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The Manufacturer’s Fault? Class Action Lawsuits and How to Steer Clear

With 13 auto manufacturers and over 8 million passenger vehicles* sold per year, the United States is home to many a class action lawsuit against the manufacturer. Quick new model rollouts and poor reliability from parts distributors create a dangerous landscape in our sue-happy country. That’s not to say that many lawsuits over faulty products are not justified. When the NHTSA has to swoop in too many times for a product recall, the parts that go defective before that recall is initiated leave many an unhappy and sometimes injured or dead customer.

The NHTSA

Since the National Traffic and Motor Vehicle Safety Act of 1966, now known as 49 U.S.C. Chapter 301, the NHTSA (National Highway Traffic Safety Administration) has the power to recall vehicles that do not meet federal standards.

Research from the NHTSA brings these numbers into perspective: since its inception, “more than 390 million cars, trucks, buses, recreational vehicles, motorcycles, and mopeds, as well as 46 million tires, and 66 million pieces of motor vehicle equipment…have been recalled to correct safety defects.”

Since so many accidents occur directly to the consumer, discovery of a defect is imperative to mitigate the chances of a class action lawsuit. According to FindLaw.com, a consumer injured by a defect can sue manufacturers for compensation, federal and state criminal and civil investigations, all of which can lead to large fines and settlements.

Takata & Honda Motor Co.

Most notable recent cases include a major settlement against Japanese auto parts supplier Takata Corp. and Honda Motor Co. While several federal recalls were issued against Honda vehicles, the rampant use of faulty air bag inflators in millions of vehicles has led to allegations against Takata for building cheaper air bags which Honda purchased.

In addition to experiencing a major decline in sales and dramatic depreciation of makes and models associated with the recall, personal injury and wrongful death claims were included. Take a look at the footage below to see the kind of damage the exploding plastic can and has done:

LA Times’ Jerry Hirsch reports the Berman firm out of Seattle has taken on the case. In the past they have settled a $1.6 billion class action suit with Toyota among others.

Many other cases have involved drive-train malfunctions, transmission failures, faulty brakes, etc. However, this is the clearest picture we can see to date of the dangers of faulty manufacturing. Honda has opted to use air bags from Toyoda Gosei, the main competitor of Takata, which stands to improve the reputation of Honda as a response to the previous choice to skimp on safety features.

Preventing a Lawsuit

For the manufacturer, issuing swift recalls and using high quality products are the keys to avoiding the endless settlements, model depreciation and reputation damage that defects like this one can cause. In the event of a case, which most are faced with annually, good E-Discovery will become of more value to corporate legal departments to get through cases such as these, but prevention is truly the best method.

*via SelectUSA.Commerce.gov

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