GM, law firm can keep ignition switch documents secret - U.S. judge

By Jonathan Stempel

NEW YORK (Reuters) - General Motors Co and its law firm need not turn over privileged documents to drivers hoping to show that the automaker intended to commit a crime or fraud by concealing defective ignition switches in their vehicles, a Manhattan federal judge ruled on Wednesday.

Despite finding "probable cause" to believe GM committed a crime or fraud by hiding the defect from regulators and the public, U.S. District Judge Jesse Furman found no showing that the automaker and King & Spalding produced the documents with an intent to further such misconduct.

Most of the documents related to the law firm's advice from 2010 to 2013 on three crashes involving Chevrolet Cobalts. Vehicle owners said the deception justified a waiver of attorney-client privilege.

"Put simply, plaintiffs do not provide a factual basis for a good faith belief that the communications and work product they seek - let alone any particular communications or work product they seek - were made with the intent to further a crime or fraud," Furman wrote.

The judge added that the vehicle owners already had many of the documents in hand, and that King & Spalding's work had "all the hallmarks of dispassionate, sober evaluations (perhaps, in hindsight, too dispassionate and sober for their own good)."

Wednesday's decision is a victory for GM as it prepares for a Jan. 11, 2016, bellwether trial over an ignition switch defect that could cause engines to stall and prevent airbags from deploying in crashes.

The defect on Cobalts, Saturn Ions and other vehicles has been linked to at least 124 deaths.

GM in February 2014 began recalling 2.6 million vehicles to fix the defect, despite having awareness of a possible problem a decade earlier.

Two months ago, GM agreed to pay $900 million and enter a deferred prosecution agreement to end a related U.S. criminal probe. Furman cited that accord when discussing probable cause.

"We're pleased with the court's ruling," GM spokesman James Cain said. "The company did not conspire with King & Spalding to further any crime or fraud."

Bob Hilliard, a lawyer for vehicle owners, said attorney-client privilege is "difficult to overcome," and that jurors in the upcoming trial "will determine what level of financial punishment should be assessed against this company."

King & Spalding spokeswoman Micheline Tang said Furman's decision shows that the firm's lawyers "did exactly what one would expect ethical and diligent litigators to do."

Furman oversees more than 200 lawsuits over the ignition switches.

The case is In re: General Motors LLC Ignition Switch Litigation, U.S. District Court, Southern District of New York, No. 14-md-02543.

(Reporting by Jonathan Stempel in New York; Additional reporting by Joseph White in Detroit and Jessica Dye in New York; Editing by David Gregorio and Steve Orlofsky)