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Majority Of Money In Airbag Fraud Settlement Slated For Automakers, Not Actual Victims

The 18-year-old all-state cheerleader was just picking up her little brother from football practice when she got into a fender bender in the parking lot – a minor accident that is almost a rite of passage for thousands of teenagers every year. But this crash was different, because this car had a defective Takata airbag. It exploded violently, sending piercing metal shrapnel everywhere. One of those shards sliced her neck, and she was dead within minutes.

Her name is Ashley Parham, and she was the first fatality of the defective Takata airbag. When she was killed, Ashley had just graduated from high school. She had dreamed of being a teacher.

If the story of her death is gruesome to read, think of how painful it was for her family to experience. And then think of how they felt when they learned that executives at the company that manufactured the airbag in their car – the airbag that killed their daughter – knew about the defect years earlier.

Sometimes fraud can seem to be a technical violation, but this fraud concealed product defects that killed people.

Ashley is one of eleven people who have died as a result of Takata’s defective product. Nearly two hundred others have been injured – wounding limbs, suffering terrible facial lacerations, or losing their sight.

Sometimes fraud can seem to be a technical violation, but this fraud concealed product defects that killed people.

Eighteen months ago, we called on Takata to establish a victim’s compensation fund to support those injured or killed by the company’s dangerous and defective product. Takata’s response? Thanks, but no thanks.

That response wasn’t acceptable to us, and it wasn’t acceptable to the Department of Justice prosecutors who took Takata to court and made sure that the settlement Takata agreed to last month included – in addition to a guilty plea and $25 million criminal penalty – $975 million in restitution for victims.

In fact, DOJ is pursuing criminal charges against three executives – for allegedly fabricating test data and knowingly placing profits before people’s lives.

So here we are, more than a year and a half later, and Takata has agreed through a plea agreement to create a victims compensation fund. Takata and Department of Justice attorneys are now just a day away from finalizing the exact terms of a restitution order that requires the company write a $975 million check to victims for their criminal misbehavior.

When we first called on Takata to establish a compensation fund for victims, we knew of eight deaths and more than 100 injuries linked to defective Takata airbags. Since then, there have been three more confirmed deaths and the number injured is now near 200.

Knowing that Takata’s explosive airbags have resulted in 11 fatalities and nearly 200 injuries, you might guess that most of that money will be directed to the families of victims. Families whose fathers and mothers or sons and daughters took the car out for an errand, school, or work, and came back grievously injured, or never came home at all. Unfortunately, you’d be wrong.

Instead, a mere $125 million has been designated for individuals whose lives have been irreparably harmed by Takata’s defective product, and it’s not clear from the terms of the plea agreement if this amount will even cover families of victims killed – like Ashley Parham’s.

Let us be clear: there is no amount of money that can replace what these families have lost. There is no definitive metric to determine how to value the loss of a limb or the loss of a life. But this amount does not even begin to make a dent – especially when the number injured and killed is almost certain to rise.

The amount set aside for actual victims is especially paltry when compared to the $850 million fund for so-called auto manufacturer “victims” for their airbag recall and replacement costs as a result of Takata’s fraud. Some of these manufacturers may have even been complicit in this tragedy by their aggressive pursuit of cheaper airbags, disregard of safety specifications and testing, and failure to alert safety regulators of troubling patterns. At best, they failed to protect their customers and serve as any kind of check on Takata’s rampant wrongdoing. 

And is their financial hit really seven times greater than the pain and suffering of human causalities?

Before the $975 million restitution order is finalized on Monday, we urge the prosecutors to reconsider the allocation of this funding and shift a great percentage of the settlement to the victim’s compensation fund, and ensure that it accounts for compensation for families of individuals killed by the Takata airbag defect. The current amount is simply insufficient.

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