Products Liability Law Daily Honda agrees to pay $605M to settle Takata airbag litigation
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Tuesday, September 5, 2017

Honda agrees to pay $605M to settle Takata airbag litigation

By Susan Engstrom

In the multi-district litigation relating to airbag inflators manufactured by Takata Corporation, automaker Honda Motor Co., Ltd. has agreed to pay $605 million to settle all economic loss actions brought against it by owners of Honda vehicles equipped with the defective devices. If approved by the court handling the MDL, the proposed settlement would require Honda to fund an outreach program designed to maximize the removal of dangerous airbag inflators from class members’ vehicles. The settlement also would provide for a rental car program, an out-of-pocket claims process, and residual distribution payments (In re: Takata Airbag Product Liability Litigation, September 1, 2017).

In the class action complaint, the plaintiffs alleged that several Honda affiliates— including Honda Motor Co., Ltd., American Honda Motor Co., Inc., Honda R&D Co., Ltd., and Honda of America Mfg., Inc. (collectively, Honda)—sold vehicles equipped with defective airbags supplied by Takata. The airbags had an unreasonably dangerous propensity to rupture, expelling debris toward the vehicle’s occupants. The plaintiffs alleged that the common defect in the airbags was tied to the inherent instability of the phase-stabilized ammonium nitrate propellant used in the airbag inflators. This defect led to the recall of over 60 million vehicles. Although Honda’s recall repair rate is more than 61 percent (the highest among all automakers), there are still millions of defective inflators in Honda vehicles that need to be replaced.

In their motion for preliminary approval of the settlement, the plaintiffs noted that five auto manufacturers—Toyota, BMW, Mazda, Subaru, and Nissan—have agreed to resolve the economic loss claims asserted against them through separate class action settlements, the first four of which have received preliminary approval from the court.

Settlement fund. In the current case, the settlement agreement would require Honda to deposit a total of $605 million, less a 20 percent credit for an enhanced rental car/loaner program, into a non-reversionary qualified settlement fund.

Outreach program. Part of the settlement fund would pay for an outreach program aimed at encouraging class members to bring their vehicles to dealerships for replacement of the Takata airbag in their vehicles. Outreach methods would include: (1) direct contact via U.S. mail, telephone, social media, email, and text message; (2) contact by third parties such as independent repair shops; and (3) multi-media campaigns using radio, television, print, and the Internet. Up to $40 million of the outreach budget would be used to maximize repairs of certain driver’s-side airbag inflators known as "Alpha" inflators, which, according to the settlement agreement, pose a particularly dangerous risk of rupture. This "Alpha Program" may utilize in-person visits and remote performance of the recall remedy via mobile repair units.

Out-of-pocket claims process. Another feature of the settlement is a claims process that would reimburse class members for reasonable out-of-pocket expenses incurred in connection with the Takata airbag inflator recalls. This process would cover expenses actually incurred, without limiting recovery to certain pre-determined categories or amounts. It also would further the public-safety goal of incentivizing class members to bring their vehicles to a dealership for the recall remedy, as having this remedy performed is a prerequisite for such a payment. Covered expenses would include taxi fare, towing expenses, lost wages, child care costs, and storage fees.

Residual distribution payments. Instead of submitting a claim for out-of-pocket expenses, class members would have the option of registering for a residual distribution of up to $250 from the fund. These distributions would be funded with the monies remaining in the fund at the end of each of the four settlement program years, after all payments are made for the outreach program and approved claims for out-of-pocket expenses. Because any residual funds cascade down from year to year, class members could receive up to $500 over the course of the settlement.

Enhanced rental car/loaner program. Under the settlement’s enhanced rental car/loaner program, any class member who brings a recalled vehicle to a dealership for the recall remedy and requests a rental/loaner vehicle would be provided one for free, until the recall remedy is performed on the subject vehicle. In exchange for providing this program, Honda would receive a credit of 20 percent of the settlement amount.

Prospective coverage. Finally, Honda has agreed to provide class members with prospective coverage for repairs and adjustments (including parts and labor) necessary to correct any defects in the material or workmanship of: (1) the Takata PSAN inflators contained in the driver or passenger front airbag modules of the affected vehicles; or (2) replacement driver or passenger inflators installed pursuant to the Takata airbag recall. This would cover the following two circumstances in which class members would be at risk of incurring additional expenses in the future: (1) the vehicle’s airbag contains a not-yet-recalled Takata PSAN inflator (e.g., a vehicle designated with a low-priority level or a vehicle with a desiccated inflator); and (2) the recall remedy has been performed, but the new inflator is defective or breaks.

The case is No. 15-MD-02599-MORENO.

Attorneys: Peter Prieto (Podhurst Orseck, PA) for Plaintiffs. Amanda Farfel (Sidley Austin, LLP) and Joel H. Smith (Bowman & Brooke, LLP) for Honda Motor Co., Ltd., American Honda Co., Inc., Honda R&D Co., Ltd. and Honda of America Mfg., Inc.

Companies: Honda Motor Co., Ltd.; American Honda Co., Inc.; Honda R&D Co., Ltd.; Honda of America Mfg., Inc.

MainStory: TopStory SettlementAgreementsNews MotorVehiclesNews MotorEquipmentNews FloridaNews

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