Attorney General Laxalt, 44 States and Territories Reach Settlement With Takata Over Defective Airbags
Nevada Attorney General Adam Paul Laxalt announced a settlement with TK Holdings, Inc., the U.S. subsidiary of Takata, over allegations that the company concealed safety issues related to its airbag systems installed in a wide variety of vehicles. TK Holdings, Inc. filed for bankruptcy in June 2017, and its reorganization plan has been confirmed by the United States Bankruptcy Court for the District of Delaware.
The settlement, reached between the attorneys general of 44 states, the District of Columbia and TK Holdings, Inc., concludes a multistate investigation into the company’s failure to timely disclose known safety defects associated with certain airbag inflators using phase-stabilized ammonium nitrate as a propellant. The consent decree and settlement agreement have been presented to the United States Bankruptcy Court for the District of Delaware for approval.
“This settlement is the result of an investigation into an extremely dangerous public safety risk that has killed at least 20 individuals and injured hundreds more,” said Laxalt. “These inflators posed a significant risk to anyone who operated or rode as a passenger in these vehicles.”
Beginning in 2008, auto manufacturers issued a number of recalls of vehicles containing these airbag inflators in response to ruptures upon deployment of the airbag. More than 50 million airbags in more than 37 million vehicles have been recalled to date, with future anticipated recalls through the end of 2019 likely. As a result, the total number of affected airbags ranges between 65 and 70 million.
The recalls involved the use of phase-stabilized ammonium nitrate (PSAN) to inflate the airbags upon deployment. As the compound was exposed to heat and humidity over time, particularly in warmer and wetter parts of the United States, the propellant degraded. Consequently, upon deployment, the inflator could rupture explosively, destroying the metal casing surrounding the propellant and spraying shrapnel into the vehicle’s passenger cabin.
The multistate coalition of attorneys general alleged that the company knew that the airbag inflator posed a safety defect because of testing failures. TK Holdings, Inc.’s parent company later pleaded guilty to manipulating testing data and submitting false and misleading reports to auto manufacturers. The company knew about several ruptures which occurred as early as 2004, but appropriate action to recall these unsafe inflators did not occur until November 2014. However, despite this knowledge, the company failed to properly notify regulators and the public of the serious danger posed by this defect.
The states alleged that these actions were unfair and deceptive, and that the automaker’s actions violated state consumer protection laws, including Nevada’s Deceptive Trade Practices Act.
Under the consent decree and settlement agreement, TK Holdings, Inc. and its successor, Reorganized TK Holdings, shall:
- Not advertise or otherwise represent the safety of its airbag systems or phase-stabilized ammonium nitrate in any way that is false, deceptive or misleading;
- Not represent that its airbags are safe unless supported by competent and reliable scientific or engineering evidence;
- Not falsify or manipulate testing data, or provide any testing data that the companies know is inaccurate;
- Except as needed to fulfill its obligations under the various recalls, sell any airbag systems using PSAN as a propellant;
- Comply with state and federal law, as well as the NHTSA Consent Order and Coordinated Remedy Order; and
- Continue to cooperate with auto manufacturers to ensure that replacement airbag inflators are made available as expeditiously as possible from all possible sources.
TK Holdings, Inc. has also agreed to reimburse the multistate for its investigative costs and for the entry of stipulated civil penalty in the amount of $650 million. The multistate agreed that, given the pending bankruptcy and the company’s inability to pay its debts, this penalty would be subordinated in order to maximize the recovery available to consumers who were the victims of this airbag defect.
The National Highway and Traffic Safety Administration (NHTSA) has established the website www.safercar.gov/rs/takata for consumers to determine whether their vehicle is affected by the recall and to sign up for status updates. The airbag repair service can take several months to administer. NHTSA does not recommend that consumers disable airbags while waiting for a remedy. Many automakers have made loaner vehicles available to consumers, upon request. Consumers are encouraged to ask their dealer if this is an option.
In addition to Nevada, members of the multistate coalition include: Alabama, Alaska, Arkansas, Arizona, California, Connecticut, Delaware, District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New York, North Carolina, North Dakota, New Jersey, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington and Wisconsin.
Chief Deputy Attorney General JoAnn Gibbs and Deputy Attorney General Laura M. Tucker of the Attorney General’s Bureau of Consumer Protection represented Nevada in this matter. To view the settlement agreement, click here.