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From Products Liability Law Daily, November 21, 2014

Senate demands internal investigation into Takada air bag defect disclosure, recall process

By Pamela C. Maloney, J.D.

Despite testimony by a senior executive of Takada Corp. denying that the company concealed from federal regulators the presence of a deadly defect that can cause its air bags to explode during inflation, members of the U.S. Senate Committee on Commerce, Science, and Transportation called for an independent investigation into the issue of when Takada and Honda Motor Co. knew of the existence of the defect but failed to disclose these risks to the National Highway Traffic Safety Administration as required by the TREAD Act.

The purpose of the November 20 hearing titled “Examining Takata Airbag Defects and the Vehicle Recall Process,” was to examine the circumstances of a series of recalls beginning in 2008 for defective airbags manufactured by Takata. The most recent recalls for Takata airbags now encompass 10 automobile manufacturers and affect 7.8 million vehicles in the United States. The hearing focused on how defective Takata airbags became installed in so many vehicles and the responses of Takada, automakers, and NHTSA to remedy the safety defect to protect consumers.

The executives of Takada, Honda, and Chrysler were repeatedly asked to respond to New York Times allegations that Takada knew of but concealed risks about defects in these air bags long before the recalls began in 2008. In response to questions involving a 2004 incident, senior executives from both Takada and Honda emphasized that the investigation into that incident revealed an individual anomaly in that air bag but did not uncover any system errors in the manufacturing process. According to these executives, it was not until an investigation was undertaken following a series of incidents in 2007 that the companies discovered that improper density in the inflator propeller in these air bags was the source of the failure. The Honda executive testified that this defect was not present in the air bag involved in the 2004 incident.

A senior executive from Chrysler Group, LLC strongly, but respectfully disagreed that confidential settlements of air bag claims evidence his company’s attempt to conceal these defects and refused to agree to forgo use of these agreements in the future. The executive stressed that the settlement details involving vehicle safety were reported to NHTSA at the time and, thus, there was no concealment on the part of Chrysler. Furthermore, the executive emphasized that as long as confidential settlement agreements were part of the legal process, the company would utilize that process. However, the executive assured the committee members that Chrysler would continue to report all report safety issues arising during that process to federal regulators.

Committee members also challenged Takada and Honda executives to agree with NHTSA’s recent move calling for a nationwide recall of these air bags (see Products Liability Law Daily’s November 19 analysis) and questioned them on whether the recall should be expanded further to include passenger side air bags manufactured by Takada. All three executives were asked for reassurances that the inventory of air bags was sufficient to meet replacement demands for both driver’s side and passenger side airbags.

In addition to cross-examining the auto maker executives and Takata’s executive about when they knew of the existence of the defects, many of the committee members expressed frustration that despite the record fines levied against Toyota, GM, and Hyundai this year alone the committee was again faced with examining an apparent failure with serious safety consequences. Ranking Member John R. Thune (R-S.D.) stated, “The troubling string of recalls this year should be a wake-up call. I believe we can do a better job of addressing safety issues as they arise and holding automakers, their suppliers, and NHTSA accountable to their shared mission of ensuring safety on America’s roadways.”

NHTSA Administrator Friedman stressed the need for automakers to share information, to the extent allowed by federal antitrust law, regarding incidents involving possible defects in components, especially in instances such as this, when a single component manufacturer supplies parts to multiple automobile manufacturers.

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