Takata Deal Parties Ask for Special Master

Last week, the U.S. Attorney in Detroit announced Takata Corporation agreed to plead guilty to wire fraud and pay $1 billion in penalties stemming from the company’s fraudulent conduct related to sales of defective air bag inflators. The federal prosecutor said automotive suppliers who sell products that are supposed to protect consumers from injury or death must put safety ahead of profits. Under the terms of the agreement, which is subject to court approval, Takata pleaded guilty for falsifying testing data and reports that were provided to automakers. Takata will pay a criminal fine of $25 million and establish a $125 million restitution fund for individuals who suffered or will suffer personal injury caused by the malfunction of a Takata airbag inflator, and who have not already resolved their claims. In addition, Takata will establish an $850 million restitution fund for the benefit of automakers who received falsified testing data and reports or who have purchased airbag inflators from Takata containing phase-stabilized ammonium nitrate. The deal includes appointment of an independent monitor, who will report to the Justice Department and monitor Takata’s compliance with its legal and ethical obligations. The parties asked the federal judge to appoint mediator Kenneth Feinberg as a special master to distribute restitution payments. He handled restitution funds in the General Motors ignition switch and BP oil spill cases, among others. Payments to individuals must be made soon and automakers must be paid within five days of Takata's anticipated sale or merger. Takata is expected to be sold to another auto supplier or investor sometime this year. See more in stories here-- http://detne.ws/2jUBC5x and http://trib.in/2jfzRPf and press release-- http://bit.ly/2jzi2YZ

BP Settlement

Over the course of the next 18 years, British Petroleum (BP) will pay Florida $3.25 billion or more for its role in the biggest offshore spill in U.S. history. The Deepwater Horizon drilling rig in the Gulf of Mexico exploded in 2010, killing eleven men aboard and spewing crude oil from the sea floor for almost 90 days. Along with Florida, some $18.7 billion will be paid to Mississippi, Louisiana and Alabama. BP already spent $42 billion in cleanup efforts, penalties and payouts for people whose livelihoods were directly affected by the spill. For businesses and individuals, about $5 billion was paid out. The accident led to thousands of lawsuits against BP, as well as Transocean, the rig’s owner, and Halliburton, which provided contract services for the project. Last week's settlement was the largest of BP’s agreements since the spill. BP agreed in 2012 to plead guilty and pay the government $4 billion to resolve a criminal case. BP also agreed that year to pay another $525 million over allegations of understating the size of the spill. The company also reached an estimated $10.3 billion settlement with most Gulf area residents and businesses harmed by the spill who did not opt out. That deal will probably cost more because claims that haven’t been fully processed. The settlement didn’t cover banks, casinos, insurance companies and businesses or residents in large swaths of Texas and Florida. It also didn’t include shareholders or businesses blaming BP for the Obama administration’s moratorium on deep-water drilling in the Gulf following the spill. BP has increased the amount set aside to pay for the spill to $53.8 billion which may not be enough. Investors filed a securities-fraud lawsuit, claiming BP downplayed the disaster, which goes to trial next year in Texas. A class action covers investors who bought BP’s U.S. shares from a period days after the blowout. BP will ask the U.S. Court of Appeals in New Orleans this month to block them from suing as a group, which could delay the case. Investors are seeking as much as $2.5 billion, according to court filings. BP's defense seeks to deny responsibility for those damages because the U.S. government ordered and extended the drilling ban for months. See stories here-- http://bit.ly/1H5iMIs and http://bit.ly/1NLxrOg

Mediator to Oversee Bank of America Settlement

A law professor and mediator will oversee billions in consumer relief for struggling borrowers as part of the settlement by Bank of America with the federal government. Veteran dispute resolver, Eric Green, will give or withhold credit on mortgage modifications and home loans for low income borrowers. Green served as mediator on various Bank of America cases. In 2011, a federal judge approved a $410 million settlement in a class-action lawsuit involving some 13 million customers affected by debit card overdrafts. That suit claimed the bank processed its debit card transactions from highest to lowest dollar amounts in order to maximize fees customers paid. That settlement sparked criticism because it gave some customers only a fraction of what they paid. Of this new record $16.65 billion settlement, $9.65 billion will be in cash payments to various federal agencies and six states, with the rest in consumer aid. The Department of Justice is restricted from overseeing Green, who will provide quarterly reports. Bank of America has until summer 2018, to provide the relief. Interestingly, Green did not play a role in the terms or in mediating the settlement. If the mediator determines Bank of America has not complied by the deadline, the bank would be required to make cash payments equal to its shortfall. That money would go to organizations that provide housing counseling and foreclosure prevention. See stories here-- http://bit.ly/1smjUBu and http://bit.ly/1qdZJam