General Motors 2014 Annual Report Download - page 113

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
agreements with GMCL. In May 2009 in the context of the global restructuring of the business and the possibility that GMCL might
be required to initiate insolvency proceedings, GMCL offered the Plaintiff Dealers the wind-down agreements to assist with their exit
from the GMCL dealer network and to facilitate winding down their operations in an orderly fashion by December 31, 2009 or such
other date as GMCL approved but no later than on October 31, 2010. The Plaintiff Dealers allege that the Dealer Sales and Service
Agreements were wrongly terminated by GMCL and that GMCL failed to comply with certain disclosure obligations, breached its
statutory duty of fair dealing and unlawfully interfered with the Plaintiff Dealers’ statutory right to associate in an attempt to coerce
the Plaintiff Dealers into accepting the wind-down agreements. The Plaintiff Dealers seek damages and assert that the wind-down
agreements are rescindable. The Plaintiff Dealers’ initial pleading makes reference to a claim “not exceeding” CAD $750 million,
without explanation of any specific measure of damages. On March 1, 2011 the court approved certification of a class for the purpose
of deciding a number of specifically defined issues including: (1) whether GMCL breached its obligation of “good faith” in offering
the wind-down agreements; (2) whether GMCL interfered with the Plaintiff Dealers’ rights of free association; (3) whether GMCL
was obligated to provide a disclosure statement and/or disclose more specific information regarding its restructuring plans in
connection with proffering the wind-down agreements; and (4) assuming liability, whether the Plaintiff Dealers can recover damages
in the aggregate (as opposed to proving individual damages). A number of former dealers have opted out of participation in the
litigation, leaving 181 dealers in the certified class. Trial of the class issues was completed in the fourth quarter of 2014. We are now
awaiting a decision from the Ontario Superior Court. The current prospects for liability are uncertain, but because liability is not
deemed probable we have no accrual relating to this litigation. We cannot estimate the range of reasonably possible loss in the event
of liability as the case presents a variety of different legal theories, none of which GMCL believes are valid.
UAW Claim
On April 6, 2010 the UAW filed suit against us in the U.S. District Court for the Eastern District of Michigan claiming that we
breached our obligation to contribute $450 million to the New VEBA. The UAW alleges that we were contractually required to make
this contribution pursuant to the UAW-Delphi-GM Memorandum of Understanding Delphi Restructuring dated June 22, 2007. We
believe this claim is without merit. On December 10, 2013 the court granted our motion for summary judgment and dismissed the
claims asserted by the UAW, holding that the relevant agreement is unambiguous and does not require the payment sought. The UAW
has appealed. On October 9, 2014 the United States Court of Appeals for the Sixth Circuit heard oral arguments. We are now awaiting
a decision from the United States Court of Appeals for the Sixth Circuit.
GM Korea Wage Litigation
Commencing on or about September 29, 2010 current and former hourly employees of GM Korea filed eight separate group actions
in the Incheon District Court in Incheon, Korea. The cases, which in aggregate involve more than 10,000 employees, allege that GM
Korea failed to include bonuses and certain allowances in its calculation of Ordinary Wages due under the Presidential Decree of the
Korean Labor Standards Act. On November 23, 2012 the Seoul High Court (an intermediate level appellate court) issued a decision
affirming a decision of the Incheon District Court in a case involving five GM Korea employees which was contrary to GM Korea’s
position. GM Korea appealed to the Supreme Court of the Republic of Korea (Supreme Court) and initiated a constitutional challenge
to the adverse interpretation of the relevant statute. In December 2013 the Supreme Court rendered a decision in a case involving
another company not affiliated with us which addressed many of the issues presented in the cases pending against GM Korea and
resolved many of them in a manner which we believe is favorable to GM Korea. In particular, while the Supreme Court held that fixed
bonuses should be included in the calculation of Ordinary Wages, it also held that claims for retroactive application of this rule would
be barred under certain circumstances. On May 29, 2014 the Supreme Court rendered its decision with respect to the case involving
the five GM Korea employees and remanded the case to the Seoul High Court consistent with its December 2013 ruling. In July 2014
GM Korea and its labor union agreed to include bonuses and certain allowances in ordinary wages retroactively to March 1, 2014.
Therefore our accrual related to these cases was reclassified from a contingent liability to the Pensions liability. We estimate our
reasonably possible loss, as defined by ASC 450, “Contingencies,” in excess of amounts accrued to be 562 billion South Korean Won
(equivalent to $511 million) at December 31, 2014, which relates to periods before March 1, 2014. We are also party to litigation with
current and former salaried employees over allegations relating to Ordinary Wages regulation. At December 31, 2014 we have
identified a reasonably possible loss in excess of the amount of our accrual of 164 billion South Korean Won (equivalent to $149
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