States reach agreement with Takata on defective airbags

Forty-four states and the District of Columbia announced a settlement Thursday with TK Holdings Inc. over allegations that the company concealed safety issues related to its airbag systems installed in millions of vehicles. The company, the U.S. subsidiary of Takata, filed for bankruptcy in June 2017, and its reorganization plan has been filed in a federal bankruptcy court. 

An investigation by the agencies found the company failed to disclose the safety defects of some airbag inflators using ammonium nitrate as a propellant. The settlement agreement has been presented to the bankruptcy court for approval.

“This settlement is the result of an investigation into an extremely dangerous public safety risk that has killed at least 20 individuals and injured hundreds more,” said Nevada Attorney General Adam Paul Laxalt. “These inflators posed a significant risk to anyone who operated or rode as a passenger in these vehicles.”

Beginning in 2008, auto manufacturers issued recalls of vehicles with these airbag inflators due to ruptures that occurred when the airbag were deployed. More than 50 million airbags in more than 37 million vehicles have been recalled, with future recalls through the end of 2019 expected. The total number of airbags involved is between 65 and 70 million.

The recalls airbags used phase-stabilized ammonium nitrate to inflate the airbags when deployed. As the compound was exposed to heat and humidity over time, especially in warmer and wetter parts of the United States, the propellant degraded. When deployed, the inflator could rupture, destroying the metal casing around the propellant and spraying shrapnel into the vehicle.

The attorney's general alleged that the company knew that the airbag inflator posed a safety defect because of testing failures. TK Holdings parent company later pleaded guilty to manipulating testing data and submitting false reports to auto manufacturers. The company knew about several ruptures that occurred as early as 2004, but action to recall the unsafe inflators didn't occur until November 2014. However, the company failed to notify regulators and the public of the danger posed by the defect.

The states alleged that these actions violated state consumer protection laws.

Under the settlement agreement, TK Holdings and its successor, Reorganized TK Holdings, will:

• Not represent the safety of its airbag systems or phase-stabilized ammonium nitrate in a way that's deceptive.
• Not represent airbags are safe unless there's scientific evidence.
• Not falsify test data, or provide testing data that are inaccurate.
• Not sell any airbag systems using PSAN as a propellant, except for recalls.
• Comply with state and federal law, including National Highway Transportation Safety orders.
• Continue to cooperate with auto manufacturers so replacement airbag inflators are made available as soon as possible from all sources.

TK Holdings has agreed to pay a civil penalty of $650 million and reimburse the states for the costs of the investigation. The states agreed that, due to the pending bankruptcy and the company’s inability to pay its debts, the penalty would be set aside to increase the recovery available to consumers who were the victims of the airbag defect.

NHTSA has a website for consumers to determine whether their vehicle is affected by the recall and to sign up for status updates. The airbag repair service can take several months to administer. NHTSA doesn't recommend that consumers disable airbags while waiting for a repair. Many automakers have made loaner vehicles available to consumers who request them. Consumers are encouraged to ask their dealer if this is an option.

Members of the coalition include: Alabama, Alaska, Arkansas, Arizona, California, Connecticut, Delaware, District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New York, North Carolina, North Dakota, New Jersey, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, and Wisconsin.