Takata Nixes Idea Of Airbag Victim Compensation Fund, For Now

Last month, in his first public address of the massive airbag defect linked to eight deaths and more than a hundred injuries, Takata CEO Shigehisa Takada announced the Japanese auto parts maker would consider the possibility of creating a victim compensation fund. Now, the company says such a fund is a no-go.

The New York Times reports that Takata sent a letter to Connecticut Senator Richard Blumenthal – who urged executives of the company to start a compensation fund – revealing it has no current plans to offer recompense to victims of the safety devices that have been found to spew pieces of shrapnel with enough force to injure or kill occupants.

“Takata believes that a national compensation fund is not currently required,” Kevin Kennedy, an executive vice president with Takata, wrote in the letter to Blumenthal.

Kennedy says the company made the decision to nix a compensation fund at this time because there have been a limited number of claims filed and consolidated litigation in Florida already provides “efficient coordination” of claims.

Kennedy goes on to say the company would continue to study its options and would let the senator know if it changes its mind on creating a fund.

A spokesperson for Takata tells the NYT that the company has “settled a number of injury claims and will continue to do so based on the facts and circumstances of individual cases.”

Blumenthal says he was disappointed by Takata’s decision on Thursday.

“Takata seems unwilling to acknowledge its responsibility to help the victims and loved ones of victims that have suffered as a result of its lapses and gaps in performance,” Blumenthal tells the NYT.

The idea of a Takata victim compensation fund began floating around following a congressional hearing in June where Blumenthal called on the company to establish a program.

At that time, Kennedy said he couldn’t commit to creating the fund. But two weeks later, CEO Takada broke his relative silence on the massive airbag defect by saying the creation of a fund was just one of several options the company was looking at to compensate victims.

While Takada didn’t provide details of what a potential fund may have looked like, many thought it would likely be modeled after a similar program currently used by General Motors to provide compensation for victims of its massive ignition switch recall.

So far, that fund has approved claims for 117 deaths and 237 injuries. The company estimated at the time the fund was set up in August 2014 that it could spend between $400-$600 million compensating victims.

In his letter to Blumenthal, Kennedy brushed off comparisons to GM’s recall woes, referencing how that fund compensated victims who may have been unable to sue GM outright because that company’s 2009 bankruptcy restructuring protects it from certain types of lawsuits related to pre-bankruptcy GM.

Recalls of vehicles with Takata-produced airbags began slowly in 2008, but gained traction over the last year, culminating in the recall of 33.8 million vehicles in May.

The company and a plethora of investigators from the National Highway Traffic Safety Administration, as well as the 10 automakers affected by the recall have yet to identify what causes Takata’s airbags to rupture so violently. Because of this, it’s unclear whether or not vehicles already repaired are actually safe.

In fact, company also plans to re-recall about 400,000 vehicles that have already been repaired.

Takata announced it would change its use of the often volatile chemical ammonium nitrate in its safety devices and replace its batwing driver inflators.

Takata Says No to Fund for Victims of Defective Airbag [The New York Times]

by Ashlee Kieler via Consumerist