Takata to Pay $1B for Airbag Scandal

Santa Clara, CATakata Corporation has agreed to pay $1 billion to settle multi-district litigation alleging the airbag manufacturer was aware of the fatal defect with its airbags but sold them anyway. At least 11 deaths have been linked to the airbags, which can explode due to a design defect. According to the proposed settlement terms Takata will plead guilty to wire fraud. However, Plaintiffs have objected to the proposed deal on the grounds that it doesn’t address the culpability of TK Holdings Inc., Takata’s US, subsidiary, and that the Department of Justice had been misled in its investigation.

According to the civil litigation, the plaintiffs claim that automakers Ford, Nissan, Honda, Toyota and BMW were all aware that the air bag inflators were defective and unsafe. Allegedly, they were aware of this for years, but continued to equip their cars with the “ticking time bombs” because they were cheaper than alternative products, states a status report filed in the Florida litigation and attached to their objection in the Detroit court.

Additionally, Takata has also agreed to pay a $25 million criminal fine and will establish a $125 million restitution fund for people who were injured or will be injured by a malfunctioning Takata air bag inflator.
Automobile manufacturers will also benefit from the deal, with the creation of an $850 million fund to benefit for automakers who received the falsified data and reports or who purchased the potentially dangerous inflators.

The National Highway Traffic Safety Administration (NJTSA) levied a $200 million fine on Takata, its largest ever, just over a year ago. As part of that deal, Takata admitted that it failed to tell the agency about the defect despite the fact that it was aware and withheld important information. According to the NHTSA, at that time the exploding airbag inflators were responsible for some 98 injuries.

The cases are United States of America v. Takata Corp., case number 2:16-cr-20810, in the U.S. District Court for the Eastern District of Michigan, and In re: Takata Airbag Products Liability Litigation, case number 1:15-md-02599, in the U.S. District Court for the Southern District of Florida.