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From Products Liability Law Daily, May 16, 2016

State of Hawaii files first lawsuit stemming from defective Takata airbags

By Colleen Kave, J.D.

The State of Hawaii’s Office of Consumer Protection, a division of the state’s Department of Commerce and Consumer Affairs, filed a lawsuit in the Circuit Court of the First Circuit, State of Hawaii against Takata Corporation, TK Holdings, Inc., Honda Motor Co., American Honda Motor Co., Honda of America Manufacturing, Inc., and 100 "Doe Defendants" whose identities are presently unknown except that they are connected in some manner to the named defendants seeking declaratory and injunctive relief, restitution, disgorgement, non-compensatory civil penalties, and other additional relief. The complaint alleges that the Takata and Honda defendants engaged in unfair and deceptive acts or practices by making, supplying, and using airbags that they knew to be unsafe (Hawaii v. Takata Corp., May 13, 2016).

Count I against Takata defendants. According to the complaint, Takata airbags have been unsafe since 1999, when the company began using an unstable, volatile compound known as ammonium nitrate to inflate its airbags. Heat and humidity, two conditions characteristic of Hawaii’s geography and climate, can further aggravate the instability of ammonium nitrate, causing it to explode when an airbag is deployed and resulting in the body of the inflator erupting, sending metal fragments through the airbag and into the vehicle’s occupants at lethal velocities. Nonetheless, the complaint alleges that despite Takata’s knowledge that ammonium nitrate was too unstable for use in airbags, evidenced by its description of the chemical as "problematic" and "thermally unstable" in its patent application for the ammonium nitrate inflator, the company decided to use ammonium nitrate instead of a safer alternative inflator propellant. While the shift to ammonium nitrate caused Takata’s share of the worldwide airbag market to increase to almost one-quarter of all motor vehicle airbags sold by 2015, reports of unsafe airbag deployment began to surface, and Takata began to investigate related injuries and deaths as early as 2004.

The complaint also asserted that Takata covered up evidence that it knew of the dangers associated with ammonium nitrate and hid test results from its investigation into reported incidents involving its airbags. When whistleblowers began to leak information pertaining to the extent of the company’s knowledge, Takata denied that ammonium nitrate was responsible for its airbags’ safety issues, continued to withhold the results of its investigations, and then dragged its feet in recalling and replacing its products. According to the plaintiff, Takata continued its pattern of deception and intransigence through multiple Congressional hearings in 2014 and 2015 and opposed government pleas for a nationwide recall as late as December 2015.

Based on these acts and omissions, allegedly undertaken by Takata to increase its own profits and market share and to avoid the expense and negative publicity of a recall, the plaintiff contended that the Takata defendants engaged in unfair and deceptive acts or practices in the conduct of trade or business in violation of HRS Chapter 480 and other applicable Hawaiian law. Specifically, the complaint asserts that Takata, by misrepresenting and withholding material information from the public, offended established public policy and acted immorally, unethically, and unscrupulously, and substantially injured consumers by subjecting them to serious injury, death and/or the risk of serious injury and death. Takata also took advantage of consumer ignorance and exercised oppressive power over consumers because consumers were not in a position to investigate, or to recognize the need to investigate, the unsafe condition of the airbags for themselves.

Count II against Honda defendants. With respect to the Honda defendants, the complaint reasserted all of the allegations against the Takata defendants and added that Honda knew that the airbags it purchased from Takata used ammonium nitrate as a propellant; knew or should have known that ammonium nitrate was not used by any other maker of airbags; and was put on notice, after the first Takata airbag rupture was reported, that there was a problem with the airbags, and yet turned a blind eye toward it. Further, the complaint asserted that although the Honda defendants privately expressed concern about the hazardous condition of the airbags, it did not share its knowledge or concern with the public or the government, continued to install unsafe Takata airbags in its automobiles and sell and lease them to the public, and took too long to implement safety recalls. According to the plaintiff, the Honda defendants acted to increase their own profits and market share and to avoid the expense and negative publicity of a large-scale recall, and its acts and omissions constituted unfair or deceptive acts or practices in the conduct of any trade or business in violation of HRS Chapter 480 and other applicable Hawaii law.

Relief. The complaint requested that the court enjoin the Takata and Honda defendants from engaging in their unfair and deceptive conduct; compel the defendants to engage in a robust public education effort to ensure that affected Hawaii consumers are aware of the potential hazards of their Takata airbags and the availability of repairs; compel the defendants to promptly, on an ongoing basis, reimburse and/or otherwise provide restitution to all affected vehicle owners and to assume the cost of distributing such restitution; compel the defendants to disgorge to all ill-gotten gains unjustly obtained; and assess and award all additional remedies available under HRS Chapter 480 and other applicable Hawaii law. Additionally, the plaintiff asked for a declaration by the court that the defendants engaged in unfair or deceptive acts or practices in violation of Hawaiian law and for the imposition of civil penalties of up to $10,000 per defendant for each violation of Chapter 480.

The case is No. 16-1-0922-05 JHC.

Attorneys: Melina D. Sanchez, Enforcement Attorney State of Hawaii Office of Consumer Protection, for State of Hawaii.

Companies: Takata Corp.; TK Holdings, Inc.; Honda Motor Co., Ltd.

MainStory: TopStory ComplaintNewsStory MotorVehiclesNews MotorEquipmentNews DesignManufacturingNews DamagesNews HawaiiNews

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