MEMORANDUM OPINION AND ORDER DECIDING CERTAIN 2016 THRESHOLD ISSUES
The Court is tasked with resolving certain of the 2016 Threshold Issues
The Court today resolves three of the 2016 Threshold Issues, holding: (i) only plaintiffs with the Ignition Switch Defect in a Subject Vehicle are Ignition Switch Plaintiffs; (ii) used car purchasers are bound by the Sale Order to the same extent as their predecessors in interest; and (iii) claims for punitive damages against New GM, based on Old GM conduct, are barred by the Bankruptcy Code’s priority scheme.
I. BACKGROUND
This Opinion assumes familiarity with the history of the General Motors bankruptcy, which is explained more fully in the previous opinions of this Court and the Second Circuit, many of which are referenced below. This Opinion will explain only the background necessary to resolve 2016 Threshold Issues One, Three, and Four (defined below).
On July 5, 2009, my predecessor Judge Gerber entered a sale order (the “Sale Order,” ECF Doc. # 2968) under section 363 of the Bankruptcy Code in these chapter 11 cases. The Sale Order authorized the sale (the “363 Sale”) of the bulk of the assets from Motors Liquidation Company (f/k/a General Motors Corp.) (“Old GM”) to General Motors LLC (“New GM”), “free and clear of liens, claims, encumbrances, and interests,” with certain limited exceptions. (Sale Order at 2.) Attached to the Sale Order was the Amended and Restated Master Sale and Purchase Agreement (the “Sale Agreement,” ECF Doc. # 2968-2). Under the Sale Order and Sale Agreement, New GM assumed “[l]iabilities to third parties for death, personal injury, or other injury to Persons or damage to property caused by motor vehicles ... manufactured, sold or delivered by [Old GM]” (“Product Liabilities”) arising out of accidents or incidents occurring on or after the closing date of the 363 Sale, which turned out to be July 10, 2009 (the “Closing Date”). (Sale Agreement § 2.3.) Accidents or incidents occurring on or after the Closing Date have been referred to throughout this litigation, and will be referred to in this Opinion, as “Posh-Closing Accidents,” and the plaintiffs asserting those claims are “Posh-Closing Accident Plaintiffs”
On December 13, 2016, this Court entered an order to show cause (the “Order to Show Cause,” ECF Doc. # 13802) setting forth five threshold issues (the “2016 Threshold Issues”) to be resolved regarding claims asserted against New GM involving vehicles manufactured by Old GM, and the procedures for resolving these issues. The issue whether the Sale Order barred independent claims based solely on post-closing wrongful conduct of New GM (“Threshold Issue Two”) was addressed and resolved in a recent opinion. See In re Motors Liquidation Co.,
[“Threshold Issue One”:] In the context of (a) the April 2015 Decision/June 2015 Judgment, and (b) the November 2015 Decision/December 2015 Judgment, are Ignition Switch Plaintiffs only those plaintiffs that are asserting claims against New GM based on an “Ignition Switch” in a “Subject Vehicle,” and all other plaintiffs are Non-Ignition Switch Plaintiffs? If that is not correct, what did the Bankruptcy Court mean when it used the terms Ignition Switch Plaintiffs and Non-Ignition Switch Plaintiffs in (a) the April 2015 Decision/June 2015 Judgment, and (b) the November 2015 Decision/December 2015 Judgment? ...
[“Threshold Issue Three”:] Is the [Second Circuit] Opinion’s holding that claims held by Used Car Purchasers are not covered by the Sale Order because they had no contact or relationship with Old GM limited to (a) only those parties that appealed the April 2015 Decision/June 2015 Judgment to the Second Circuit, and/or (b) Independent Claims asserted by Used Car Purchasers based solely on New GM conduct?
[“Threshold Issue Four”:] Are Post-Closing Accident Plaintiffs bound by the Sale Order or may they bring successor liability claims against New GM and seek punitive damages in connection therewith notwithstanding the Court’s rulings in the November 2015 Decision/E)ecember 2015 Judgment?
(Order to Show Cause at 2-3 (footnote omitted).) The Court addresses these three questions today.
B. This Court’s Decisions and Judgments
In April 2015, Judge Gerber issued an opinion interpreting the Sale Order’s “free and clear” provision. See In re Motors Liquidation Co.,
In September 2015, the Court entered a scheduling order setting a briefing schedule to address, among other issues, whether New GM had contractually assumed liability for punitive damages under the Sale Order, as well as whether certain allegations in non-bankruptcy lawsuits ran afoul of the Sale Order, April Decision, and June Judgment, (“September Scheduling Order,” ECF Doc. # 13416.) In November 2015, the Court issued an opinion deciding the questions laid out in the September Scheduling Order, See In re Motors Liquidation Co.,
C. The Second Circuit Opinion
New GM, the Old GM General Unsecured Creditors Trust (the “GUC Trust”), and four groups of plaintiffs (the Groman Plaintiffs, Ignition Switch Plaintiffs, Non-Ignition Switch Plaintiffs represented by-attorney Gary Peller, and Pre-Closing Accident Plaintiffs)
D. Benjamin Pillars’ Claims
Plaintiff Benjamin Pillars asserts claims for personal injury and wrongful death against New GM, arising from an accident on November 23, 2005, involving a 2004 Pontiac Grand Am. (“Pillars Opening Brief,” ECF Doc. # 13857 at 2.) Pillars alleges that his wife, Kathleen Ann Pillars (the “decedent”), lost control of her vehicle when the ignition switch unexpectedly turned to the off position. (Id.) The decedent sustained severe injuries and died approximately seven years after the accident, in March 2012. (Id. at 2-3.) The 2004 Pontiac Grand Am is not a Subject Vehicle (as defined below). Pillars asserts, however, that he should be considered an Ignition Switch Plaintiff because he alleges a defect in the ignition switch of the vehicle. Pillars argues that Judge Gerber used the term “Non-Ignition Switch Plaintiffs” in the April Decision and June Judgment, and the November Decision and December Judgment, to refer only to plaintiffs asserting economic loss claims, implying that plaintiffs alleging personal injury or wrongful death are not Non-Ignition Switch Plaintiffs. (Id. at 3.) Pillars further argues that the 2004 Pontiac Grand Am was also subject to a recall for a faulty ignition switch: NHTSA Recall No. 14v400, in July 2014. (Id. at 4.) Finally, Pillars argues that because New GM previously stated that his claims were “identical to” the claims of “Ignition Switch Pre-
II. LEGAL STANDARD
A. 2016 Threshold Issue One: Definitions of “Ignition Switch Plain- , tiff’ and “Non-Ignition Switch Plaintiff’
1. This Court’s Use of the Terms “Ignition Switch Plaintiff ” and “Non-Ignition Switch Plaintiff’
On August- 8, 2014, Judge Gerber adopted stipulated facts agreed to by the parties (the “Stipulated Facts,” EOF.Doc. # 12826), upon which the Court based its April Decision and June Judgment. The Stipulated Facts included the following definitions:
“Ignition Switch” shall mean an ignition switch designed and/or sold by Old GM in the Subject Vehicles that may unintentionally move out of the “run” position, resulting in a partial loss of electrical power and turning off the engine. (Consent Order, In re TQ14-001, NHTSA Recall No. 14V-047 (Dep’t of Transp., Nat’l Highway Safety Admin. Dated May 16, 2014 (“Consent Order”) at 2, ¶¶ 6; Part 573 Defect Notice filed by New GM with the National Highway Traffic Safety Administration (“NHTSA”), dated February 7, 2014.). “Subject Vehicles” are (1) 2005-2007 Chevrolet Cobalt and Pontiac GS, 2003-2007 Saturn Ion, 2006-2007 Chevrolet HHR, 2005-2006 Pontiac Pursuit (Canada), 2006-2007 Pontiac Solstice and 2007 Saturn Sky vehicles; and (2) 2008-2010 Pontiac Solstice and G5; 2008-2010 Saturn Sky; 2008-2010 Chevrolet Cobalt; and 2008-2011 Chevrolet HHR vehicles—certain of the vehicles in this second category may have been repaired using a defective Ignition Switch that had been sold to dealers or aftermarket wholesalers. Statements about the Ignition Switch, apply to the Subject Vehicles listed in the second category only to the extent that the Subject Vehicles were actually repaired using a defective Ignition Switch. (Part 573 Defect Notices filed by New GM with the NHTSA, dated February 7, 2014, February 24, 2014, and March 28, 2014, hereinafter “Feb. 7 Notice”, “Feb. 24 Notice”, and “March 28 Notice”).
(Stipulated Facts at 3.)
This Court and the parties defined the Ignition Switch Defect according to the Stipulated Facts; in other words, the Ignition Switch Defect is the defect in the Subject Vehicles that gave rise to NHTSA Recall No. 14v047. See, e.g., Motors Liquidation I,
In the June Judgment, the Court defined the term “Ignition Switch Plaintiff’ for the first time, again in accordance with the Stipulated Facts and again with reference to the Subject Vehicles affected by NHTSA Recall No. 14v047: “plaintiffs that have commenced a lawsuit against New GM asserting economic losses based on or arising from the Ignition Switch in the Subject Vehicles (each term as defined in the [Stipulated Facts], at 3).” (June Judgment at 1 n,l.)
2. The Second, Circuit Opinion is Consistent with this Court’s Definitions
As noted above, New GM, the GUC Trust, and certain other plaintiffs appealed the April Decision and June Judgment directly to the Second Circuit. The Second Circuit framed the issue just as the Bankruptcy Court had: “On February 7, 2014 [the date of the first letter giving rise to NHTSA Recall No. 14v047], New GM first informed the National Highway Traffic Safety Administration (‘NHTSA’) that it would be recalling, among other vehicles, the 2005 Chevrolet Cobalt. A defect in the ignition switch could prevent airbags from deploying.” Motors Liquidation III,
The Second Circuit included an extensive discussion of the Ignition Switch Defect, beginning with Old GM’s development of a new ignition switch starting in 1997, the ignition switch’s failure to pass internal testing, and the approval in May 2002 of the ignition switch for production. Id. at 148-49. The Second Circuit described the customer complaints that arose soon after the faulty ignition switches went into production: “In the fall of 2002, Old GM began producing vehicles with the faulty ignition switch. Almost immediately, customers complained of moving stalls, sometimes at highway speeds Id. at 149. Old GM’s internal investigations continued, but employees did “nothing to resolve the problem for years.” Id. at 150 (citation omitted). “Indeed, New GM would not begin recalling cars for ignition switch defects until February 2014”—again, the month of the first recall letter under NHTSA Recall No. 14v047. Id. It is also notable that the Second Circuit focused on an investigative report written by attorney Anton Valukas of the law firm Jenner & Block (the “Valukas Report,” May 29, 2014, available at https://assets.document cloud.org/documents/1183508/g-m-intemal-investigation-report.pdf). The Valukas Report describes recalls occurring in February and March 2014, not thereafter. (See id. at 224 (describing February 7, 2014, recall letter); id. at 226 (describing expansion of the recall on March 28, 2014 to certain vehicles that may have been repaired with a faulty ignition switch).) Although the Second Circuit did not specify the recall number, it is clear from the context of the opinion and the detailed background information drawn from the Valukas Report that the Second Circuit’s use of the terms “ignition switch” and “ignition switch defect” refer to the Igni
The Court recognizes that the term Non-Ignition Switch Plaintiff has been used to refer to plaintiffs whose vehicles allegedly contain ignition switches with defects other than the Ignition Switch Defect, as well as defects not involving the ignition switch at all. At oral argument, plaintiffs’ counsel explained that there are at least four additional recalls allegedly involving the ignition switch currently being litigated in the multidistrict litigation before Judge Furman in the District Court for the Southern District of New York (the “MDL”): NHTSA Recall Nos. 14v355, 14v394, 14v400, and 14v346, all in July or August 2014. (See 5/17/2017 Tr., EOF Doc. # 13943 at 70-73.) Counsel further indicated that discovery regarding whether the facts underlying those recalls are related to the same defect giving rise to NHTSA Recall No. 14v047 is ongoing but not yet complete. (Id. at 72.) Judge Furman recently noted that “between 2014 and 2015, New GM issued more than eighty-four recalls relating to more than seventy defects and affecting over twenty-seven million GM cars.” In re Gen. Motors LLC Ignition Switch Litig., No. 14-MC-2543 (JMF), — F.Supp.3d -, -,
B. 2016 Threshold Issue Three: Used Car Purchasers
1. The Second Circuit’s Ruling was Limited to Used Car Purchasers with the Ignition Switch Defect
In the April Decision, Judge Gerber clearly considered “Used Car Purchasers” a subset of the Ignition Switch Plaintiffs. “A subset of the Economic Loss Plaintiffs, the Used Car Purchasers ... assert that they have special rights—to assert claims for successor liability when nobody else can—because they had not yet purchased their cars at the time of the 363 Sale.” Motors Liquidation I,
Judge Gerber also held that the Used Car Purchasers were successors in interest to the prior owners of the Old GM vehicles—and because those prior owners were bound by the Sale Order, so were the Used Car Purchasers. Id. Judge Gerber determined that purchasers of used cars cannot acquire greater rights than the seller possessed:
And for each [Used Car Purchaser], an earlier owner was in the body of owners of Old GM vehicles who were bound by the Free and Clear Provisions. With exceptions not applicable here (such as holders in due course of negotiable instruments), the successor in interest to a person or entity cannot acquire greater rights than his, her, or its transferor. That is the principle underlying the Wagoner Rule, which, while an amalgam of state and federal law, is firmly embedded in the law in the Second Circuit. And that principle has likewise been applied to creditors seeking better treatment than the assignors of their claims. Thus it is not at all surprising to this Court that in Old Careo, Judge Bernstein blocked the suits by those who bought used 2005 and 2006 Dodge Du-rangos or Jeep Wranglers, distinguishing Grumman Olson-Bankrwptcy on the ground that those plaintiffs “or their predecessors (the previous owners of the vehicles) had a pre-petition relationship with Old Careo, and the design flaws that they now point to existed pre-petition.”
Motors Liquidation I,
On appeal, the Second Circuit limited its discussion of used car purchasers to those whose cars had the Ignition Switch Defect: “Included within the Ignition Switch Plaintiffs were individuals who had purchased Old GM cars secondhand after the § 363 sale closed (‘Used Car Purchasers’).” Motors Liquidation III,
The Second Circuit therefore reversed Judge Gerber’s determination that the Used Car Purchasers had not shown that they were prejudiced, but did not disturb Judge Gerber’s ruling that owners of used cars cannot acquire more rights than the seller had. That ruling therefore remains law of the case. See Am. Hotel Int’l Grp., Inc. v. OneBeacon Ins. Co.,
C. 2016 Threshold Issue Four: Punitive Damages
1. Judge Gerber’s Ruling that New GM Did Not Contractually Assume Liability for Punitive Damages Remains Law of the Case
Judge Gerber ruled, as a matter of contract interpretation, that New GM did not assume liability for punitive damages
The Court cannot agree with the plaintiffs’ contentions that the Sale Agreement unambiguously provides that New GM assumed punitive damages obligations. At best, it is ambiguous. And to the extent the Sale Agreement is ambiguous, the indicia of intent strongly come down against New GM’s assumption of punitive damages obligations premised on anything other than its own knowledge and conduct. Thus New GM did not contractually assume liability for punitive damages based on Old GM knowledge or conduct. Nor is New GM liable for punitive damages based on Old GM conduct under other theories, such as by operation of law as a result of New GM’s assumption of certain liabilities for compensatory damages. Consequently, under the April Decision and Judgment, punitive damages may not be premised on Old GM knowledge or conduct, or anything else that took place at Old GM. Punitive damages may be sought against New GM to the extent—but only the extent—they are based on New GM knowledge and conduct alone.
Motors Liquidation II,
2. Claims for Punitive Damages Are Barred by the Bankruptcy Code’s Priority Scheme
The Post-Closing Accident Plaintiffs argue, however, that because their injuries had not yet occurred at the time of the 363 Sale, they are “future claimants” under Grumman Olson whose claims could never have been barred by the Sale Order. (See “Plaintiffs’ Joint Opening Brief,” ECF Doc. # 13866 at 49-51 (citing In re Grumman Olson Indus., Inc.,
The Bankruptcy Code provides that general unsecured creditors, including those who file late claims, must be paid in full before any claim for punitive damages may be paid. 11 U.S.C. § 726(a)(3)-(4). While section 726(a) applies to cases under chapter 7 of the Bankruptcy Code, the “best interest of creditors” test mandates that claimants in a chapter 11 case must receive at least as much as they would receive in a chapter 7 case. See, e.g., In re Best Payphones, Inc.,
The plaintiffs argue that whether Old GM would have paid punitive damages is irrelevant because punitive damages are “not disallowed” but “merely subordinated,” and in any event New GM is solvent. (“Plaintiffs’ Joint Reply Brief,” ECF Doc. # 13889 at 46.) But the relevant inquiry under the Bankruptcy Code is whether the debtor, not the purchaser, is insolvent. And the Bankruptcy Code’s priority scheme draws a ready distinction between general unsecured claims and claims for punitive damages. See 11 U.S.C. § 726(a)(3)-(4). An insolvent debtor like Old GM often pays general unsecured claims on a pro rata basis. In contrast, as a rule an insolvent debtor would never pay a penny of punitive damages unless all higher priority claims are paid in full. And in the case of Old GM, not all higher priority claims will be paid in full. As Judge Gerber held in an earlier opinion in this case, punitive damages are subordinated in liquidating cases because “the victims of the punitive damages would in reality be only other, wholly innocent, creditors.” In re Motors Liquidation Co., No. 09-50026,
III. DISCUSSION
A. 2016 Threshold Issue One: “Ignition Switch Plaintiffs” Includes Only Plaintiffs Asserting Claims Based on the Ignition Switch Defect
Pillars urges the Court to disregard Judge Gerber’s and the Second Circuit’s clear discussions of the Ignition Switch Defect, arguing that Judge Gerber defined the terra “Non-Ignition Switch Plaintiffs” to include plaintiffs without the Ignition Switch Defect who were asserting economic loss claims, not personal injury or wrongful death claims. (Pillars Opening Brief at 3.) But Judge Gerber defined the Non-Ignition Switch Plaintiffs as those asserting economic losses simply because the plaintiffs without the Ignition Switch Defect before him at the time were asserting economic losses. See Motors Liquidation I,
Further, New GM’s isolated statement that Pillars’ claims were “identical” to the claims of Ignition Switch Pre-Closing Accident Plaintiffs cannot be taken as an admission that Pillars is an Ignition Switch Pre-Closing Accident Plaintiff. (See Pillars Opening Br. at 6; “New GM Reply Brief,” ECF Doc. # 13888 at 43.) It is clear that in context, New GM was arguing that Pillars, like the Ignition Switch Pre-Closing Accident Plaintiffs, was barred from asserting claims against New GM. (See Pillars Opening Br. at 6; New GM Reply Br. at 43.) That is not the same as stating the two sets of plaintiffs are one and the same.
It is true that the sheer number of prior decisions, all addressing slightly different groups of plaintiffs and all arising under different procedural postures, has led to
The Court finds Judge Gerber’s and the Second Circuit’s focus on the Ignition Switch Defect—rather than the question of economic loss versus personal injury—persuasive. The April Decision and June Judgment relied on the Stipulated Facts, which defined the Ignition Switch Defect as limited to the Subject Vehicles. The Second Circuit never indicated that it was changing the scope of Judge Gerber’s definitions, and in fact, its detailed discussion of the Ignition Switch Defect indicates the Second Circuit viewed the defect as having the same scope used by Judge Gerber. Accordingly, the Court finds that the following definitions apply to the holdings under the April Decision, June Judgment, November Decision, December Judgment, and this Opinion:
• “Subject Vehicles” are (1) 2005-2007 Chevrolet Cobalt and Pontiac G5, 2003-2007 Saturn Ion, 2006-2007 Chevrolet HHR, 2005-2006 Pontiac Pursuit (Canada), 2006-2007 Pontiac Solstice and 2007 Saturn Sky vehicles; and (2) 2008-2010 Pontiac Solstice and G5; 2008-2010 Saturn Sky; 2008-2010 Chevrolet Cobalt; and 2008-2011 Chevrolet HHR vehicles—certain of the vehicles in this second category may have been repaired using a defective Ignition Switch that had been sold to dealers or aftermarket wholesalers; Statements about the Ignition Switch apply to the Subject Vehicles listed in the seeond category only to the extent that the Subject Vehicles were actually repaired using a defective Ignition Switch.
• “Ignition Switch” shall mean an ignition switch designed and/or sold by Old GM in the Subject Vehicles that may unintentionally move out of the “run” position, resulting in a partial loss of electrical power and turning off the engine.
• “Ignition Switch Plaintiffs” includes only those plaintiffs asserting economic losses arising from the Ignition Switch' Defect in the Subject Vehicles.
• “Non-Ignition Switch Plaintiffs” are plaintiffs asserting economic losses arising from a defect other than the Ignition Switch Defect.
• “Pre-Closing Accident Plaintiffs” are plaintiffs asserting claims based on an accident or incident that occurred prior to the Closing Date.
• “Post-Closing Accident Plaintiffs” are plaintiffs asserting claims based on an accident or incident that occurred on or after the Closing Date.
• “Ignition Switch Pre-Closing Accident Plaintiffs” are that subset of Pre-Closing Accident Plaintiffs that had the Ignition Switch Defect in them Subject Vehicles.
• “Non-Ignition Switch Pre-Closing Accident Plaintiffs” are that subset of Pre-Closing Accident Plaintiffsthat did not have the Ignition Switch Defect in a Subject Vehicle.
B. 2016 Threshold Issue Three: Used Car Purchasers Without the Ignition Switch Defect Are Bound by the Sale Order
1. The Plaintiffs’ Reliance on “Future Claimant” Case Law is Misplaced
The Plaintiffs urge the Court to consider used car purchasers as “unknown” or “future” claimants, who could not be bound by the Sale Order because they had not yet purchased their vehicles on the Closing Date and had no prior relationship with Old GM. (See Plaintiffs’ Joint Opening Br. at 48.) It is true that “[bjecause parties holding future claims cannot possibly be identified and, thus, cannot be provided notice of the bankruptcy, courts consistently hold that, for due process reasons, their claims cannot be discharged by the bankruptcy courts’ orders.” In re Grumman Olson Indus.,
But the plaintiffs overlook an important distinction: the plaintiff in Grumman Olson was a FedEx employee driving a vehicle for business purposes; she never purchased the vehicle or had any relationship with the debtor whatsoever. Morgan Olson, LLC v. Frederico (In re Grumman Olson Indus. Inc.),
2. Used Car Purchasers Without the Ignition Switch Defect Stand in the Shoes of Their Predecessors in Interest and Are Therefore Bound by the Sale Order
Judge Gerber’s ruling in the April Decision remains law of the case: “the successor in interest to a person or entity cannot acquire greater rights than his, her, or its transferor.” Motors Liquidation I,
C. 2016 Threshold Issue Four: Post-Closing Accident Plaintiffs May Not Pursue Claims for Punitive Damages
Because a successor corporation may only be liable to the same extent as its predecessor, New GM cannot be held liable for a claim that its predecessor would never have had to pay under the
The Court underscores, as explained in the Legal Standard section, that its decision is based on the priority scheme under the Bankruptcy Code. While an insolvent debtor may pay general unsecured claims on a pro rata basis, the Bankruptcy Code dictates that an insolvent debtor would never pay punitive damages until higher priority claims are paid in full. It is thus inconsistent with the Bankruptcy Code to hold a purchaser in a section 363 sale liable for damages that would be categorically barred as a matter of priority had the sale never occurred.
Exposing a section 363 buyer to punitive damages based on the conduct of the insolvent seller—when the Bankruptcy Code prevents recovery of punitive damages from the insolvent seller—-would seriously chill a robust section 363 sale process designed to maximize creditor recoveries. The buyer would be unable to quantify the financial risk to which it was exposing itself in purchasing the assets; the stronger the financial condition of the buyer, the greater the risk of a large punitive damages award based on the insolvent seller’s conduct.
This result is also consistent with the general purpose of punitive damages: to “punish the actual wrongdoer and to deter him from acting illegally again.” E.E.O.C. v. Nichols Gas & Oil, Inc.,
The Court therefore finds that Posh-Closing Accident Plaintiffs may not assert claims against New GM for punitive damages based on conduct of Old GM.
For the above reasons, the Court finds that (i) only plaintiffs with the Ignition Switch Defect in a Subject Vehicle are Ignition Switch Plaintiffs; (ii) used car purchasers are bound by the Sale Order to the same extent that the previous owners of the used vehicle would be; and (iii) Post-Closing Accident Plaintiffs may not assert claims against New GM for punitive damages based on the conduct of Old GM.
IT IS SO ORDERED.
Notes
. All capitalized terms in the Introduction are defined below.
. New GM recently took the position before this Court that Threshold Issue Two was not fully resolved by the Pitterman Opinion, because the Court did not expressly answer the following question:
Are Non-Ignition Switch Plaintiffs barred from asserting Independent Claims against New GM either because (a) other than those plaintiffs represented by Mr. Peller in the Elliott, Sesay and Bledsoe cases that appealed the April 2015 Decision/June 2015 Judgment, they did not appeal the April 2015 Decision/June 2015 Judgment to the Second Circuit, and therefore the [Second Circuit] Opinion does not apply to them, and/or (b) they did not appeal the November 2015 Decision/December 2015 Judgment and/or the [Second Circuit] Opinion did not affect the rulings in the November 2015 Decision/December 2015 Judgment?
(Order to Show Cause at 2; see ECF Doc. # 13963 at 3-4 n.5.) The Court ruled in the Pitterman Opinion that truly Independent Claims—that is, claims based solely on wrongful post-closing conduct of New GM— are not barred by the Sale Order because they were not "claims” at the time of the 363 Sale. Motors Liquidation Pitterman,
. The Second Circuit defined these groups of plaintiffs as follows:
On April 21, 2014, Steven Groman and others (the "Groman Plaintiffs”) initiated an adversary proceeding against New GM in the bankruptcy court below, asserting economic losses arising from the ignition switch defect.
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Other plaintiffs allegedly affected by the Sale Order included classes of individuals who had suffered pre-closing injuries arising from the ignition switch defect ("Pre-Closing Accident Plaintiffs”), economic losses arising from the ignition switch defect in Old GM cars ("Ignition Switch Plaintiffs”), and damages arising from defects other than the ignition switch in Old GM cars (“Non-Ignition Switch Plaintiffs”). Included within the Ignition Switch Plaintiffs were individuals who had purchased Old GM cars secondhand after the § 363 sale closed (“Used Car Purchasers”).
Motors Liquidation III,
. In the Pitterman Opinion, the Court incorrectly paraphrased the April Decision: Judge Gerber stated that the Ignition Switch Defect led to recalls during the spring of 2014, not the summer. See Motors Liquidation Pitterman,
. In particular, it is unclear whether Ignition Switch Plaintiffs will be able to prove damages. Judge Furman recently ruled that “while New GM’s alleged concealment of the ignition switch defect may have caused economic injury to Plaintiffs who purchased their vehicles after New GM came into existence, it did not cause economic injury to Plaintiffs who purchased their vehicles before; the latter Plaintiffs’ injury, if any, was complete at the time of sale, and thus is not attributable to New GM’s conduct.” In re Gen. Motors LLC Ignition Switch Litig., —— F.Supp.3d at -,
. It is unnecessary to address whether, absent contractual assumption of liability, the purchaser in a section 363 sale would be obligated to pay any portion of a punitive damages claim under bankruptcy or applicable non-bankruptcy law in the event that all higher priority claims have been paid in full.
. The Court previously granted New GM's motion to extend its time to appeal, or to seek leave to appeal, the Motors Liquidation Fitter-man decision, until fourteen (14) days after the date the Court resolved additional 2016 Threshold Issues, Consequently, all parties have until fourteen (14) days from the date of this Opinion to appeal, or to seek leave to appeal, any aspect of the Court’s rulings on the 2016 Threshold Issues. The Court makes no determination whether any aspect of its rulings on the 2016 Threshold Issues is immediately appealable as of right.