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From Products Liability Law Daily, December 21, 2015

NHTSA continues to flex its enforcement muscle with $40M penalty against BMW for safety violations

By Susan Lasser, J.D., Pamela Maloney, J.D., and John Dumoulin

Exercising its enforcement power against automakers for the third time this month, the National Highway Traffic Safety Administration (NHTSA) has imposed a $40 million civil penalty on BMW of North America, LLC, for violations of the Motor Vehicle Safety Act and certain NHTSA regulations, according to a news release issued by the agency. NHTSA also will require a series of performance obligations by the automaker. Earlier this month, NHTSA imposed an additional $70 million in civil penalties on Fiat Chrysler for failing to meet early warning reporting requirements [see Products Liability Law Daily’s December 10, 2015 analysis]. One day earlier, the agency announced that equipment importer Harbor Freight had agreed to a $1 million penalty to settle staff charges relating to recall violations [see Products Liability Law Daily’s December 9, 2015 analysis] (NHTSA Press ReleaseNo. 53-15, December 21, 2015).

Under the terms of a Consent Order dated December 17, 2015, BMW acknowledged that it violated requirements to issue a timely recall of vehicles that did not comply with minimum crash protection standards, to notify owners of recalls in a timely fashion, and to provide accurate information about its recalls to NHTSA. NHTSA imposed a $3 million civil penalty on BMW in 2012 for similar violations.

According to the release, the consent order resolves a NHTSA investigation into whether BMW failed to issue a recall within five days of learning that 2014 and 2015 Mini Cooper models failed to meet regulatory minimums for side-impact crash protection. In October 2014, a Mini 2 Door Hardtop Cooper failed a crash test designed to determine whether the vehicle met crash-protection minimums. According to BMW, the vehicle was listed with an incorrect weight on the vehicle’s Tire Information Placard and would pass the test if conducted at the proper weight rating. The company agreed to conduct a recall to correct the incorrect weight rating and to conduct a voluntary service campaign, short of a recall, to add additional side-impact protection.

However, NHTSA conducted a crash test in July 2015 at the corrected weight rating on a vehicle with the additional side-impact protection, and the vehicle again failed the test. NHTSA learned that BMW had not conducted the voluntary service campaign it had agreed to.

Details of agreement. The civil penalty includes $10 million due in cash and a requirement that BMW spend at least $10 million meeting the order’s performance obligations. In addition, the terms state that $20 million in deferred penalties will come due if the company fails to comply with the order or commits other safety violations.

The performance obligations BMW must meet include retaining a NHTSA-approved independent safety consultant to help the company develop best practices for complying with the Motor Vehicle Safety Act and NHTSA regulations. The company must then submit those best practices to NHTSA. BMW must also evaluate, under the independent consultant’s guidance, all safety or compliance-related issues under the company’s review and provide a monthly written report to NHTSA on those issues.

In addition, BMW must launch a pilot program to determine whether the company can use data analytics capabilities to detect emerging safety-related defect trends and must establish a plan to deter BMW dealers from selling new vehicles with unremedied safety defects. The last requirement stems from the fact that during NHTSA’s investigation, a NHTSA representative purchased a new vehicle with an open safety recall from a BMW dealer.

Companies: BMW of North America, LLC

MainStory: TopStory MotorVehiclesNews

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