General Motors 2014 Annual Report Download - page 114

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
million). Both the scope of claims asserted and GM Korea’s assessment of any or all of the individual claim elements may change if
new information becomes available. These cases are currently pending before various district courts in Korea and the Supreme Court.
Inventory Management Securities Class Action
On June 29, 2012 a putative securities class action was filed against us and a number of our past and current officers and directors
in the United States District Court for the Southern District of New York (George G. Scott v. General Motors Company et al).
Purporting to sue on behalf of owners of common stock deriving from our 2010 initial public offering, plaintiff asserts non-fraud
prospectus based liability claims under various federal securities statutes alleging that the Company has made false statements about
its vehicle inventory controls and production decisions, particularly with respect to full-size trucks. The plaintiff’s complaint requests
compensatory damages, rescission and litigation costs, fees and disbursements. On November 21, 2012 the court appointed the
Teamster’s Local 710 Pension Fund as lead plaintiff in the matter. On February 1, 2013 the plaintiff filed an amended complaint. On
September 4, 2014 the district court granted our motion to dismiss, and dismissed the case with prejudice. Plaintiff filed an appeal.
GM Financial Subpoena
In July 2014 GM Financial was served with a subpoena by the U.S. Department of Justice directing GM Financial to produce
certain documents relating to GM Financial’s and its subsidiaries’ and affiliates’ origination and securitization of sub-prime
automobile loans since 2007 in connection with an investigation by the U.S. Department of Justice in contemplation of a civil
proceeding for potential violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. Among other
matters, the subpoena requests information relating to the underwriting criteria used to originate these automobile loans and the
representations and warranties relating to those underwriting criteria that were made in connection with the securitization of the
automobile loans. GM Financial was subsequently served with additional investigative subpoenas to produce documents from state
attorneys general and other governmental offices relating to its sub-prime automotive finance business and securitization of sub-prime
automobile loans. In October 2014 GM Financial received a document request from the SEC in connection with its investigation into
certain practices in sub-prime automobile loan securitization. GM Financial is investigating these matters internally and believes that
it is cooperating with all requests. Such investigations could in the future result in the imposition of damages, fines or civil or criminal
claims and/or penalties. No assurance can be given that the ultimate outcome of the investigations or any resulting proceedings would
not materially and adversely affect GM Financial or any of its subsidiaries and affiliates.
Product Liability
With respect to product liability claims involving our and General Motors Corporation’s products, we believe that any judgment
against us for actual damages will be adequately covered by our recorded accruals and, where applicable, excess liability insurance
coverage. Although punitive damages are claimed in some of these lawsuits and such claims are inherently unpredictable, accruals
incorporate historic experience with these types of claims. In addition we indemnify dealers for certain product liability related claims
including products sold by General Motors Corporation’s dealers. We monitor actual claims experience and make periodic
adjustments to our estimates. Liabilities have been recorded in Accrued liabilities and Other liabilities for the expected cost of all
known product liability claims plus an estimate of the expected cost for product liability claims that have already been incurred and
are expected to be filed in the future for which we are self-insured. In light of recent vehicle recalls it is reasonably possible that our
accruals for product liability claims may increase in future periods in material amounts, although we cannot estimate a reasonable
range of incremental loss based on currently available information.
Ignition Switch Recall Compensation Program
In the three months ended June 30, 2014 we announced the creation of a compensation program (the Program) to compensate
accident victims who died or suffered physical injury (or their families) as a result of a faulty ignition switch related to the 2.6 million
vehicles recalled as more fully described in Note 13. It is important to our company that we reach everyone through this Program who
has been impacted. The Program is being administered by an independent program administrator. The independent administrator has
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