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

GM Mediator Crash Payouts

A plan recently developed for General Motors (GM) by Mediator Kenneth Feinberg, who previously helped develop terms following the 9-11 terror attacks, BP oil spill and multiple shooting incidents, will provide compensation for people killed in accidents caused by faulty ignition switches. Under the guidelines, families will be offered $1 million for the death of the victim, plus $300,000 for the surviving spouse and $300,000 for each of the victim's surviving dependents. Those payments are intended to cover non-economic losses, such as emotional distress. Claimants in the case can choose options for economic losses and look at the victim's previous earnings, benefits, age and household to determine how much should be awarded, including a victim's past, present and assumed future income. The protocol takes effect August 1. GM has launched a website that describes the plan-- www.gmignitioncompensation.com. Victims submitting personal injury claims are being compensated for economic and non-economic losses on a sliding scale, from $500,000 if they were hospitalized for at least 32 days, down to $20,000 for one overnight hospitalization. Eligible claimants who were physically injured in an accident related to the ignition switches but not hospitalized overnight will receive up to $20,000 for medical treatment. The compensation plan also notes that, "because the physical injuries are so vastly different, and have significantly different long-term effects," each major injury claim will be evaluated to establish non-economic loss. Lawsuits against GM claim a death toll of around 60. The U.S. Department of Transportation already fined GM $35 million for the safety issues related to the delayed recall. See news story here-- http://cbsn.ws/1qgPuzY

Toyota Seeks Settlements

This month, Toyota said it would begin negotiations to settle hundreds of pending federal and state lawsuits over the sudden acceleration of its vehicles. Lawyers suing Toyota claim unintended acceleration reports increased after Toyota began equipping vehicles with electronic throttle control via its ETCS-i system. Signals from a sensor detecting how far the gas pedal is pressed control the throttle. An Oklahoma jury recently found a Camry’s electronic throttle system was defective and that Toyota had acted with reckless disregard. Previously, Toyota won sudden-acceleration trials; this being the automaker’s first loss. Reportedly, this verdict likely caused Toyota to pursue settlements in its remaining cases. Negotiations could put an end to a lengthy process that hurt Toyota financially and affected its reputation for quality. Last summer, Toyota agreed to pay $1.6 billion to settle a class-action lawsuit brought by vehicle owners who suffered financial losses. Toyota still faces hundreds of personal injury and wrongful death suits, most of which are consolidated in California. The decision to pursue a comprehensive settlement process will suspend that litigation. Lawyers representing plaintiffs in those cases felt talks would save both sides time and legal costs. Over the past few years, Toyota recalled over ten million Toyota and Lexus vehicles for problems including floor mats that caused the accelerator to become stuck. U.S. District Judge James Selna of Santa Ana issued an order halting the lawsuits. A hearing has been set next month in case 8:10-ml-02151, United States District Court for the Central District of California. See stories here-- http://nyti.ms/1h46mJ4 and http://bloom.bg/KbMiqp