When a company puts profit over consumer safety, the resulting liability can be sizable, as the recent $1 billion settlement between the Justice Department and Takata Corp. illustrates.
The company is a giant in the automotive airbag industry, with over 100 million air bags in vehicles worldwide. Unfortunately, a defective in the air bag translates into the largest product recall in history. Worldwide, the fatal injury count is reported at 17.
A federal court recently approved the settlement deal, which means that victims should soon see payments. The terms require an independent compliance monitor to keep tabs on the company during a three-year probationary period. The monitor may also oversee the timely payment of the settlement funds.
The money will be apportioned in several ways, with around $125 million going to victims who were injured by the company’s defective airbags. Another $850 million will go to automakers that installed the airbags in their vehicles, and $25 million will be paid as a criminal fine. As part of the settlement, Takata also entered a guilty plea.
The federal court presumably viewed the settlement deal as the best way to maximize compensation for victims of the faulty product. However, sometimes an injured consumer is better off filing an individual product liability lawsuit.
Our Michigan law firm has experience holding companies accountable for defective products. In fact, our firm’s lead counsel used to work as an automotive engineer, which gives extra insight into the type of evidence needed to build a strong product liability case.
Source: Bloomberg, “Takata’s U.S. Guilty Plea Sets Stage for Sale of Air-Bag Maker,” Margaret Cronin Fisk, Steven Raphael, and Kevin Buckland, Feb. 27, 2017