Takata Agrees to NHTSA Consent Order & Record Fine

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For years the Takata airbag deflator defect was allowed to fester as airbags that could deploy with excessive force and shoot pieces of metal at the driver and passengers were installed in many popular makes and models of vehicles. In fact, the first signed of the defect were dismissed back in 2004 by Takata engineers who characterized an exploding airbag in a 2002 Honda Accord as “an anomaly.” As such, this characterization allowed the company to avoid federal regulators for four more years until November 2008 when the first recall was issued.

However this recall was limited to only 4,000 vehicles and it was prematurely closed in late 2009 as NHTSA concluded that the problem was “isolated.” Inquiry into this problem would not be re-opened for nearly 5 years until June of 2014 after NHTSA received reports of deaths due to defective Takata airbags. This investigation resulted in a recall that was first limited to high-humidity areas as Takata assured automakers, law makers, and the public that the airbags were safe and free from problems. However, by November 2014, NHTSA requested for Takata to expand the recall to cover all of the United States. However Takata, at first, maintained its insistence that nothing was wrong with their airbags. However, by May 2015, the company admitted that a significant number of its airbags were defective.

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NHTSA and Takata have wrangled over how to handle the defect and recall for months. On November 3rd, 2015, NHTSA announced the largest civil penalty in its history against Takata. Furthermore, as part of the consent order, Takata is obligated to take certain steps regarding the use of ammonium nitrate in its airbags.

NHTSA Announces Largest Fine in History Against Airbag Maker

The first of the two consent orders announced by NHTSA imposes the largest fine in the regulatory agency’s history. The fine is currently set at a total of $200 million. $70 of the fine will be paid by Takata in cash. The $70 million in fines is broken into a payment schedule requiring six payments with the last payment on October 31, 2020. For the remaining $130 million in fines, these will only come due if Takata fails to meet certain commitments contained within the consent order. Furthermore, if additional problems or additional violations of the Motor Vehicle Safety Act are discovered, Takata will also become liable for the remaining fine.

According to Department of Transportation Secretary Anthony Fox, “For years, Takata has built and sold defective products, refused to acknowledge the defect, and failed to provide full information to NHTSA, its customers, or the public. The result of that delay and denial has harmed scores of consumers and caused the largest, most complex safety recall in history. Today’s actions represent aggressive use of NHTSA’s authority to clean up these problems and protect public safety.”

While the fine appears harsh at first glance, the headline fine number will only come into play if Takata fails to satisfy certain conditions. In light of the seven airbag deaths and one hundred injuries in the United States, this fine seems like it leaves something to be desired. However, on the other hand, NHTSA’s ability to levy fines is statutorily limited and this approach provides Takata with a financial incentive to meet the safety goals contained in the second consent order.

Second NHTSA consent Order Should Expedite the Repair of Defective Airbags

The second consent order is focused on the remedial safety measures Takata must take. The company agreed to cease its use of ammonium nitrate as an airbag propellant unless the company can provide proof of their safety or the reason why they have been known to deploy with excessive force. Furthermore, the order also subjects Takata to a high-level of oversight. NHTSA will be able to select and place an independent auditor to assess and track the company’s progress in satisfying the conditions of the consent orders. The auditor will also oversee Takata’s compliance with the Coordinated Remedy Program also established through this order. The independent monitor is slated to remain in place for five years.

The coordinated vehicle remedy program involves Takata and 12 automakers and is the first time NHTSA has invoked this authority since the passage of the 2000 TREAD Act. Under the remedy program, the airbag maker and auto manufacturers are required to prioritize their solutions based on risk assessments. Additionally, the parties are subject to certain deadlines by which they must source replacement parts sufficient to repair all defective vehicles.

Also part of the consent orders, the company admitted that it had knowledge of a safety defect, but neglected to implement a required and timely recall to fix the problem. Furthermore, NHTSA findings indicate that Takata provided the agency with inaccurate or selective data since at least 2009.

Despite Agreement, Honda Drops Takata as An Airbag Supplier for its Cars, Trucks, SUVs, and Vans

Unfortunately, the agreement between NHTSA and Takata appears to be too little, too late for Honda. For years, Honda has been a loyal and profitable customer for the airbag maker. However, it was warning from Honda engineers that Takata disregarded that resulted in this issue reaching its current level of severity.

In recent weeks, however, Honda has begun to distance itself from its supplier. At or near the release of the Takata-NHTSA agreement Honda indicated that it would no longer use the manufacturer because Takata has breached the trust between the parties. Honda, like the NHTSA, charges that Takata, “misrepresented and manipulated test data.” This was the justification given by Honda for the reduced relationship. A Honda spokesperson stated that no new Honda vehicles or Acura vehicles will make use of Takata supplied airbags or airbag inflators in the driver or passenger airbags.

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Interestingly, Honda is not fully severing the relationship. Takata will continue to provide Honda with seatbelts and other safety gear.
All this adds up to exceedingly bad news for Takata and perhaps raises questions about the company’s long-run viability. Takata shares are down to nearly half of their value from before the airbag defect became public. Furthermore, airbags make up about forty percent of the company’s sales and the United States is the company’s largest market. If more auto makers follow Honda’s lead and remove Takata airbags in an attempt to regain consumer trust, Takata could find itself in an impossible financial situation. If the company runs into financial difficulties so severe as to result in a bankruptcy, people severely injured by the airbags and the family of those wrongfully killed by Takata airbags will face significant difficulties in being made whole.

Have You suffered Catastrophic Injuries Due to a Faulty and Defective Airbag?

If you have suffered life-altering injuries due to a defective Takata airbag or if a loved one have been killed due to an airbag that deployed with excessive force, the experienced personal injury lawyers of The Reiff Law Firm can fight for you. For more than 34 years we have fought to hold manufactures of dangerous and defective products accountable for the injuries and deaths they inflict. To schedule a confidential, free initial consultation call us at (215) 246-9000 today. We understand the pain, suffering, and difficult situations you have faced and will face. We will fight for you.

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