Attorney General Janet Mills and other Attorneys General Settle Case Against Airbag Manufacturer

February 22, 2018


Maine Attorney General Janet T. Mills announced a settlement with TK Holdings, Inc., the U.S. subsidiary of Takata, over allegations that the company concealed safety issues related to its airbag systems installed in a variety of vehicles.

The settlement between the attorneys general of 44 states and the District of Columbia and TK Holdings, Inc., concludes an extensive multistate investigation into the company?s failure to timely disclose the safety defects of certain airbag inflators that use phase-stabilized ammonium nitrate as a propellant.

?The investigation showed that this company knowingly allowed airbags to deploy in a way so as to injure passengers,? said Attorney General Janet Mills. Beginning in 2008, auto manufacturers recalled a number of vehicles containing these airbag inflators because of ruptures that occurred when vehicles crashed. 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 65 or 70 million. As of September 15, 2017, there were 83,198 unrepaired vehicles and 99,441 unrepaired recalled inflators estimated in Maine alone.

At least 20 people have died worldwide and hundreds more injured as a result of the defect which involves phase-stabilized ammonium nitrate (?PSAN?) to inflate airbags on deployment. When this compound is exposed to heat and humidity over time, particularly in warmer and wetter parts of the United States, the propellant degrades. When the airbag deploys, the inflator then ruptures and explodes, destroying the metal casing around the propellant and spraying shrapnel into the vehicle?s passenger compartment.

The attorneys general investigation alleged that the company knew the airbag inflator was unsafe because it failed company testing. In fact, TK Holdings, Inc.?s, parent company, pled guilty to manipulating test data and submitting false and misleading reports to auto manufacturers. The company knew about several ruptures which occurred as early as 2004 but did not take appropriate action to recall these unsafe inflators until November 2014. Despite its prior knowledge, the company failed to properly notify the public and government regulators of the serious danger posed by this defect.

The states alleged that the automaker?s actions violated state consumer protection laws, including Maine's Unfair Trade Practices Act.

TK Holdings, Inc. filed for chapter 11 bankruptcy protection in June 2017, and its reorganization plan has been confirmed by the United States Bankruptcy Court for the District of Delaware. Under the consent decree and settlement agreement approved by the Bankruptcy Court, TK Holdings, Inc. and its successor, Reorganized TK Holdings, are ordered to:

? Not advertise or otherwise represent the safety of its airbag systems or 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 PSAN 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 as expeditiously as possible from all possible sources.

TK Holdings, Inc. has also agreed to reimburse the states for their investigative costs and has agreed to a civil penalty of 650 million dollars, which will be subordinated in the bankruptcy proceeding order to maximize the monetary recovery to the victims of the airbag defect.

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