Hill
Attorney General Curtis Hill announced Tuesday a settlement with TK Holdings Inc., the U.S. subsidiary of Takata, over allegations that the company concealed safety issues related to airbag systems installed in a wide variety of vehicles. TK Holdings Inc. filed a bankruptcy case in Chapter 11 in June 2017, and its reorganization plan has been confirmed by the U.S. Bankruptcy Court for the District of Delaware. The consent decree and settlement agreement have been presented to that court for approval.
In addition to Indiana, the settlement with TK Holdings Inc. also is joined by the attorneys general of 43 other states and the District of Columbia. It concludes a multistate investigation into the company’s failure to disclose in a timely manner known safety defects associated with certain airbag inflators.
“Protecting the safety of Hoosier consumer is one of our top priorities,” Attorney General Hill said. “We will always work to ensure that automakers and all others doing business in our state are held accountable for following our laws.”
Beginning in 2008, auto manufacturers issued multiple 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. Additional recalls are anticipated through the end of 2019, likely bringing the total number of affected airbags to 65-70 million.
The recalls involved the use of phase-stabilized ammonium nitrate (“PSAN”) to inflate 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. At least 20 people have died worldwide and hundreds more have been injured as a result of this defect.
The multistate action alleged that the company knew that the airbag inflator posed a safety defect because of testing failures, and in fact TK Holdings Inc.’s parent company pled guilty to manipulating testing data and submitting false and misleading reports to auto manufacturers. The company knew about several ruptures that occurred as early as 2004, but appropriate action to recall these unsafe inflators did not occur until November 2014. 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 Indiana’s Deceptive Consumer Sales 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 coalition for its investigative costs, and for the entry of stipulated civil penalty in the amount of $650 million. The multistate coalition 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 victims of this airbag defect.