Chief U.S. Bankruptcy Judge Martin Glenn ruled that the State of Texas is enjoined from proceeding with its lawsuit against General Motors LLC until it strikes all allegations regarding pre-bankruptcy conduct from its complaint, according to an October 14, 2025 opinion issued in the U.S. Bankruptcy Court for the Southern District of New York.
The 46-page decision, filed in Case No. 09-50026 (MG), grants the motion by General Motors LLC and OnStar, LLC to enforce the 2009 Sale Order that authorized the sale of substantially all assets of the bankrupt General Motors Corp. Judge Glenn held that Texas's attempt to use Old GM's conduct to calculate civil penalties against New GM "constitutes impermissible successor liability barred by the Sale Order."
The Texas Lawsuit
In August 2024, Texas Attorney General Ken Paxton filed a lawsuit against New GM in the District Court for Montgomery County, Texas, alleging violations of the Texas Deceptive Trade Practices Act (DTPA). According to the court's opinion, "Texas accuses New GM of operating a 'mass surveillance program' involving the collection of data pertaining to a user's driving behavior, geolocation data, and disclosing that data to third parties without adequate disclosure to consumers."
The original complaint did not contain allegations about Old GM's conduct. However, on May 20, 2025, Texas filed a First Amended Petition that New GM claims "added numerous allegations pertaining to Old GM's pre-bankruptcy conduct," according to the court's recitation of the facts.
Historical Allegations Spanning Eight Decades
The Second Amended Petition, filed June 5, 2025, included allegations about Old GM's conduct that the court document describes as follows:
- "Tracking Ralph Nadar [sic] in the 1960s and its related settlement in the 1970s"
- "TARP loans and bankruptcy in 2008 and 2009"
- "Fuel tank fires from the 1970s through the 1990s"
- "Allegedly monopolistic and anti-consumer conduct based on court cases from 1941 and 1951"
- "Vehicle emissions issues based on a news article from 1995"
The opinion notes that "certain allegations contained in the Second Amended Complaint (defined below) go as far back as the 1940s."
The Second Amended Petition included details about deaths related to fuel tank fires in GM vehicles, including "the immolation of Shannon Mosley in 1989, the McGee Family in 1991, and the Anderson Family in 1993, and deaths resulting from the ignition switch scandal," according to the court. The complaint also included "a photo of a burning vehicle with the caption 'illustrative of what could happen to consumers trapped in a GM inferno,'" the opinion states.
Texas's Disclaimer and Legal Theory
Texas included a footnote in the Second Amended Petition stating: "For the avoidance of doubt, the State of Texas is not asserting successor liability against [New GM] for liabilities arising from [Old GM's] conduct prior to the closing of the bankruptcy sale. The assessment of penalties is only sought based on [New GM's] conduct post-closing of the bankruptcy sale."
Texas argued that Section 17.47(g) of the DTPA permits consideration of historical conduct when calculating civil penalties. The statute instructs fact-finders to consider:
- The seriousness of the violation
- The history of previous violations
- The amount necessary to deter future violations
- The economic effect on the defendant
- Knowledge of the illegality of the conduct
- Any other matter that justice may require
According to the court, "Texas believes that its statutory methodology for calculating a civil penalty and is not a 'claim' as defined under the Bankruptcy Code." Texas argued it seeks to "use Old GM's conduct as a comparator to New GM's conduct to determine the amount necessary to deter future violations by a major automobile manufacturer."
The 2009 Bankruptcy Sale
The court's opinion provides background on the bankruptcy proceedings. General Motors Corp. filed for bankruptcy on June 1, 2009, and simultaneously filed a motion to sell substantially all assets to a predecessor of New GM. On July 5, 2009, the court entered the Sale Order, and the sale closed on July 10, 2009.
The Sale Order stated that "the Purchased Assets (defined in the Sale Agreement) were transferred free and clear of all liens, claims, encumbrances, and other interests of any kind or nature whatsoever, except the Assumed Liabilities," according to the opinion.
The Sale Agreement specified that New GM assumed three types of vehicle-related liabilities: "(i) Product Liabilities (defined in the Sale Agreement), which include, inter alia, liabilities to third parties for death, personal injury or other injury as a result of the operation of motor vehicles on a public roadway or by the components of such motor vehicles, (ii) liabilities arising from express written warranties, and (iii) all obligations arising under Lemon Laws," the court stated.
The Sale Order "specified that New GM was not liable for any claims against Old GM, including claims based on Old GM's conduct and successor liability claims," according to the opinion. The Sale Order also provided that the bankruptcy court "would retain jurisdiction to enforce and implement the terms and provisions of the Sale Order."
Jurisdiction and Abstention Arguments
Texas initially challenged the bankruptcy court's jurisdiction on multiple grounds, though the opinion notes that "at the hearing, the State of Texas stated on the record that it waived several of its arguments present in its briefing," including the jurisdictional challenge.
Judge Glenn addressed the arguments nonetheless:
Subject Matter Jurisdiction: The court held that "a bankruptcy court's decision to interpret and enforce a prior sale order falls under this formulation of 'arising in' jurisdiction," citing In re Motors Liquidation Co., 829 F.3d 135, 153 (2d Cir. 2016). The court stated: "This Court has jurisdiction to interpret and enforce the Sale Order."
Sovereign Immunity: The court found that "sovereign immunity does not bar this Court from exercising jurisdiction over this matter for two reasons." First, the court stated that "the interpretation and enforcement of the Sale Order is ancillary to this Court's exercise of its in rem jurisdiction." Second, the court held that "Congress has created an express limited waiver of certain provisions of the Bankruptcy Code" through 11 U.S.C. § 106(a), which abrogates sovereign immunity for governmental units with respect to sections 105 and 363.
Anti-Injunction Act: The court found that "sections 105 and 363 of the Bankruptcy Code constitute express authorization of Congress" for injunctions, bringing the case within an exception to the Anti-Injunction Act.
Younger Abstention: The court concluded that "abstention pursuant to the Supreme Court's decision in Younger is not appropriate," finding that "there is no ongoing state judicial proceeding parallel to this proceeding."
Burford Abstention: The court held that "abstention pursuant to the Supreme Court's decision in Burford is not appropriate," stating that "this Court is able to limit its review to the Sale Order and avoid making determinations of state law."
Bankruptcy Abstention: The court found that both mandatory and permissive abstention under 28 U.S.C. § 1334 were inapplicable.
The Court's Analysis of Successor Liability
Judge Glenn's opinion states: "The Sale Order provides for the sale of Old GM's assets free and clear, in other words, with no successor liability."
The court cited Second Circuit precedent holding that "the Sale Order's free and clear provision bars punitive damages claims under a theory of successor liability." In re Motors Liquidation Co., 943 F.3d 125, 133 (2d Cir. 2019).
The opinion states: "This Court has also previously held that purchases of assets 'cannot be placed at risk of liability for claims based on seller conduct premised on the notion that the claims are not exactly for successor liability.'" In re Motors Liquidation Co., 531 B.R. 354, 359 (Bankr. S.D.N.Y. 2015).
Judge Glenn wrote: "Texas is correct that independent claims based on New GM's conduct are not barred by the Sale Order. However, an attempt to hold New GM liable for the acts of Old GM is not an independent claim, violates the Sale Order, and constitutes a form of successor liability."
The court found: "Texas's claims against New GM are not wholly independent to the extent that it seeks a civil penalty based on the conduct of Old GM. Even if the underlying claim to establish liability under the DTPA is wholly independent, Texas destroys the claim's independence by seeking to base the civil penalty, even if only in part, on Old GM's conduct."
Civil Penalties vs. Punitive Damages
Texas argued that civil penalties differ from punitive damages in ways that should permit consideration of Old GM's conduct. The court addressed this argument:
"This Court is not persuaded by Texas's argument that punitive damages and civil penalties are meaningfully different in the context of asserting successor liability and violation of the Sale Order," Judge Glenn wrote.
The opinion notes that Texas cited Austin v. United States, 509 U.S. 602, 610 (1993), "to argue that the purpose of a civil penalty is not merely remedial, but it also serves as a punishment with either a retributive or deterrent purpose." The court stated: "The same is true of punitive damages."
Judge Glenn concluded: "While punitive damages and civil penalties are not identical, this Court does not see why this Court's prior rulings regarding punitive damages are not applicable in the context of successor liability claims."
Section 363(f) Analysis
The court conducted an analysis of whether Texas's penalty calculation methodology violates Section 363(f) of the Bankruptcy Code, which permits sales "free and clear of any interest in such property."
Judge Glenn wrote: "Although Texas is correct that its underlying lawsuit seeks to impose liability under the DPTA for the acts of New GM alone, Texas also seeks the right to pursue additional civil penalties for conduct of Old GM arising exclusively from the assets prior to the 363 Sale."
The court held: "The pursuing New GM for penalties arising from the conduct of Old GM violates section 363(f) of the Bankruptcy Code because the civil penalty constitutes the incurrence of an obligation from the Purchased Assets that is an 'interest' that was expunged by the Sale Order."
The opinion states: "Allowing New GM to be held liable for the acts of Old GM would squarely defeat the purpose of section 363(f)."
Rejection of Texas's Alternative Arguments
The court addressed each of Texas's alternative theories:
Independent Claims: Judge Glenn wrote: "The allegations levied by the State of Texas against New GM are not wholly independent because the penalty to be awarded depends, at least in part, on the prior bad conduct of Old GM."
The court noted that Texas "seeks to introduce at times graphic stories regarding Old GM's conduct" and stated: "This is a transparent attempt to hold New GM liable for the prior bad acts of Old GM and is barred by the Sale Order."
Old GM as Comparator: The court found that "Texas does not allege similar conduct by other similarly situated corporations, like BMW, Stellantis, or Ford" and concluded that "Texas seeks to use Old GM's bad conduct to paint New GM in a bad light to a jury."
Imputation of Knowledge: The court held that "this Court has held that imputation must be based on 'identified individuals or identified documents,'" citing In re Motors Liquidation Co., No. 09-50026(REG), 2015 WL 11070293, at *2 (Bankr. S.D.N.Y. Dec. 4, 2015). Judge Glenn found: "Texas has failed to identify specific documents or individuals from which to impute knowledge to New GM."
Justice Requires Consideration: The court addressed Texas's final argument in one sentence: "The State of Texas's last argument is meritless."
"New GM Was Born Innocent"
The opinion references prior rulings in the GM bankruptcy case. Judge Glenn wrote: "This Court barred the State of Arizona from using identical language in a prior suit against New GM," referring to the phrase "GM was not born innocent" that appeared in Texas's complaint.
The court stated: "New GM is not a successor in interest and this Court has found that New GM, 'was born innocent, and the focus must be instead on its own knowledge and acts after it was born.'" In re Motors Liquidation Co., 541 B.R. at 137 n.94.
The Court's Order
The court's conclusion states: "This Court exercises its role as a 'gatekeeper,' determining whether claims asserted against New GM are barred by the Sale Order and prior decisions of this Court. The merits of any claims that pass through the gate are not for this Court to pass upon."
Judge Glenn wrote: "The Court concludes below that Texas's claims regarding Old GM's conduct predating the sale to New GM may not be asserted against New GM because the claims seek to hold New GM accountable for conduct of Old GM and are barred by the Sale Order and this Court's prior rulings. Therefore, Texas is enjoined from proceeding until it strikes the allegations regarding Old GM's conduct from the Second Amended Complaint."
The opinion states: "Accordingly, the State of Texas must strike allegations relating to the conduct of Old GM in the Seconded Amended Complaint" and "allegations solely involving conduct of New GM may proceed."
The formal order states: "The Motion is therefore GRANTED to the extent described herein."
What Happens Next
The court's ruling does not dismiss Texas's lawsuit. The opinion makes clear: "This Court's determination regarding whether Texas can include certain allegations of Old GM's conduct does not prejudice the Texas Court from pursuing the Texas Lawsuit's attempt to hold New GM liable for its alleged violations of the DTPA for its data collection."
According to the court, "Texas is only impacted with respect to the evidence that may be presented to the jury on two elements of what the state argues the jury may consider under the DTPA," specifically sections 17.47(g)(3) and (6) relating to "amount necessary to deter future violations" and "any other matter that justice may require."
The opinion notes: "Texas may still present information regarding previous violations of New GM's conduct or information related to other categories permitted under the DTPA."
Prior Proceedings in the GM Bankruptcy Case
The opinion references multiple prior rulings in the GM bankruptcy case. Judge Glenn noted that "New GM points toward several prior interpretations of the Sale Order from this Court," including:
- In re Motors Liquidation Co., 576 B.R. 313 (Bankr. S.D.N.Y. 2017), aff'd in part, rev'd in part, 590 B.R. 39 (S.D.N.Y. 2018)
- Judgment dated December 4, 2015 (ECF Doc. # 13563)
- In Matter of Motors Liquidation Co., 541 B.R. 104 (Bankr. S.D.N.Y. 2015)
The court stated: "This Court has previously rejected the argument that it lacks jurisdiction over the Sale Order," citing In re Old Carco LLC, 636 B.R. 347, 355 (Bankr. S.D.N.Y. 2022) and other decisions.
The Sale Order's Jurisdiction Provision
The opinion quotes the Sale Order's jurisdictional provision: "This Court retains exclusive jurisdiction to enforce and implement the terms and provisions of this Order, the MPA, all amendments thereto . . . [to] interpret, implement, and enforce the provisions of this Order."
Judge Glenn stated: "In the instant case, New GM requests the Court reexamine the Sale Order to determine whether any of Texas's claims against it in the Texas Court Proceeding violate the Sale Order. This request squarely falls within the Court's 'core' jurisdiction as it pertains exclusively to the interpretation of the Sale Order, and this Court has jurisdiction to enforce its own orders."
Legal Representation
General Motors LLC and OnStar, LLC are represented by King & Spalding LLP, with attorney Scott Davidson appearing for the companies.
The State of Texas is represented by its Attorney General's office, including:
- Ken Paxton, Attorney General of Texas
- Brent W. Webster, First Assistant Attorney General
- Ralph M. Olina, Deputy First Assistant Attorney General
- Austin K. Klinghorn, Deputy Attorney General for Civil Litigation
- Johnathan Stone, Esq., Chief, Consumer Protection Division
Background on the Bankruptcy Filing
According to the opinion, the State of Texas "filed an objection to the 363 Sale but ultimately withdrew its objection on the record at the sale hearing." The court cites a July 2, 2009 hearing transcript in which Texas stated: "[The State of Texas] filed a limited standalone objection. We've reached an agreement with the debtors, subject to entry of that agreement on the record, we will be prepared to withdraw."
The opinion notes that the 363 Sale closed on July 10, 2009, five days after the Sale Order was entered.
The Court's Gatekeeping Role
Judge Glenn described the bankruptcy court's function in these enforcement proceedings: "As explained in greater detail below, this Court exercises its role as a 'gatekeeper,' determining whether claims asserted against New GM are barred by the Sale Order and prior decisions of this Court. The merits of any claims that pass through the gate are not for this Court to pass upon."
The court stated: "This Court expresses no view regarding the underlying allegations of the liability under the DTPA in the Texas Lawsuit. This Court's inquiry is limited to the determination whether the inclusion of certain facts of Old GM's conduct constitutes a violation of the Sale Order."
Conclusion
The opinion concludes: "For the reasons explained above, this Court finds that it possesses jurisdiction over the Sale Order because the interpretation and enforcement of the Sale Order is within the Court's 'core' jurisdiction. The Court further finds that sovereign immunity does not prevent this Court from exercising jurisdiction. Similarly, the Anti-Injunction Act, Younger, Burford, and both permissive and mandatory bankruptcy abstention do not require or encourage this Court to abstain."
On the merits, the court held: "New GM is not liable for the bad acts of Old GM in the context of civil penalties under the DTPA. The Court finds that the statutory scheme for calculating damages relying on Old GM's prior bad acts constitutes a form of successor liability, which is barred by the Sale Order."
The final order states: "IT IS SO ORDERED" and is dated October 14, 2025, and signed by Martin Glenn, Chief United States Bankruptcy Judge.
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