Schuette: Multistate Settlement Reached with Takata Over Defective Airbags

February 22, 2018

LANSING- Attorney General Bill Schuette today announced a multistate settlement with TK Holdings, Inc., the U.S. subsidiary of Takata, over allegations that the company had concealed safety issues with their airbag systems, installed in a wide variety of vehicles impacting drivers and passengers across the country. The company filed for chapter 11 bankruptcy in June of 2017, and its reorganization plan has been confirmed by the United States Bankruptcy Court for the District of Delaware.

The settlement reached between the attorneys general of 44 states and the District of Columbia, along with TK Holdings, Inc., concludes the multistate investigation into the company’s failure to timely disclose known safety defects with its airbag inflators using phase-stabilized ammonium nitrate as a propellant.

TK Holdings Inc. has also agreed to reimburse the multistate for its investigative costs, and for entry of stipulated civil penalty in the amount of 650 million dollars. The multistate 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 the victims of the airbag defect.

“The safety of consumers is one of my top priorities as your attorney general,” said Schuette. “That’s why I crack down on companies that lack transparency to the consumer, especially when it directly effects their safety.”

The multistate alleged that the company knew of the airbag inflator’s safety defect due to testing failures. TK Holdings, Inc.’s parent company pled guilty to manipulating data and submitting false and misleading reports to auto manufacturers. The company was aware of airbag ruptures as early as 2004 but did not take appropriate action to recall unsafe airbag inflators or notify regulators and the public of the danger until November of 2014.

Settlement Details

Beginning in 2008, auto manufacturers issued a number of recalls of vehicles containing these airbag inflators in response to ruptures upon airbag deployment. To date, more than 50 million airbags in more than 37 million vehicles have been recalled with future recalls through the end of 2019 likely, bringing the total number of affected airbags to around 65 or 70 million.

The states alleged that these actions were unfair and deceptive and that the automaker’s actions violated state consumer protection laws, including the Michigan Consumer Protection Act.

Under the consent decree and settlement agreement, which was filed with the Bankruptcy Court, TK Holdings, Inc. and its successor, reorganized TK Holdings, shall:

  • Not advertise or otherwise represent the safety of its airbag systems of 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 the same phase-stabilized ammonium nitrate 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 quickly and from all possible sources.