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Takata Corporation Faces Wider Recall, Fines, and a Class Action Suit

April 15, 2015

Last year saw more auto recalls in the United States than any other year in the country’s history (one trade publication has even dubbed 2014 “the infamous Year of The Recalls”). This blog has been covering the massive Takata airbag recall–which has officially claimed the lives of at least six people and is thought to have killed even more–since last summer, and we finally have some good news about the company being held responsible for its misconduct.

The National Highway Traffic and Safety Administration, in a February letter to Takata, claimed the corporation had not responded “fully or truthfully” to orders for documents and other data (Takata denies this claim). As a result, the federal regulators decided to begin fining the Japanese manufacturer $14,000 per day for every day it failed to cooperate with the ongoing investigation. The New York Times notes that this amount “stems from violations of two special orders from the agency. Each violation carries a fine of $7,000 a day, the maximum allowed.” While it is promising to see a negligent company be held responsible for its inaction, it is worth noting that this fine is a drop in the bucket to a company like Takata, which took in about $4.7 billion in revenue in 2014.

As we have described in previous articles, the recalled airbags are at increased risk for overinflating upon impact due to a volatile propellant, which may lead to a violent explosion of metal shrapnel inside a vehicle’s cabin (the Times even ran a story titled “It Looked Like a Stabbing, but Takata Air Bag Was the Killer”).

Another major problem–from the perspective of the NHTSA and consumer advocates–is the fact that, by law used car dealers and rental car companies are not under any obligation to inform customers and clients that a particular vehicle is under recall. Taking into account the additional 100,000 cars that were added to this recall only about a month ago, the total number of affected vehicles is hovering around 18 million. By the most conservative estimates, this places thousands of individuals, whether they are shopping for a used car or renting one, in serious risk.

In response, Secretary of Transportation Anthony Foxx has begun a push in Congress to introduce a bill that would force these businesses to “fix safety defects before renting or selling vehicles that had been recalled.” According to an auto industry safety expert, this is an unprecedented move: “It’s really historic for them to come out so strongly to close those auto safety loopholes for rental cars and used cars. That would be a major expansion of NHTSA’s authority.”

While class action lawsuits against Takata in the United States are inevitable (and surely already in the works), none have been filed to date. In Canada, however, three individuals who own affected vehicles have formed a class and “are seeking combined damages of 2.4 billion Canadian dollars,” which is just shy of $2 billion American dollars.

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