Law360: Ford gets initial OK on $300M deal to exit Takata MDL

Posted on September 05, 2018

Law360, Miami (September 5, 2018, 8:19 PM EDT) — A Florida federal judge granted preliminary approval on Wednesday to a $299.1 million deal for Ford Motor Co. to exit multidistrict litigation over defective Takata Corp. air bags and hasten the removal of dangerous air bag inflators from 6 million affected vehicles.

U.S. District Judge Federico A. Moreno said the agreement, which mirrors previous settlements with automakers in the sprawling case, appeared to meet the necessary requirements. He set a Dec. 11 fairness hearing ahead of determining final approval.

“We are pleased that Judge Moreno granted preliminary approval, and that our Ford class members are one step closer to seeing this settlement become effective,” lead class counsel Peter Prieto of Podhurst Orseck PA said. “This settlement, like the ones that preceded it, will not only provide compensation but will save lives through unique and ongoing outreach efforts that are designed to have our class members and Ford’s customers understand the danger of Takata’s inflators so that they replace these defective inflators without delay.”

The court gave its approval over a lone opposition filed Tuesday night by Ford Mustang owner Dolly L. Wright, who asked the court to require class counsel to disclose the effectiveness of the “outreach program” approved in previous settlements to inform and motivate vehicle owners to come to dealerships to get their Takata airbags replaced.

Prieto assured the court that the settlement special administrator has been testing the various communications methods being used and said they would fully address the issue in a written response before final approval.

Under the terms of the deal, Ford will inform affected consumers about the recall of cars with the defective air bags using a state-of-the-art outreach program that regularly contacts class members through direct mail, phone calls, email, internet ads, social media and in-person canvassing, according to the plaintiffs.

The settlement will also provide compensation to consumers for their losses resulting from the recall, including the reimbursement of reasonable out-of-pocket expenses or up to a $500 payment for those who did not document their out-of-pocket expenses. Ford will also provide rental cars for class members while they wait for their recall repairs.

Ford will make a total payment of $299.1 million minus a 20 percent credit for the rental car/loaner program, the order said. The payment will cover all attorneys’ fees and costs, service awards to class representatives and costs for class notice and settlement administration. The deal covers vehicle owners’ economic loss claims, but the company will remain a defendant to automotive recyclers’ claims in the multidistrict litigation, which the court severed.

The order identified 27 class representatives and named attorneys from Podhurst Orseck, Boies Schiller Flexner LLPPower Rogers & Smith LLPBaron & Budd PCCarella Byrne Cecchi Olstein Brody & Agnello PC and Lieff Cabraser Heimann & Bernstein LLP as settlement class counsel.

Ford, which entered into the agreement in July, became the seventh automaker to reach a settlement in the MDL. Honda agreed to a $605 million deal last September, Nissan settled for $98 million in August 2017 and Toyota, Subaru, Mazda and BMW agreed to pay a combined $553.6 million in May 2017.

Counsel for Ford declined to comment after Wednesday’s hearing.

Four additional automakers — General Motors LLC, Fiat Chrysler, Volkswagen Group of America and Mercedes-Benz USA LLC — that were roped into the MDL with new suits filed in March are still litigating the claims against them.

Judge Moreno said during Wednesday’s hearing that he would schedule a hearing on their pending motions to dismiss in either late November or December after briefing is complete.

Consumers first filed suit in 2014, alleging the cheap but volatile ammonium nitrate that inflates the bags can misfire, especially in humid conditions, blasting chemicals and metal fragments at passengers and drivers. Takata’s air bag inflators have been linked to at least 11 deaths in the U.S., and the company has faced massive global recalls.

Takata has pled guilty to wire fraud, agreed to pay $1 billion in fines and restitution and acknowledged that it ran a scheme to use false reports and other misrepresentations to convince automakers to buy air bag systems that contained faulty, inferior or otherwise defective inflators. In June, the company filed for bankruptcy in Delaware and Japan.

The class is represented by chair lead counsel Peter Prieto, Aaron S. Podhurst, Stephen F. Rosenthal, John Gravante, Matthew P. Weinshall and Alissa Del Riego of Podhurst Orseck PA, with parts of the suit being handled by Boies Schiller Flexner LLP, Colson Hicks Eidson, Power Rogers & Smith LLP, Lieff Cabraser Heimann & Bernstein LLP, Carella Byrne Cecchi Olstein Brody & Agnello PC and Baron & Budd PC.

Takata is represented by Stephen J. Krigbaum and Michael D. Sloan of Carlton Fields and by Keith A. Teel and Shankar Duraiswamy of Covington & Burling LLP.

Ford is represented by Henry Salas and Brian Dominguez of Cole Scott & Kissane PA and R. Kent Warren, Jill C. Griset, T. Richmond McPherson III, Perry W. Miles IV, Lauren P. Scott, Jonathan T. Tan and Ashley W. Winsky of McGuireWoods LLP.

Wright is represented by N. Albert Bacharach Jr. PA.

The MDL is In re: Takata Airbag Products Liability Litigation, case number 1:15-md-02599, in the U.S. District Court for the Southern District of Florida.

–Additional reporting by Carolina Bolado. Editing by Haylee Pearl.