Law360: GM and other automakers can’t shake Takata Air bag case

Posted on May 06, 2019

May 6, 2019 UMV: 1,536,967
By Nathan Hale
Law360 (May 6, 2019, 6:05 PM EDT) — A group of automakers, including General Motors and Fiat Chrysler,
fell short Friday on attempts to escape consumers’ economic damages claims against them in multidistrict
litigation over the use of defective Takata Corp. air bags, but won assurances they will not face duplicative
claims in multiple venues.
U.S. District Judge Federico A. Moreno, who is overseeing the Takata MDL in the Southern District of Florida,
limited his order to arguments the automakers raised in their motions to dismiss over the consumers’ strategic
decision to simultaneously file separate complaints in four district courts where the companies are incorporated
and three complaints directly in the MDL in March 2018. But he addressed a variety of issues about how the
court will handle the cases as they progress.
“The personal jurisdiction issues before the court are unusual because plaintiffs filed complaints directly in this
MDL proceeding, while also separately transferring related, but significantly different complaints, into the MDL
proceeding through the [Joint Panel of Multidistrict Litigation], from district courts where many of the
defendants are jurisdictionally ‘at home,'” the judge said in his order.
Judge Moreno said he had to address challenges about jurisdiction, claim splitting and other related issues
because the defendants — General Motors Co., FCA US LLC, Mercedes-Benz USA LLC, Audi of America LLC
and Volkswagen Group of America, plus Mercedes’, Audi’s and Volkswagen’s German parent corporations —
chose not to stipulate to waiving personal jurisdiction.
Like previous complaints against other automakers in the MDL, the suits allege these companies were aware
or should have been aware of the Takata air bags’ defects when they made and sold their vehicles and either
concealed or failed to notify the general public about the risks of catastrophic failure, including ruptures.
Judge Moreno rejected arguments that the consumers’ complaints filed directly in the MDL resulted in a lack of
general personal jurisdiction because none of the companies are “at home” on Florida, saying that filing
directly in an MDL is not uncommon and falls within various court rules.
The judge also found no problem with the consumers bringing new claims for the first time in the “direct file”
complaints, in particular a nationwide Racketeer Influenced and Corrupt Organizations Act class action claim.
“Allowing MDL plaintiffs to amend their pleadings is consistent with Federal Rule of Civil Procedure 15(a)(2)’s
directive that district courts ‘should freely give leave [to amend] when justice so requires,’ and ‘the general rule
that, in multidistrict litigation, a transferee judge can handle all types of pretrial matters that otherwise would
have been handled by the transferor court,'” the judge said.
The court also rejected Fiat Chrysler’s argument that the direct file complaints should be dismissed for lack of
jurisdiction because the transferor complaints were not transferred into the MDL until later, saying that “in the
interest of judicial efficiency, the court will treat the direct file complaints as reiterating the substance of the
transferor complaints.”
However, Judge Moreno said that the court will treat the direct file complaints as the legally operative
pleadings, noting they significantly amended the transferor complaints by adding new claims from new plaintiffs
as well as new claims from the transferor plaintiffs.
Based on that decision, he also dismissed the transferor complaints without prejudice.
That served to address Mercedes-Benz and Volkswagen’s argument for dismissal based on the consumers
allegedly splitting claims between the two sets of complaints. Judge Moreno granted their motion to dismiss to
the extent there are no longer multiple legally operative complaints.
“While the court appreciates defendants’ concern that plaintiffs may be getting ‘two bites at the apple,’ the
defendants need not worry that plaintiffs will ‘have it both ways’ because the transferor complaints are
dismissed,” he said, stressing that if the consumers cannot show jurisdiction in the MDL court, they will not be
able to litigate those claims in another district court.
Looking ahead, Judge Moreno said that while the transferor complaints are dismissed, their legal actions “live
on” in the direct file complaints. When pretrial proceedings conclude, he will sever their claims and suggest
remand and transfer to appropriate courts.
He also ruled that new claims brought in the direct file complaints must also be remanded and said he will
make a determination on the proper venue in accordance with JPML rules when the time comes.
“We are pleased that Judge Moreno’s thorough order confirmed that the process plaintiffs followed in filing their
cases in the transferor courts, as well as directly in the MDL court, was consistent with MDL practice,” Peter
Prieto, chair lead counsel for the consumers, said Monday.
Counsel for the various automakers did not immediately respond to requests for comment Monday.
The MDL arose from consumer suits first filed suit in 2014 that alleged the cheap but volatile ammonium nitrate
that inflates air bags made by Takata 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.
Several other car companies involved in the suit have settled claims against them.
Ford became the seventh automaker to reach a settlement in the MDL in September, agreeing to pay $300
million. Honda agreed to a $605 million deal in September 2017, 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.
The class is represented by 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.
GM is represented by Laurie Michele Riley of Jones Walker LLP, and Leonid Feller and Renee D. Smith
of Kirkland & Ellis LLP.
FCA is represented by Douglas B. Brown and Scott M. Sarason of Rumberger Kirk & Caldwell, and Brian D.
Glueckstein and Elizabeth A. Rose of Sullivan & Cromwell LLP.
Volkswagen and Audi are represented by Gerald E. Greenberg, Adam Michael Schachter and Mikayla Kiersten
Espinosa of Gelber Schachter & Greenberg PA, and Robert J. Giuffra Jr., Suhana S. Han, Yavar Bathaee and
James H. Congdon of Sullivan & Cromwell LLP.
Mercedes is represented by Raoul G. Cantero of White & Case LLP, and Troy M. Yoshino, Eric J. Knapp,
Aengus H. Carr and Alfredo W. Amoedo of Squire Patton Boggs LLP.
The case is Dunn et al. v. Takata Corp. et al., case number 1:14-cv-24009, and the MDL is In re: Takata
Airbag Products Liability Litigation, case number 1:15-md-02599, both in the U.S. District Court for the
Southern District of Florida.