rulings by the Bankruptcy Court, on the one hand, or should be
deferred pending such rulings, on the other.”55 He provided, as I have, for an initial
suspension of discovery, but provided further that his directive would not “preclude any
discovery that is agreed or ordered to facilitate matters in the Bankruptcy Court, provided
that to the extent any discovery is undertaken in the Bankruptcy Court, it shall be
coordinated with this Court.”56 And he expressly provided that matters addressed in his
order could be reconsidered “to the extent necessary or desirable to address any rulings
53 	JPML Decision, --- F.Supp.2d at ---, 2014 U.S. Dist. LEXIS 79713, at *4, 2014 WL 2616819, at
*2.
54 	June 24 Order Section IX.
55 	Id. Section X(B).
56 	Id. Section XII (italics in original).
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by the Bankruptcy Court or any higher court exercising appellate authority over the
Bankruptcy Court’s decision.”57
Given the respect evidenced by each of the Multidistrict Panel and Judge Furman
of the Bankruptcy Court’s responsibility to determine matters pending here, there is no
reasonable basis for a conclusion that Judge Furman would want—or allow—the Phaneuf
Plaintiffs’ action, which has been added to the lengthy list of cases before him, to proceed
on its own.
Thus, even if I had not already found that the Sale Order’s injunctive provisions
already apply, New GM would be entitled to a preliminary injunction in its favor until
I’ve ruled on the Threshold Issues.
Conclusion
For the above reasons, the Phaneuf Plaintiffs’ Ignition Switch Action, like the
others, will be stayed pending further rulings in the matters before me, or my further
order.
This decision is without prejudice to the rights of the plaintiffs in all of the other
87 Ignition Switch Actions, and of any other parties (including, without limitation, New
GM and the GUC Trust) who might hereafter want to be heard on issues before me.
New GM is to settle an order in accordance with this ruling.
Dated: New York, New York 	s/Robert E. Gerber
July 30, 2014 	United States Bankruptcy Judge
57 	Id. Section XVI.
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1 printed pages contain little extracted OCR body text; searchable legal-body completeness has not been established for those pages.

OCR transcription for search; preserved printed pages are authoritative

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UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK

Inre:

Chapter 11

MOTORS LIQUIDATION COMPANY, et. al., Case No. 09-50026 (REG)
f/k/a General Motors Corp., et. al.,

(Jointly Administered)

Nee ee Ne we wa Ss aS

Debtors.

ERRATA ORDER RE: DECISION WITH RESPECT
TO NO STAY PLEADING (PHANEUF PLAINTIFFS)

This matter having come up on the Court’s own motion, itis ORDERED:
1. That the Court’s Decision with Respect to No Stay Pleading (Phaneuf Plaintiffs),
dated July 30, 2014, is corrected in the respects noted below:

(a) Page 13, footnote 26: replace “Complaint” with “complaint”.

(b) Page 14, footnote 35: add period after “driving”.

(c) Page 16, footnote 42: add period after “prior orders”.

(d) Page 17, footnote 34: correct citation to 460 B.R. 592, replacing pinpoint
citation to page 595 with 598, and correcting parenthetical quotation to read “two non-
debtors, or that the Chapter 11 cases have been confirmed.”

2. Future references to this decision shall be to the decision as corrected, a copy of

which is attached as exhibit A.
Dated: New Y ork, New Y ork s/Robert E. Gerber
October 2, 2014 United States Bankruptcy Judge

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EXHIBIT A

-1-
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------x
In re 	: 	Chapter 11
:
MOTORS LIQUIDATION COMPANY, et al., 	: 	Case No.: 09-50026 (REG)
f/k/a General Motors Corp., et al. 	:
:
Debtors. 	: 	(Jointly Administered)
---------------------------------------------------------------x
DECISION WITH RESPECT TO NO STAY
PLEADING (PHANEUF PLAINTIFFS) 1
APPEARANCES:
KING & SPALDING LLP
Attorneys for General Motors LLC
1185 Avenue of the Americas
New York, New York 10036
By: 	Arthur J. Steinberg, Esq. (argued)
Scott I. Davidson, Esq.
KIRKLAND & ELLIS LLP
Attorneys for General Motors LLC
300 North LaSalle
Chicago, Illinois 60654
By: 	Richard C. Godfrey, Esq.
Andrew B. Bloomer, Esq.
BLOCK & LEVITON LLP
Attorneys for Phaneuf Plaintiffs
155 Federal Street, Suite 400
Boston, Massachusetts 02110
By: 	Jeffrey C. Block, Esq. (argued)
Joel A. Fleming, Esq.
1 	This written decision memorializes and amplifies on the oral decision that I issued after the close
of oral argument at the hearing on this matter on July 2, 2014 (the “July 2 Hearing”). Because it
had its origins in the originally dictated decision, it has a more conversational tone. As a general
matter, it speaks as of the time I issued the original decision, though by footnote (see n.8), I’ve
updated it to describe an event that took place after I dictated the original decision.
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-2-
FINKELSTEIN, BLANKINSHIP, FREI-PEARSON & GARBER, LLP
Attorneys for Phaneuf Plaintiffs
1279 Route 300
Newburg, New York 12551
By: 	Todd Garber, Esq.
ROBERT E. GERBER
UNITED STATES BANKRUPTCY JUDGE:
In February 2014, General Motors LLC (“New GM”) announced ignition switch
defects in Chevy Cobalts and Pontiac G5s going back to the 2005 model year—at least
seemingly in material part before the chapter 11 filing of Reorganized Debtor General
Motors Corporation, now called Motors Liquidation Corp. (“Old GM”), from whom
New GM purchased the bulk of Old GM assets in a section 363 “free and clear” sale2 in
July 2009.3 The 2014 announcement came many years after ignition switch issues were
first discovered by at least some personnel at Old GM. Very nearly immediately after
New GM’s announcement, a large number of class actions (and to a lesser extent,
individual lawsuits) relating to those defects, referred to here as the “Ignition Switch
Actions,” were commenced against New GM.
At the time of the 363 Sale, New GM assumed many, but much less than all, of
Old GM’s liabilities.4 Focusing on that distinction, in April 2014, New GM filed a
2 	I approved the sale—referred to here as the “363 Sale”—by order dated July 5, 2009 (the “Sale
Order”) (ECF No. 2968), and the sale closed a few days thereafter.
3 	In a February 2014 letter to the National Traffic and Highway Administration, New GM made
reference to 2005–2007 model year Chevy Cobalts, and 2007 model year Pontiac G5s. Defective
ignition switches, manufactured at a time yet to be determined (before the 363 Sale, after the 363
Sale, or both), may also have been installed in other vehicles, including those in other (and
possibly later) model years, including some after the 363 Sale. I make no findings as to any of
these matters at this point in time; I merely identify them as matters that may eventually need to be
stipulated to or otherwise resolved.
4 	The Old GM liabilities assumed by New GM, on the one hand, and not assumed, on the other,
were described in the 363 Sale’s underlying sale agreement, captioned “Amended and Restated
Master Purchase and Sale Agreement,” often referred to by the parties as the “ARMSPA,”
“MPA,” or “MSPA.” As in the past—because, as I’ve repeatedly noted, all but the most common
acronyms are singularly unhelpful to those who haven’t been living with a case—I instead use the
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-3-
motion before me (the “Motion to Enforce”)5 to enforce the free and clear provisions of
the Sale Order—contending (though these contentions are disputed) that most, if not all,
of the claims in the Ignition Switch Actions related to vehicles or parts manufactured and
sold by Old GM; that the Ignition Switch Actions assert liabilities not assumed by New
GM; and that the Sale Order’s free and clear provisions proscribe such claims. At very
nearly the same time, counsel for one group of plaintiffs—the “Groman Plaintiffs”—
commenced a class action adversary proceeding in this Court (the “Groman
Adversary”) 6 seeking a declaration that their claims were not so proscribed.
In this jointly administered proceeding in which I address issues in New GM’s
Motion to Enforce and the Groman Adversary,7 I must determine whether one out of
88 Ignition Switch Actions—brought by a group of plaintiffs (the “Phaneuf Plaintiffs”),
suing on their own behalf and on behalf of a purported class—should be allowed to
proceed when the plaintiffs in every other Ignition Switch Actions agreed to stay their
actions while the issues in the Motion to Enforce were being litigated.8
more descriptive term “Sale Agreement.” See, e.g., Castillo v. Gen. Motors LLC (In re Motors
Liquidation Co.), 2012 Bankr. LEXIS 1688, at *13 n.25, 2012 WL 1339496, at *5 n.25 (Bankr.
S.D.N.Y. Apr. 17, 2012) (Gerber, J.), aff’d, 500 B.R. 333 (S.D.N.Y. 2013) (Furman, J.) (“The Sale
Agreement was more formally entitled ‘Amended and Restated Master Purchase and Sale
Agreement,’ and referred to more than occasionally as the ‘ARMSPA.’ By reason of the Court's
dislike of acronyms, which rarely are helpful to anyone lacking intimate familiarity with the
subject, the Court simply says ‘Sale Agreement’”).
5 	ECF No. 12620.
6 	Adv. No. 14-01929.
7 	I determined early on that the largely overlapping issues in the contested matter that resulted from
New GM’s Motion to Enforce and the Groman Adversary should be heard together in this Court.
For brevity I’ll hereafter refer to the Motion to Enforce as a shorthand means to collectively refer
to both.
8 	At the time I orally ruled with respect to the Phaneuf Plaintiffs’ issues at the July 2 Hearing, they
were the only plaintiff group that had declined to stipulate to stay its Ignition Switch Action. In
proceedings later that day, I granted leave to two initially pro se individual plaintiffs (the “Elliott
Plaintiffs”), who had so stipulated but later retained counsel, to be relieved of the stipulation they
had agreed to while pro se. Thus, after having delivered my oral decision on this matter, I now
have one more group of plaintiffs seeking to proceed before all of the others.
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Some of the issues that I’ll later need to decide may turn out to be difficult, but
those here are not. I rule that the Phaneuf Plaintiffs should be treated no differently than
those in the 87 other Ignition Switch Actions who agreed to voluntary stays, with
adherence to the orderly procedures in this Court that were jointly agreed to by counsel
for those other plaintiffs and New GM. The Phaneuf Plaintiffs’ complaint alleges matters
that, on their face, involve matters preceding Old GM’s chapter 11 filing and 363 sale,
with respect to which the Sale Order’s “free and clear” injunctive provisions, at least in
the first instance, apply. And the Phaneuf Plaintiffs would not be prejudiced at all, much
less materially, by litigating their needs and concerns along with the other New GM
consumers raising substantially identical claims. Though injunctive provisions are
already in place and thus a preliminary injunction is unnecessary, New GM has also
shown an entitlement to a preliminary injunction staying the Phaneuf Plaintiffs from
proceeding with their litigation elsewhere while the issues here are being determined.
My Findings of Fact, Conclusions of Law, and bases for the exercise of my
discretion follow.
Findings of Fact
As previously noted, very nearly immediately after New GM’s public
announcement of the ignition switch defects, a very large number of Ignition Switch
Actions were commenced against New GM. Although back in 2009, New GM had
voluntarily undertaken to assume liability for death, personal injury, and property damage
arising from accidents and incidents after the 363 Sale, these lawsuits were for something
else—for “economic loss,” which I understand to cover (possibly among things) claims
for alleged diminishment in value of affected vehicles, out of pocket expenses,
inconvenience, and, additionally, punitive damages, RICO damages, and attorneys fees.
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A. The Context of this Controversy
Very shortly after it filed its Motion to Enforce, New GM sought a conference
with me to establish procedures to manage the litigation of its motion. With the Groman
Adversary also having been filed, and with additional similar litigation foreseeable, I
granted new GM’s request for the conference. I solicited comments from interested
parties with respect to the agenda for that conference, and held an on-the-record
conference on May 2 (the “May 2 Conference”). By the time of the May 2 Conference,
I understood there to be about 65 Ignition Switch Actions; I’m informed that their
number has now reached 88.
To deal with the very large number of plaintiffs’ attorneys who might be impacted
by any rulings I might issue, I asked them to designate a smaller group of their number
who’d speak on their behalf. The plaintiffs’ lawyers community did so. They designated
the law firms of Brown Rudnick, LLP; Caplin & Drysdale, Chartered; and Stutzman,
Bromberg, Esserman & Plifka, PC (whose practices include the representation of tort and
asbestos plaintiffs in bankruptcy courts) to speak on their behalf; those three firms came
to be known as the “Designated Counsel.” And at the May 2 Conference, it became
apparent that this controversy had the potential to impact prepetition creditors of Old
GM, who, under Old GM’s reorganization plan, had become unit holders (“Unit
Holders”) in a General Unsecured Creditors Trust—referred to colloquially as the “GUC
Trust”—which, among other things, would quarterback objections to claims on behalf of
Old GM unsecured creditors, whose recoveries might be diluted by others’ claims against
Old GM. Thus I determined that I should give counsel for the GUC Trust and Unit
Holders the opportunity to be heard as well. Though I provided means for other
plaintiffs’ counsel to be heard to the extent that the Designated Counsel didn’t
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satisfactorily present the others’ views, I ruled that I should primarily hear from
Designated Counsel to avoid duplication and to allow the issues to be decided in an
orderly manner.
At the May 2 Conference, with knowledge of the injunctive provisions of the Sale
Order, I determined that while the litigation process was underway in this Court,
plaintiffs in Ignition Switch Actions would either
(i) agree to enter into a stipulation (“Stay Stipulation”) with New GM
staying the Ignition Switch Actions they’d brought elsewhere, or
(ii) file with the Bankruptcy Court a “No Stay Pleading”—as later
defined in a heavily negotiated scheduling order (the “May 16 Order”)9 I signed
after the May 2 Conference—setting forth why they believed their Ignition Switch
Actions should not be stayed.
The May 16 Order further provided that after September 1, any party may request that I
“modify the stay for cause shown, including based on any rulings in this case, or any
perceived delay in the resolution of the Threshold Issues.”10
9 	ECF No. 12697.
10 	The “Threshold Issues” are:
a. Whether Plaintiffs’ procedural due process rights were
violated in connection with the Sale Motion and the Sale
Order and Injunction, or alternatively, whether Plaintiffs’
procedural due process rights would be violated if the Sale
Order and Injunction is enforced against them (“Due Process
Threshold Issue”);
b. If procedural due process was violated as described in (a)
above, whether a remedy can or should be fashioned as a
result of such violation and, if so, against whom (“Remedies
Threshold Issue”);
c. Whether any or all of the claims asserted in the Ignition
Switch Actions are claims against the Old GM bankruptcy
estate (and/or the GUC Trust) (“Old GM Claim Threshold
Issue”); and
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On June 9, the Ignition Switch Actions, which were brought in many judicial
districts in the United States, were transferred, under 28 U.S.C. § 1407, upon a decision
of the Judicial Panel on Multidistrict Litigation11 to the United States District Court for
the Southern District of New York. They’re now pending in this district for pretrial
purposes before the Hon. Jesse Furman, United States District Judge. Each of Judge
Furman and I has granted comity to the other, and he has entered a scheduling order in
his court that accomplishes his needs while respecting mine.12 By a subsequent MDL
Panel order, the Phaneuf Plaintiffs’ action is before Judge Furman too.
Plaintiffs in 87 out of 88 Ignition Switch Actions agreed to enter into stay
stipulations.13 But the Phaneuf Plaintiffs declined to do so. Instead, they filed a No Stay
Pleading, contending that they are asserting only post-sale claims, and thus that their
claims should be treated differently. They argue that they should be allowed to proceed
with their action even while the Motion to Enforce is pending.
d. If any or all of the claims asserted in the Ignition Switch
Actions are or could be claims against the Old GM bankruptcy
estate (and/or the GUC Trust), should such claims or the
actions asserting such claims nevertheless be
disallowed/dismissed on grounds of equitable mootness
(“Equitable Mootness Threshold Issue”).
11 	See In re General Motors LLC Ignition Switch Litigation, --- F.Supp.2d ---, 2014 U.S. Dist.
LEXIS 79713, 2014 WL 2616819 (J.P.M.L June 9, 2014) (“JPML Decision”).
12 	Order No. 1, In re General Motors LLC Ignition Switch Litigation, No. 14-MC-2543 (S.D.N.Y.
June 24, 2014), ECF No. 3 (the “June 24 Order”).
13 	But see n.8 above, with respect to the Elliott Plaintiffs’ request, which I granted, to withdraw from
their earlier stipulation.
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B. The Sale Agreement and Sale Injunctions
As noted above, the Sale Agreement and Sale Order set out Old GM liabilities
that New GM would assume and not assume. 14 Under the Sale Agreement, New GM did
not assume liability for most “Product Liability Claims” (as there defined).15 But New
GM expressly assumed responsibility for claims for death, personal injury or damage to
property caused by “accidents or incidents” first occurring after the 363 Sale,16 even if
such might otherwise be claims against Old GM.17
Under the Sale Agreement (and the Sale Order, which had corresponding
provisions), New GM also took on, as additional Assumed Liabilities, some, but not all,
claims other than for death, personal injury or property damage caused by accidents or
incidents. In addition, the Sale Order included several injunctive provisions. Relevant
provisions of the Sale Order follow.
1. Sale Order Provisions re Assumed Liabilities
Under the Sale Order (and as described with greater precision there), New GM
assumed Old GM’s obligations under express warranties (colloquially referred to as the
“glove box” warranty) that had been delivered in connection with the sale of vehicles and
14 	Liabilities New GM agreed to assume were called “Assumed Liabilities,” in each of the Sale
Agreement and Sale Order. Those New GM did not assume (and that Old GM retained) were
called “Retained Liabilities.”
15 	See Sale Agreement § 2.3(a)(ix) (as amended on June 30, 2009 (see pages 111–12 of ECF No.
2968-2)).
16 	Id.
17 	See generally In re Motors Liquidation Co., 447 B.R. 142, 149 (Bankr. S.D.N.Y. 2011) (Gerber,
J.) (“GM-Deutsch”) (construing the “incidents” portion of the “accidents or incidents” language
(in the context of claims against New GM by the estate of a consumer who had been in an accident
before the 363 Sale, but died thereafter) as covering more than just “accidents,” but covering
things that were similar, such as fires, explosions, or other definite events that caused injuries and
resulted in the right to sue).
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vehicle parts prior to the 363 Sale.18 But New GM did not assume responsibility for
other alleged warranties, including implied warranties and statements in materials such as
individual customer communications, owner’s manuals, advertisements, and other
promotional materials.19
The Sale Order also provided that except for the Assumed Liabilities expressly set
forth in the Sale Agreement, New GM would not “have any liability for any claim that
arose prior to the Closing Date, relates to the production of vehicles prior to the Closing
Date, or otherwise is assertable against the Debtors or is related to the Purchased Assets
prior to the Closing Date.”20 And it went on to say that:
The Purchaser [New GM] shall not be deemed, as a
result of any action taken in connection with the
MPA [Sale Agreement] or any of the transactions or
documents ancillary thereto or contemplated
thereby or in connection with the acquisition of the
Purchased Assets, to:
(i) be a legal successor, or otherwise
be deemed a successor to the Debtors (other
than with respect to any obligations arising
under the Purchased Assets from and after
the Closing);
(ii) have, de facto or otherwise,
merged with or into the Debtors; or
(iii) be a mere continuation or
substantial continuation of the Debtors or
the enterprise of the Debtors.
18 	See Sale Order ¶ 56. New GM also assumed Old GM obligations under state “lemon law”
statutes—which generally require a manufacturer to provide a consumer remedy when the
manufacturer is unable to conform the vehicle to the warranty, as defined in the applicable statute,
after a reasonable number of attempts as further defined in the statute—and other related
regulatory obligations under such statutes. Id.
19 	Id.
20 	Sale Order ¶ 46.
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Without limiting the foregoing, the Purchaser shall
not have any successor, transferee, derivative, or
vicarious liabilities of any kind or character
for any claims, including, but not limited to, under
any theory of successor or transferee liability, de
facto merger or continuity, environmental, labor and
employment, and products or antitrust liability,
whether known or unknown as of the Closing, now
existing or hereafter arising, asserted, or unasserted,
fixed or contingent, liquidated or unliquidated.21
The Sale Order also provided:
Except for the Assumed Liabilities, or as expressly
permitted or otherwise specifically provided for in
the MPA or this Order,
the Purchaser shall have no liability or
responsibility for any liability or other obligation of
the Sellers [Old GM and its Debtor subsidiaries]
arising under or related to the Purchased Assets.
Without limiting the generality of the foregoing,
and except as otherwise specifically provided in this
Order and the MPA,
the Purchaser shall not be liable for any claims
against the Sellers or any of their predecessors or
Affiliates, and
the Purchaser shall have no successor, transferee, or
vicarious liabilities of any kind or character,
including, but not limited to, any theory of antitrust,
environmental, successor, or transferee liability,
labor law, de facto merger, or substantial continuity,
whether known or unknown as of the Closing, now
existing or hereafter arising, whether fixed or
contingent, asserted or unasserted, liquidated or
unliquidated, with respect to the Sellers or any
obligations of the Sellers arising prior to the
Closing.22
21 	Sale Order ¶ 46 (reformatted for readability).
22 	Sale Order ¶ 48 (reformatted for readability).
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2. Sale Order Injunctive Provisions
Importantly for this matter, the Sale Order also included injunctive provisions.
The first of them provided, in relevant part:
Except as expressly permitted or otherwise
specifically provided by the MPA or this Order,
all persons and entities, including, but not limited to
. . . litigation claimants . . .
holding . . . claims . . . of any kind or nature
whatsoever, including rights or claims based on any
successor or transferee liability, against . . . a Seller
. . .
arising under or out of, in connection with, or in any
way relating to, the Sellers, the Purchased Assets,
the operation of the Purchased Assets prior to the
Closing, or the 363 Transaction,
are forever barred, estopped, and permanently
enjoined (with respect to future claims or demands
based on exposure to asbestos, to the fullest extent
constitutionally permissible)
from asserting against the Purchaser, its successors
or assigns, its property, or the Purchased Assets,
such persons’ or entities’ . . . claims . . . , including
rights or claims based on any successor or
transferee liability.23
The second injunctive provision provided, in relevant part:
Effective upon the Closing and except as may be
otherwise provided by stipulation filed with or
announced to the Court with respect to a specific
matter or an order of the Court,
all persons and entities are forever prohibited and
enjoined
23 	Sale Order ¶ 8 (reformatted for readability).
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from commencing or continuing in any manner any
action or other proceeding, whether in law or
equity,
in any judicial, administrative, arbitral, or other
proceeding against the Purchaser . . . or the
Purchased Assets, with respect to any
(i) claim against the Debtors other than
Assumed Liabilities, or
(ii) successor or transferee liability of the
Purchaser for any of the Debtors, including,
without limitation, the following actions:
(a) commencing or continuing any
action or other proceeding pending
or threatened against the Debtors as
against the Purchaser, or its
successors, assigns, affiliates, or
their respective assets, including the
Purchased Assets;
. . . .
(e) commencing or continuing any
action, in any manner or place, that
does not comply, or is inconsistent
with, the provisions of this Order or
other orders of this Court, or the
agreements or actions contemplated
or taken in respect thereof . . . . 24
C.. The Phaneuf Plaintiffs’ Claims
The Phaneuf Plaintiffs’ complaint alleges that after the 363 Sale (which it will be
recalled took place in July 2009), at various times in the period from November 2009 to
September 2010, Phaneuf Plaintiffs:
 	Lisa Phaneuf purchased a 2006 Chevy HHR;
 	Adam Smith purchased a 2007 Pontiac Solstice; and
24 	Sale Order ¶ 47 (reformatted for readability).
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 	Catherine and Joseph Cabral purchased a 2007 Chevy Cobalt.25
Each was a vehicle manufactured by Old GM.26
But the Phaneuf Plaintiffs’ Ignition Switch Action was brought against New GM.
New GM was sued as alleged “successor in interest” to Old GM,27 and the Phaneuf
Plaintiffs repeatedly rely on alleged conduct of Old GM, in part by referring to the two
entities collectively,28 and in part by specific reference to acts undertaken by Old GM
before New GM was created. In seven places in their complaint, the Phaneuf Plaintiffs
speak of acts that took place in February 2005;29 April 2005;30 June 2005;31 March
25 	See Phaneuf Compl. ¶¶ 8, 9, 15, ECF No. 12698-10 (“Compl.”).
26 	The Phaneuf Plaintiffs’ complaint suggests that others in their group—Mike Garcia, who bought a
2010 Cobalt; Javier Delacruz, who bought a 2009 Cobalt (in September 2009, which conceivably
could have been manufactured after the July 2009 363 Sale); Steve Sileo, who bought a 2010
Cobalt; Steven Bucci, who bought a 2009 Cobalt (in November 2009, which, like Delacruz’s
Cobalt, conceivably could have been manufactured after the July 2009 363 Sale); and David
Padilla, who purchased a 2010 Cobalt (see Compl. ¶¶ 10–14)—might have purchased vehicles
manufactured by New GM, rather than Old GM, and that they thus might have factual
circumstances that distinguish them from Phaneuf, Smith, and the Cabrals. But all of the Phaneuf
Plaintiffs sue under a common complaint. In the briefing to follow, Garcia, Delacruz, Sileo, Bucci
and Padilla, like others, will be free to flesh out the facts with respect to the manufacture of their
vehicles, and to point out any factual distinctions that might be warranted.
27 	See Compl. at page 1, before the beginning of numbered paragraphs (“Plaintiffs . . . allege the
following against Defendant General Motors LLC (‘New GM’) successor-in-interest to General
Motors Corporation (‘Old GM’) (collectively, the ‘Company,’ or ‘GM’)”) (emphasis added).
28 	The Phaneuf Plaintiffs’ effort to treat Old GM and New GM as a single entity is inappropriate, as
a matter of bankruptcy law, if not as a matter of other law as well. As if it cures the deficiency,
the Phaneuf Plaintiffs continue, in a footnote:
Any reference to “GM” relating to a date before July 10, 2009
means Old GM. Any reference to “GM” relating to a date
after July 10, 2009 means New GM. Any reference to “GM”
that does not related to a specific date means Old GM and
New GM, collectively.
Compl. n.2. That tactic underscores the Phaneuf Plaintiffs’ efforts to muddy the distinctions
between the two entities, and to impose liability on New GM based on Old GM’s conduct.
29 	See Compl. ¶ 26 (“In 2005, for example, GM launched the ‘Only GM’ advertising campaign. . . .
‘Safety and security’ were the first two features highlighted in the Company’s February 17, 2005
press release describing the campaign.”).
30 	Id. ¶ 27 (“Similarly, an April 5, 2005 press release about the ‘Hot Button marketing program’
stated that the ‘Value of GM's Brands [Was] Bolstered By GM's Focus On Continuous Safety’
and explained that the Hot Button program was ‘intended to showcase the range of GM cars,
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2005; 32 November 2005;33 April 2006;34 and as early as 2003. 35 Each of those acts took
place before the formation of New GM, and would have been more candidly described in
the Phaneuf Plaintiffs’ complaint if, in each instance, the reference to “GM” were to “Old
GM.” The allegations do not describe actions taken by New GM.
I don’t now make any finding as to any respects in which New GM might be
liable for its own post-sale conduct, or whether the Sale Order (or any part of it) should
be invalidated, by reason of due process concerns or any of the other matters that
Designated Counsel will be briefing in the upcoming weeks. 36 But I do find the Phaneuf
Plaintiffs’ efforts to merge pre- and post-sale acts, and to place reliance on the alleged
conduct of Old GM, especially collectively, are much more than sufficient for me to find
that the Phaneuf Plaintiffs place material reliance on Old GM actions that took place
before the Sale Order, and assert claims with respect to vehicles that were manufactured
before the 363 Sale. Thus I find as a fact, or mixed question of fact and law, that the
trucks and SUVs that offer drivers continuous safety-protection before, during and after a
vehicle collision.’”) (hyphen in original).
31 	Id. ¶ 28 (“On June 14, 2005, GM issued a press release stating that ‘Safety [Was The] No. 1
Concern For Women At The Wheel’ . . . .”).
32 	Id. ¶ 29 (“In a statement aired on Good Morning America on March 7, 2005, a GM
spokesperson stated that ‘the [Chevrolet] Cobalt exceeds all Federal safety standards that
provide - significant real-world safety before, during, and after a crash.’” (alteration and
hyphen in original).
33 	Id. ( “ In November 2005, GM ran radio advertisements stating that ‘One of the best things to
keep you [and your] family safe is to buy a Chevy equipped with OnStar . . . from Cobalt to
Corvette there’s a Chevy to fit your budget.’”) (alterations in original).
34 	Id. ¶ 41 (“In April 2006, GM attempted to fix the Ignition Defect by replacing the original detent
spring and plunger with a longer detent spring and plunger.”).
35 	Id. ¶ 45 (“[I]n 2003, a GM service technician observed the Ignition Defect while he was
driving.”).
36 	I likewise don’t make a finding now as to the significance of the pre- or post-sale timing of the
design or manufacture of parts that might have gone into vehicles that were built pre- or post-sale.
I assume that issues of that character will be addressed by Designated Counsel, New GM, and
others in the briefing in the upcoming weeks, and those parties deserve to be heard before I make
any decisions in that regard.
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threshold applicability of the Sale Order—and its injunctive provisions—has easily been
established in the first instance, at least for the purposes of the Phaneuf Plaintiffs’
claims.37
Discussion
In that factual context, I rule that the Phaneuf Plaintiffs’ claims will be treated the
same as those in the other 87 Ignition Switch Actions. The stay already imposed by the
injunctive provisions of Paragraphs 8 and 47 of the Sale Order (and that I may also
impose by preliminary injunction) will remain in place insofar as it affects the Phaneuf
Plaintiffs’ complaint—subject to the right, shared by all of the other plaintiffs in the
Ignition Switch Actions, to ask that I revisit the issue after September 1.
A. Applicability of the Sale Order
Paragraph 8 of the Sale Order provides, among other things, that all persons and
entities “are . . . enjoined . . . from asserting against the Purchaser [New GM] . . . such
persons’ or entities’ . . . claims . . ., including rights or claims based on any successor or
transferee liability.”
Similarly, Paragraph 47 of the Sale Order provides, among other things, that all
persons and entities “are . . . enjoined from commencing or continuing in any manner any
action or other proceeding . . . against the Purchaser . . . with respect to any (i) claim
against the Debtors other than Assumed Liabilities, or (ii) successor or transferee liability
of the Purchaser for any of the Debtors . . . .”
37 	That is not to say, of course, that what the Sale Order says will be the end of the inquiry, either in
the Phaneuf Plaintiffs’ case or in the case of the other 87 Ignition Switch Actions. By reason of
the due process contentions that the other litigants will address, or otherwise, the Sale Order may
turn out to have exceptions or self-destruct. But for now it’s in place.
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I’ve found as a fact—based on the Phaneuf Plaintiffs’ complaint’s express
reference to New GM as the “successor in interest” to Old GM,38 and the facts that at
least three of them purchased cars manufactured before the 363 Sale;39 that their
complaint (apparently intentionally) merges pre- and post-sale conduct by Old GM and
New GM; 40 and that their complaint places express reliance on at least seven actions by
Old GM, before New GM was formed 41 —that at least much of the Phaneuf Plaintiffs’
complaint seeks to impose liability on New GM based on Old GM’s pre-sale acts.
Efforts of that character are expressly forbidden by the two injunctive provisions just
quoted. Though I can’t rule out the possibility that a subset of matters the Phaneuf
Plaintiffs might ultimately show would not similarly be forbidden, at this point the Sale
Order injunctive provisions apply. And it need hardly be said that I have jurisdiction to
interpret and enforce my own orders,42 just as I’ve previously done, repeatedly, with
respect to the very Sale Order here.43
38 	See page 13 & n.27 above.
39 	See pages 12–13 & n.25 above.
40 	See page 13 & n.28 above.
41 	See pages 13–14 & nn.29–35 above.
42 	See Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151 (2009) (“Travelers”) (“[A]s the Second
Circuit recognized . . . the Bankruptcy Court plainly had jurisdiction to interpret and enforce its
own prior orders.”); see also In re Lyondell Chem. Co., 445 B.R. 277, 287 (Bankr. S.D.N.Y. 2011)
(Gerber, J.) (same).
43 	See Castillo v. Gen. Motors LLC (In re Motors Liquidation Co.), 2012 Bankr. LEXIS 1688, at
*17, 20, 31, 50, 2012 WL 1339496, at *6–7, 9, 14 (Bankr. S.D.N.Y. April 17, 2012) (Gerber, J.),
aff’d, 500 B.R. 333 (S.D.N.Y. 2013) (Furman, J.) (interpreting the Sale Order, among other
extrinsic evidence bearing on the intent of Old GM and New GM in entering into the Sale
Agreement, to aid in determining whether New GM assumed Old GM’s settlement with the
Castillo Plaintiffs); Trusky v. Gen. Motors LLC (In re Motors Liquidation Co.), 2013 Bankr.
LEXIS 620, at *4, 11–24, 2013 WL 620281, at *1, 4–8 (Bankr. S.D.N.Y. Feb. 19, 2013) (Gerber,
J.) (construing the Sale Order, and then remanding the remainder of a controversy, involving
issues unrelated to the Sale Order, to the Eastern District of Michigan); GM-Deutsch, discussed at
n.17 above.
Other judges in the Southern District of New York, at both the District Court and Bankruptcy
Court levels, have recognized this as well. See, e.g., In re Grumman Olson Indus., Inc., 467 B.R.
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Thus unless and until I rule, after hearing from counsel in the other 87 Ignition
Switch Actions, that I should not enforce the Sale Order, in whole or in part (or that with
respect to any particular matters, the Sale Order does not apply), the Phaneuf Plaintiffs
remain enjoined under it. As the Supreme Court held in Celotex,44 persons subject to an
injunctive order issued by a court with jurisdiction are expected to obey that decree until
it is modified or reversed, even if they have proper grounds to object to the order.
Then even assuming (though this is debatable) that I could deprive New GM of
the benefits of the Sale Order’s injunctive provisions in the exercise of my discretion, I
am not prepared to do so now. I have 88 Ignition Switch Actions before me—in most of
which parties are likely to make similar contentions. Under section 105(d) authority45
694 (S.D.N.Y. 2012) (Oetken, J.), aff’g, 445 B.R. 243, 247–50 (Bankr. S.D.N.Y. 2011) (Bernstein,
C.J.) (“Grumman Olson”) (confirming that a bankruptcy judge can interpret the scope and effect
of his or her court’s prior sale order, post-confirmation, and as between non-debtors (citing Luan
Inv. S.E. v. Franklin 145 Corp. (In re Petrie Retail, Inc.), 304 F.3d 223, 228–31 (2d Cir.2002)
(holding that Bankruptcy Court could exercise continuing postconfirmation jurisdiction over non-
debtor parties, in part because “the dispute . . . was based on rights established in the sale order”
and noting that a “bankruptcy court retains post-confirmation jurisdiction to interpret and enforce
its own orders”))); In re Old Carco LLC, 505 B.R. 151, 159 & 163 n.17 (Bankr. S.D.N.Y. 2014)
(Bernstein, C.J.) (“the Court retains bankruptcy jurisdiction under 28 U.S.C. § 1334 to interpret its
prior sale order even when the dispute involves non-debtor third parties”); see also Moelis Co.
LLC v. Wilmington Trust FSB (In re Gen. Growth Props., Inc.), 460 B.R. 592, 598 (Bankr.
S.D.N.Y. 2011) (Gropper, J.) (“A bankruptcy court always has jurisdiction to interpret its own
orders. It does not matter that the State Court Action is purportedly between two non-debtors, or
that the Chapter 11 Cases have been confirmed.”) (citation omitted).
44 	Celotex Corp. v. Edwards, 514 U.S. 300, 306–07 (1995).
45 	Bankruptcy Code section 105(d) provides:
The court, on its own motion or on the request of a party in
interest—
(1) shall hold such status conferences as are
necessary to further the expeditious and economical
resolution of the case; and
(2) unless inconsistent with another provision of
this title or with applicable Federal Rules of
Bankruptcy Procedure, may issue an order at any
such conference prescribing such limitations and
conditions as the court deems appropriate to ensure
that the case is handled expeditiously and
economically . . . .
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given to me by Congress, I established an orderly process, with input from Designated
Counsel and counsel for New GM, the Groman Adversary Plaintiffs, the GUC Trust and
others by which I can fairly address these issues. It would be grossly unfair to the
plaintiffs in the 87 Ignition Switch Actions who stipulated to stay their cases to give a
single litigant group leave to proceed on its own. My efforts to manage 88 cases, with
largely overlapping issues, require that they proceed in a coordinated way.
There is no basis in law or equity, or logic, for the notion that I should except one
plaintiff group from the process to which the other 87 litigant groups are bound. Making
an exception for the Phaneuf Plaintiffs would be monumentally bad case management.
During the July 2 Hearing, we had lengthy discussion as to what would make the most
sense in managing the issues in this case—which are in many respects difficult ones.
Except for the limited purpose of having concluded that the Phaneuf Plaintiffs’ complaint
raises contentions forbidden, in the first instance, by the Sale Order, I need to minimize
piecemeal rulings now, by me or by any other judge—assuming that he or she would
disregard express provisions in the Sale Order giving me exclusive jurisdiction to decide
the matters before me now. 46 Nor should I simply let the Phaneuf Plaintiffs’ claims
proceed without the scrutiny that all of the other Ignition Switch Action claims will
undergo.
I’ve determined that the Sale Order applies in the first instance. The procedures
established by my earlier orders are necessary to ensure the fair adjudication of the issues
before me. The Phaneuf Plaintiffs have not come close to making a sufficient showing as
46 	See Sale Order ¶ 71 (“This Court retains exclusive jurisdiction to enforce and implement the terms
and provisions of this Order, the MPA, . . . and each of the agreements executed in connection
therewith, . . . including, but not limited to, retaining jurisdiction to . . . (c) resolve any disputes
arising under or related to the MPA, except as otherwise provided therein . . . .”).
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to why I should make an exception for them—nor for allowing them to proceed ahead of
the other 87 Ignition Switch Actions.
B. Preliminary Injunction
Additionally, I determine that even if the Sale Order lacked the injunctive
provisions it has, it would be appropriate to enter a preliminary injunction protecting New
GM from the need now to defend claims that, under the Sale Agreement and Sale Order,
it did not assume, and preventing the piecemeal litigation of the Phaneuf Plaintiffs’
claims ahead of all of the other lawsuits similarly situated.
The standards for entry of a preliminary injunction in the Second Circuit, as set
out in its well-known decision in Jackson Dairy47 and its progeny,48 are well established.
As stated in Jackson Dairy, “the standard in the Second Circuit for injunctive relief
clearly calls for a showing of (a) irreparable harm and (b) either (1) likelihood of success
on the merits or (2) sufficiently serious questions going to the merits to make them a fair
ground for litigation and a balance of hardships tipping decidedly toward the party
requesting the preliminary relief.”49 Those requirements are easily met here.
1. Irreparable Harm
Here, irreparable injury, in terms of the case management concerns and prejudice
to the litigants in the other 87 actions, has been established. It’s foreseeable, if not
obvious, that at least many of the 87 other litigants will present issues that the Phaneuf
Plaintiffs now present.
47 	Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70 (2d Cir. 1979) (“Jackson Dairy”).
48 	See, e.g., Christian Louboutin S.A. v. Yves Saint Laurent Am. Holdings, Inc., 696 F. 3d 206, 215
(2d Cir. 2012) (applying the Jackson Dairy standard, though not citing Jackson Dairy directly);
UBS Fin. Servs., Inc. v. W. Va. Univ. Hosps., Inc., 660 F.3d 643, 648 (2d Cir. 2011) (citing
Jackson Dairy); Citigroup Global Mkts., Inc. v. VCG Special Opportunities Master Fund Ltd., 598
F.3d 30, 35 (2d Cir. 2010) (same).
49 	Jackson Dairy, 596 F.2d at 72.
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And when actions raise overlapping issues, even if they’re not wholly congruent,
coordinated disposition is essential.50 The facts that the Phaneuf Plaintiffs present may
not appear in every one of those 88 cases. But the chances that similar facts will not be
present in at least many of them are remote. I well understand the desires of litigants to
get their cases moving as quickly as possible. But those desires are insufficient to trump
the normal case management concerns that I and most other judges have.
Indeed, these concerns underlie why MDL proceedings, like the one before Judge
Furman, come into being. For reasons that would be obvious to most, the MDL Panel
determined that Ignition Switch Actions should be handled by a single judge for
coordinated or consolidated pretrial proceedings. Irreparable injury in terms of case
management concerns, for each of me and Judge Furman (not to mention prejudice to the
litigants in the other 87 actions), would plainly occur if I were to allow the Phaneuf
Plaintiffs to proceed before all of the others.
Judge Furman’s case management concerns were apparent in his June 24 Order,51
which, among other things, set up his cases for adjudication in an orderly way,52 just as I
50 	Exemplifying this is the Phaneuf Plaintiffs’ reliance on the Bankruptcy Court and District Court
decisions in Grumman Olson, see n.43 above, 445 B.R. 243 (Bankr. S.D.N.Y. 2011) (Bernstein,
C.J.), and 467 B.R. 694 (S.D.N.Y. 2012) (Oetken, J.), respectively. I have no doubt whatever that
in the subsequent proceedings before me in connection with the other 87 Ignition Switch Actions,
Designated Counsel will place reliance on one or both of those cases, and that New GM will
argue, in contrast, that in respects relevant here, those cases are distinguishable or wrongly
decided. (The GUC Trust may also wish to be heard on the Grumman Olson cases, though its
likely position is less obvious.) That is exactly why the Phaneuf Plaintiffs’ contentions should not
be heard on their own, and why I should not be making early judgments on the merits of the issues
now—especially before Designated Counsel, New GM, the GUC Trust and any others with
differing views have had a chance to be heard.
51 	See n.12 above.
52 	See, e.g., June 24 Order at Section XI, regulating motion practice (providing that “[a]ny and all
pending motions in the transferor courts are denied without prejudice, and will be adjudicated
under procedures set forth in this Order and subsequent orders issued by this Court”); id. at
Section XII, regulating discovery (providing that “[p]ending the development of a fair and
efficient schedule, all outstanding discovery proceedings are suspended until further order of this
Court, and no further discovery shall be initiated,” but further providing that the June 24 Order
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did. Each of us recognizes the need for coordinated proceedings in a matter of this size
and complexity.
2. Sufficiently Serious Questions Going to the Merits
But I don’t need to, and should not, make a finding of likelihood of success on the
merits. That would require me to decide too much at this time, to the potential prejudice
of the plaintiffs in the other 87 Ignition Switch Actions, New GM, and the GUC Trust. I
need not address likelihood of success because, as I’ve previously noted, serious
questions going to the merits provide an alternate basis for the entry of a preliminary
injunction, when coupled with the requisite tipping of hardships.
New GM has easily shown serious issues going to the merits with respect to relief
from this Court, though it is premature for me to go beyond such a narrow finding. It
now appears, from the preceding discussion, that at least many of the Phaneuf Plaintiffs’
claims were not assumed by New GM. It’s possible that the Phaneuf Plaintiffs or others
could eventually establish that a subset of their claims would fall outside of the Sale
Order’s scope, but New GM has already made at least a prima facie showing that it did
not assume a significant portion of the Phaneuf Plaintiffs’ claims. Similarly, while we
know that other Ignition Switch Action plaintiffs will want to be heard on whether due
process concerns place constraints on New GM’s ability to rely on the Sale Order, the
starting point is the Sale Order itself. New GM has shown serious issues going to the
merits with respect to the protection it was granted under the express language of that
order, which would remain unless and until due process (or other) concerns make some
or all of the Sale Order’s protections drop out of the picture.
would not “preclude any discovery that is agreed or ordered to facilitate matters in the Bankruptcy
Court, provided that to the extent any discovery is undertaken in the Bankruptcy Court, it shall be
coordinated with this Court.”) (italics in original).
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3. Balance of Hardships
Finally, I turn to the balance of hardships. 	That too weighs in New GM’s favor.
The hardship to New GM if it were forced to litigate against the Phaneuf Plaintiffs
on one track, and the other 87 actions, on another, would be significant. New GM would
have to defend largely similar claims in multiple forums, thus exposing it to both
unnecessary expense and the possibility of inconsistent results. And New GM, the non-
bankruptcy court and I would all be prejudiced by confusion with respect to which issues
could be decided in the non-bankruptcy court, and which would have to be decided here.
There also could be prejudice to the plaintiffs in the other 87 Ignition Switch Actions,
who might be affected (presumably not by res judicata or collateral estoppel, but still by
stare decisis) by adverse rulings in the non-bankruptcy court. And there would be
significant prejudice to my case management needs, as the extensively negotiated
coordinated mechanism for dealing with 88 separate actions, with coordinated briefing of
threshold issues, was cut away.
By contrast, by being treated the same as the plaintiffs in the other 87 actions, the
Phaneuf Plaintiffs would not be harmed in any material respect. Their effort to proceed
going it alone rests on the notion that another federal judge—here, Judge Furman—
would consider it productive to allow one plaintiff group to move forward in its action
while 87 others are stayed, pending the determination in this Court of critical threshold
issues that will determine what claims may, and what claims may not, be asserted in light
of the Sale Order. That premise is unrealistic.
Reasons cited by the Multidistrict Panel in sending the Ignition Switch Actions to
New York included its recognition that I “already [have] been called upon by both
General Motors and certain plaintiffs to determine whether the 2009 General Motors
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bankruptcy Sale Order prohibits plaintiffs’ ignition switch defect lawsuits.”53 Proceeding
without regard to the agreed-on mechanisms for determining those issues in this Court
would frustrate the purpose for which the Ignition Switch Actions were sent here. And
there is little or no basis for the Phaneuf Plaintiffs’ assumption (or hope) that Judge
Furman would deprive me of the ability to do my job.
To the contrary, Judge Furman has been highly sensitive to the Bankruptcy
Court’s needs and concerns. His first order provided that while he might appoint lead
and liaison counsel before I ruled, he would be open to consideration as to whether such
appointment should be amended if “the Bankruptcy Court rules that some, but less than
all, of the claims now pending here may be asserted.”54 He asked counsel appearing
before him to address, among other things, “the extent to which proceedings in this Court
should proceed before rulings by the Bankruptcy Court, on the one hand, or should be
deferred pending such rulings, on the other.”55 He provided, as I have, for an initial
suspension of discovery, but provided further that his directive would not “preclude any
discovery that is agreed or ordered to facilitate matters in the Bankruptcy Court, provided
that to the extent any discovery is undertaken in the Bankruptcy Court, it shall be
coordinated with this Court.”56 And he expressly provided that matters addressed in his
order could be reconsidered “to the extent necessary or desirable to address any rulings
53 	JPML Decision, --- F.Supp.2d at ---, 2014 U.S. Dist. LEXIS 79713, at *4, 2014 WL 2616819, at
*2.
54 	June 24 Order Section IX.
55 	Id. Section X(B).
56 	Id. Section XII (italics in original).
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by the Bankruptcy Court or any higher court exercising appellate authority over the
Bankruptcy Court’s decision.”57
Given the respect evidenced by each of the Multidistrict Panel and Judge Furman
of the Bankruptcy Court’s responsibility to determine matters pending here, there is no
reasonable basis for a conclusion that Judge Furman would want—or allow—the Phaneuf
Plaintiffs’ action, which has been added to the lengthy list of cases before him, to proceed
on its own.
Thus, even if I had not already found that the Sale Order’s injunctive provisions
already apply, New GM would be entitled to a preliminary injunction in its favor until
I’ve ruled on the Threshold Issues.
Conclusion
For the above reasons, the Phaneuf Plaintiffs’ Ignition Switch Action, like the
others, will be stayed pending further rulings in the matters before me, or my further
order.
This decision is without prejudice to the rights of the plaintiffs in all of the other
87 Ignition Switch Actions, and of any other parties (including, without limitation, New
GM and the GUC Trust) who might hereafter want to be heard on issues before me.
New GM is to settle an order in accordance with this ruling.
Dated: New York, New York 	s/Robert E. Gerber
July 30, 2014 	United States Bankruptcy Judge
57 	Id. Section XVI.
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