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From Products Liability Law Daily, February 20, 2015

Takata ordered to pay $14,000/day for violating document production orders in airbag rupture investigation

By Pamela C. Maloney, J.D.

A $14,000 per day fine has been levied against airbag manufacturer TK Holdings, Inc. (Takata) for failing to fully cooperate with the National Highway Traffic Safety Administration’s ongoing investigation into the company’s defective airbags, U.S. Department of Transportation Secretary Anthony Foxx announced during his first stop on the last day of his GROW AMERICA Express bus tour, highlighting the importance of investing in America’s infrastructure and encouraging Congress to act on a long-term transportation bill. (NHTSA Release 06-15, February 20, 2015).

In October 2014, NHTSA issued two Special Orders to Takata requiring the company to provide documentation and other material relating to the agency’s ongoing investigation into the inflator ruptures plaguing airbags manufactured by Takata. In a letter addressed to Steven G. Bradbury, of Dechert LLP, NHTSA’s Chief Counsel O. Kevin Vincent explained that Takata was in violation of the Special Orders because it failed to provide explanations regarding the content of the deluge of documents the company had produced in relation to the investigation. Federal law and NHTSA regulations provide that failure to respond fully or truthfully to a Special Order is subject to a civil penalty of up to $7,000 per day. In this case, NHTSA allowed Takata a reasonable period of time to collect additional documents and information responsive to the Special Orders. However, Takata failed to provide any substantive information that qualified as an explanation for the 2.4 million pages of documents it had submitted.

In assessing the penalty, NHTSA clarified that in order for Takata to meet its obligations under the Special Orders, it must fully and substantively provide an explanation of the documents requested. NHTSA further warned that if Takata failed to respond to the Special Orders and to pay all accrued penalties, the agency might refer the matter to the U.S. Department of Justice to commence a civil action to enforce these remedies.

“Safety is a shared responsibility and Takata’s failure to fully cooperate with our investigation is unacceptable and will not be tolerated,” said Secretary Foxx in his announcement. “For each day that Takata fails to fully cooperate with our demands, we will hit them with another fine. But, it’s not enough. I am asking Congress to pass the GROW AMERICA Act which would provide the tools and resources needed to change the culture of safety for bad actors like Takata.”

The GROW America Act. In addition to announcing the Takata fine, Secretary Foxx and NHTSA Administrator Mark Rosekind joined elected officials, representatives from the rental car industry, and consumer safety advocates in calling upon Congress to pass legislation prohibiting rental car agencies and used car dealers from renting or selling vehicles subject to a recall without first making the necessary fix. On February 2, the Obama Administration announced a plan to begin addressing the infrastructure deficit with a $478 billion, six-year surface transportation reauthorization proposal, building on the GROW AMERICA Act, which the Administration first released last year (see Products Liability Law Daily’s February 3 analysis). The plan makes critical investments in infrastructure needed to promote long-term economic growth, enhance safety and efficiency, and support jobs for the 21st century. The plan contains an overall NHTSA budget of $908 million, which includes an increase in the agency’s defect investigation budget to $31.3 million—approximately triple the current level.

In addition, the GROW America Act (“Generating Renewal, Opportunity, and Work with Accelerated Mobility, Efficiency, and Rebuilding of Infrastructure and Communities throughout America Act”) would provide greater authority to protect the public from automobile defects by strengthening the ability of safety regulators to hold automobile manufacturers accountable for defects that can cost lives. Specifically, the Act:

  • Almost triples the budget of the Office of Defects Investigation (ODI) to enhance our ability to monitor data, find defects sooner, and strengthen NHTSA’s ability to conduct investigations of vehicles with suspected defects;

  • Establishes harsher penalties for manufacturers that refuse to address defective and dangerous vehicles and equipment that endanger the public;

  • Provides the authority to require manufacturers to cease retail sale and/or require repair of vehicles or equipment that pose an imminent hazard to the safety of the motoring public; and

  • Provides the authority to require rental car companies and used car dealers to participate in recalls of defective and unsafe vehicles.

Companies: TK Holdings, Inc.

MainStory: TopStory NHTSANewsStory MotorVehiclesNews MotorEquipmentNews

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