FORTUNE — General Motors Co. Asked a federal court in Texas to postpone a lawsuit against it claiming damages and injuries from ignition-switch defects in models of GM cars built before the automaker’s 2009 bankruptcy.
It’s an early salvo in a critical legal battle that will determine if plaintiffs across the country will be permitted to sue for damages against the “old GM.”
GM (GM) has claimed immunity from legal liability for actions the automaker took prior to bankruptcy, which presumably could shield it from dozens of legal actions of those claiming they or family members were hurt due to the switch defects. GM recalled 2.6 million Chevrolet Cobalt, Saturn Ion, and other small cars; the automaker has acknowledged that the defect is linked to 31 accidents and 13 fatalities.
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GM has acknowledged that it first detected a possible defect in the switch as early as 2001. Plaintiffs’ attorneys thus are likely to argue to the federal bankruptcy judiciary that GM shouldn’t be afforded immunity from litigation, since it knew of the defect prior to 2009 and should have disclosed the matter as part of the bankruptcy filing.
“As a result of GM’s conduct, especially in light of the taxpayer bailout of that company, [GM] has lost the right to impose their view as to what’s best for my clients and the other class members,” Adam Levitt of Grant & Eisenhofer, a lawyer for plaintiffs in a California case, told Reuters news service.
How GM fares in the litigation could bear directly on the mushrooming legal and political whirlwind that has consumed the automaker and its new chief executive officer, Mary Barra. Numerous federal lawmakers have criticized GM and leveled broadsides at its performance before and since the bankruptcy, particularly the delay in recalling vehicles affected by the ignition-switch defect.
Barra has sought to be proactive by appointing outside lawyers to conduct a broad investigation into the matter. She also hired Ken Feinberg, who supervised the payment of reparations to victims and their families in the 9/11 attack, to advise GM regarding compensation to those seeking damages.
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This week two top GM executives, supervising communications and human resources, resigned. The HR post was filled by a longtime GM executive; the communications job remains unfilled. Barra earlier created two new GM organizations, one devoted to safety and the second to “global product integrity.”
The GM chief executive officer, who has worked at the company for 33 years, is at pains to convince customers, dealers, jurists, and legislators that the corporate culture prior to bankruptcy has been rehabilitated.
“In the last five years,” Barra this week told a conference sponsored by J.D. Power & Associates, “we have made important and meaningful progress at GM in changing the company’s culture. Our focus is no longer on survival. We are more focused on quality and doing what is right for the customer than at any time in my 33 years with the company.”
As Barra also said: “It’s easy to come up with a list of values. What’s difficult is showing they are more than words on paper.’’ Keeping her job will likely hinge on that task.
