Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 1 of 57

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1 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 1 of 57 FILED 2014 Dec-17 PM 03:58 U.S. DISTRICT COURT N.D. OF ALABAMA IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION CATHRYN TANNER and MARITA MURPHY, individually and on behalf of all others similarly situated, vs. Plaintiffs, TAKATA CORPORATION, TK HOLDINGS, INC., HIGHLAND INDUSTRIES, INC., HONDA MOTOR CO., LTD, HONDA MOTOR CO., INC., FORD MOTOR COMPANY, BMW OF NORTH AMERICA LLC, BMW AG, BMW MANUFACTURING CO., LLC, NISSAN NORTH AMERICA, INC., NISSAN MOTOR CO., LTD, TOYOTA MOTOR CORP., TOYOTA MOTOR SALES, U.S.A., INC., TOYOTA MOTOR ENGINEERING & MANUFACTURING NORTH AMERICA, INC., CHRYLSER GROUP, LLC, GENERAL MOTORS CO., MAZDA MOTOR CORP., MAZDA MOTOR OF AMERICA, INC., MITSUBISHI MOTORS CORP., and SUBARU OF AMERICA, INC. Case No. CLASS ACTION COMPLAINT JURY TRIAL DEMANDED Defendants.

2 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 2 of Plaintiffs, Cathryn Tanner and Marita Murphy, bring this action individually and on behalf of all persons similarly situated in the United States who purchased or leased certain vehicles manufactured, distributed, and/or sold by Honda Motor Co., Ltd., Ford Motor Company, BMW NA LLC, BMW AG, Nissan North American, Inc., Nissan Motor Co., Ltd., Toyota Motor Corp., Toyota Motor Sales, U.S.A., Inc., Toyota Motor Engineering & Manufacturing North America, Inc., Chrysler Group, LLC, General Motors Co., Mazda Motor Corp., Mazda Motor of America, Inc., Mitsubishi Motors Corp., and Subaru of America, Inc., and/or any of their related subsidiaries, successors, or affiliates (collectively, the Vehicle Manufacturers ), with defective airbags manufactured by Takata Corporation, TK Holdings, Inc., Highland Industries, Inc., and/or its related subsidiaries, successors, or affiliates (collectively, Takata ), as described below. 1 Plaintiffs bring this action for violation of the Magnuson-Moss Warranty Act, fraudulent concealment, and assert additional statutory and common law claims. Plaintiffs seek damages, including punitive damages, in addition to equitable and declaratory relief, based upon the following allegations. 2. Takata is headquartered in Japan with worldwide subsidiaries, and is a leading manufacturer of transportation-related safety devices, including airbags, 1 Takata and the Vehicle Manufacturers are referred to collectively herein as Defendants. 1

3 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 3 of 57 seat belts, school bus seats, and child restraint systems. Takata is the manufacturer of all of the Defective Airbags (defined below) at issue in this Complaint. 3. Defendants manufactured or installed defective airbags ( Defective Airbags ) in millions of vehicles, and then actively concealed the defects from federal regulators and the public. The Defective Airbags not only cannot be relied upon to provide the expected safety, but in many cases can become a weapon, exploding with metal debris and projecting shrapnel into the face, neck, and body of passengers. Only after exhausting their attempts to downplay the extent of the harm caused by the Defective Airbags did Defendants finally acknowledged the massive scope of the problem. 4. To date, approximately 16 million motor vehicles with Takatamanufactured airbags have been recalled worldwide due to the defects described herein. 5. Vehicles that have been recalled because they contain Defective Airbags manufactured by Takata (referred to herein as the Class Vehicles ) include the following: 2 2 As reported in the October 22, 2014 National Highway Traffic Safety Administration ( NHTSA ) Consumer Advisory. 2

4 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 4 of 57 BMW: 627,615 total number of potentially affected vehicles Series Sedan Series Coupe Series Sports Wagon Series Convertible M3 Coupe M3 Convertible Ford: 58,669 total number of potentially affected vehicles 2004 Ranger GT Mustang Honda: 5,051,364 total number of potentially affected vehicles Honda Accord) Honda Accord Honda Civic Honda CR V Honda Element Honda Odyssey Honda Pilot 2006 Honda Ridgeline Acura MDX Acura TL/CL 2005 Acura RL Mitsubishi: 11,985 total number of potentially affected vehicles Lancer Raider Chrysler: 371,309 total number of potentially affected vehicles Dodge Ram Dodge Ram Dodge Ram Dodge Ram Dodge Ram Dodge Durango Dodge Dakota Chrysler Chrysler Aspen General Motors: undetermined total number of potentially affected vehicles Pontiac Vibe 2005 Saab 9 2X Mazda: 64,872 total number of potentially affected vehicles Mazda MazdaSpeed Mazda RX MPV 2004 B Series Truck Nissan: 694,626 total number of potentially affected vehicles Nissan Maxima Nissan Pathfinder Nissan Sentra Infiniti I30/I Infiniti QX Infiniti FX35/FX45 3

5 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 5 of 57 Subaru: 17,516 total number of potentially affected vehicles Baja Legacy Outback Impreza Toyota: 877,000 total number of potentially affected vehicles Lexus SC Toyota Corolla Toyota Corolla Matrix Toyota Sequoia Toyota Tundra 6. The defect in Takata s airbags dates back to at least April 2000, when, according to a recall notice, some airbags produced by Takata between April 2000 and September 2002 were said to contain defects. Takata first became aware of the defect no later than 2001 when the dangers associated with its airbags came to light in Isuzu vehicles and the first recall was issued. Since the initial announcement in 2001, additional recalls were announced every year from 2008 to The Defective Airbags have repeatedly exploded in a violent and uncontrolled fashion, literally spraying vehicle interiors with metal shrapnel, maiming and sometimes killing the occupants. At least four people have been killed, and well over one hundred injured, some severely, by Takata s violently exploding, shrapnelspewing defective airbags. 8. Moreover, when Takata engineers investigated and discovered the causes of these violent injuries and deaths, corporate management ordered them to delete their findings, destroy the evidence, and keep silent about their discoveries as well as their proposed redesign of the malfunctioning airbag parts. 4

6 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 6 of Management from the Vehicle Manufacturers learned about the defects from Takata, and even assisted Takata in obtaining airbags from their vehicles that had been brought in for service so that Takata could secretly test them. Yet, the Vehicle Manufacturers failed until relatively recently to take any action, such as recalling vehicles, to address and remedy the defects. Instead, for years, the Vehicle Manufacturers kept the facts secret to preserve their profits and protect their corporate reputations. 10. Takata and the Defective Airbags are the subject of numerous governmental investigations. For example, on November 13, 2014, Takata confirmed that it had received a subpoena from a federal grand jury in New York which seeks documents related to Takata s knowledge of risks posed by its Defective Airbags. Takata will also soon face questioning from the United States Senate Committee on Commerce. 11. Takata s unlawful cover-up, in tandem with the Vehicle Manufacturers, has endured over ten years, until whistleblower employees came forward to reveal the truth. During that time, Takata falsely and fraudulently misrepresented the safety of its airbags, and the Vehicle Manufacturers have falsely and fraudulently misrepresented the safety of their affected vehicles to the public, to customers, and to federal regulators. Takata also falsely and fraudulently misrepresented to several automobile 5

7 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 7 of 57 manufacturers that there were no defects in its airbags, and/or that any defects were confined to a small number of the Vehicle Manufacturers vehicles. 12. The Defective Airbags installed in the Class Vehicles are defective and prone to rupturing when they are deployed and inflated during a collision. When the Defective Airbags rupture, metal shards, shrapnel, and other potentially lethal debris are expelled into the Class Vehicles, placing the occupants in immediate risk of serious bodily injury or death. 13. Despite their early knowledge of the defective nature of the airbags, Takata and the Vehicle Manufacturers failed to timely disclose the defect in the Class Vehicles airbags, breaching their duty to do so. 14. Defendants conduct is in breach of express and implied warranties and in violation of state and federal law. Defendants have and will continue to benefit from their unlawful conduct while consumers are harmed as they continue to drive the Class Vehicles. Had Plaintiffs and the other members of the proposed Class known about the defect at the time of purchase or lease, they would not have bought or leased the Class Vehicles, or would have paid substantially less for them. 15. To remedy Defendants unlawful conduct, Plaintiffs, on behalf of the proposed Class and Alabama Subclass, seek damages and restitution from Defendants, as well as notification to Class members about the full extent of the defect in the Class Vehicles Defective Airbags. 6

8 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 8 of 57 PARTIES 16. Plaintiff Cathryn Tanner is a citizen of the State of Alabama. Ms. Tanner owns a 2003 Honda Civic. 17. Plaintiff Marita Murphy is a citizen of the State of Alabama. Ms. Murphy owns a 2003 Honda Pilot. 18. Defendant Takata Corporation ( Takata ) is a foreign, for-profit corporation with its principal place of business in Tokyo, Japan. Takata is a specialized supplier of automotive safety systems that designs, manufactures, tests, markets, distributes, and sells airbags. Takata manufactures component parts in its own facilities. 19. Defendant TK Holdings, Inc. ( TK Holdings ) is a subsidiary of Takata headquartered in Auburn Hills, Michigan. TK Holdings designs, sells, manufactures, tests, and distributes airbags in the United States, including the Defective Airbags at issue in this litigation. 20. Defendant Highland Industries, Inc. ( Highland ) is a subsidiary of Takata and is headquartered in Kernersville, North Carolina. Highland manufactures industrial and automotive textile product solutions, including airbag fabrics for the automotive airbag industry. Highland manufactures airbags in the United States, including the Defective Airbags at issue in this litigation. 21. Defendant Honda Motor Co., Ltd. is a Japanese corporation with its principal place of business in Tokyo, Japan, that designs, markets, manufactures, and 7

9 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 9 of 57 sells automobiles through independent retail dealers, outlets, and authorized dealerships primarily in Japan, North America, Europe, and Asia. 22. Defendant Honda Motor Co., Inc., is a California corporation with its headquarters in Torrance, California. It is the North American subsidiary of Honda Motor Co., Ltd., for which it conducts the sales, marketing, manufacture, assembly, and operational activities in North America. 23. Defendants Honda Motor Co. Ltd. and Honda Motor Co., Inc. are collectively referred to herein as Honda. 24. Defendant Ford Motor Company ( Ford ) is a Delaware corporation with its principal place of business in Dearborn, Michigan. 25. Defendant BMW of North America LLC ( BMW NA LLC ) is a Delaware limited liability company with its principal place of business in Woodcliff Lake, New Jersey. BMW NA LLC imports and sells BMW automobiles within the United States. 26. Defendant BMW Manufacturing Co., LLC ( BMW Manufacturing ) is part of BMW s global manufacturing network and is located in Spartanburg, South Carolina. 27. Defendant BMW AG is a German stock corporation with its principal place of business in Munich, Germany. BMW AG manufactures BMW automobiles. 8

10 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 10 of 57 Defendants BMW NA LLC, BMW Manufacturing Co., LLC, and BMW AG are collectively referred to herein as BMW. 28. Defendant Nissan North America, Inc. is a California corporation with its principal place of business in Franklin, Tennessee. Nissan North America, Inc. manufactures and imports automobiles and sells them in the United States. 29. Defendant Nissan Motor Co., Ltd. is a Japanese corporation with its principal place of business in Kanagawa, Japan. Nissan Motor Co., Ltd. manufactures Nissan automobiles. 30. Nissan North America, Inc. and Nissan Motor Co., Inc. are collectively referred to herein as Nissan. 31. Defendant Toyota Motor Corp. is the world s largest automaker and the largest seller of automobiles in the United States and is a Japanese corporation headquartered in Aichi Prefecture, Japan. 32. Defendant Toyota Motor Sales, U.S.A., Inc. is a wholly-owned subsidiary of Toyota Motor Corp. and is responsible for the sales, marketing, and distribution in the United States of automobiles manufactured by Toyota Motor Corp.. It is headquarter in Torrance, California. 33. Defendant Toyota Motor Engineering & Manufacturing, North America, Inc. is a subsidiary of Toyota Motor Corp., is headquartered in Erlanger, Kentucky, and has major operations in Arizona, California, and Michigan. 9

11 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 11 of Defendants Toyota Motor Corp., Toyota Motor Sales, U.S.A., Inc., and Toyota Motor Engineering & Manufacturing, North America, Inc. are collectively referred to herein as Toyota. 35. Defendant Chrysler Group, LLC ( Chrysler ) is a Delaware corporation with its principal place of business in Auburn Hills, Michigan. Chrysler manufactures and sells automobiles through independent retail dealers, outlets, and authorized dealers worldwide. 36. Defendant General Motors, Co. ( GM ) is a Delaware corporation with its principal place of business in Detroit, Michigan. GM manufactures and sells automobiles through independent retail dealers, outlets, and authorized dealers worldwide. 37. Defendant Mazda Motor Corp. is a foreign for-profit corporation with its principal place of business in Hiroshima, Japan. It manufactures and sells automobiles through independent retail dealers, outlets, and authorized dealers worldwide. 38. Defendant Mazda Motor of America, Inc. is a subsidiary of Mazda Motor Corp. headquartered in Irvine, California. It conducts the sale, marketing, and operational activities for Mazda cars, trucks, and sport utility vehicles and automobile parts in the United States. 39. Defendants Mazda Motor Corp. and Mazda Motor of America, Inc. are collectively referred to herein as Mazda. 10

12 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 12 of Defendant Mitsubishi Motors Corp. ( Mitsubishi ) is a foreign for-profit corporation with its principal place of business in Tokyo, Japan. It manufactures and sells automobiles through independent retail dealers, outlets, and authorized dealers worldwide. 41. Defendant Subaru of America, Inc. ( Subaru ) is a for-profit corporation with its principal place of business in Cherry Hill, New Jersey. It manufactures and sells automobiles through independent retail dealers, outlets, and authorized dealers worldwide. JURISDICTION AND VENUE 42. Jurisdiction is proper in this Court pursuant to the Class Action Fairness Act, 28 U.S.C. 1332(d), because members of the proposed Class are citizens of states different from Defendants home states and the aggregate amount in controversy exceeds $5,000,000, exclusive of interest and costs. 43. This Court also has original federal question jurisdiction because Plaintiffs first claim for relief arises under the Magnuson-Moss Warranty Act, 15 U.S.C. 2301, et seq. 44. The Court has supplemental jurisdiction over Plaintiffs remaining claims pursuant to 28 U.S.C

13 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 13 of Venue is proper in this Court pursuant to 28 U.S.C. 1391(a) because Defendants conduct substantial business in this District and have caused harm to Members of the Class who reside in this District. THE STATUTE OF LIMITATIONS IS TOLLED A. Fraudulent Concealment 46. Takata has known of the Defective Airbags in the vehicles since at least 2001 and possibly earlier and certainly well before Plaintiffs and Class Members acquired the Class Vehicles. 47. Takata has concealed from or failed to notify Plaintiffs, Class Members, and the public of the full and complete nature of the Defective Airbags. 48. The Vehicle Manufacturers also knew of the Defective Airbags much earlier than they disclosed this information to the public. 49. Although Defendants now acknowledge that they know of the serious and possibly deadly defect, Defendants did not fully disclose the Defective Airbags and, in fact, downplayed the widespread prevalence of the problem. 50. In 2007, Defendants jointly studied the Defective Airbags in a secret program. In this program, certain Vehicle Manufacturers would replace all or part of the Defective Airbags from cars brought into their dealerships for unrelated warranty repairs. The Defective Airbags, or their component parts, would then be sent to Takata for study and review of the defect. 12

14 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 14 of Despite early knowledge of the Defective Airbags and the damage they could cause, Defendants fraudulently concealed their knowledge from the public, insisting that the defect was not serious and was limited to a small subset of motor vehicles. 52. While Defendants have only now acknowledged to safety regulators that Takata s airbags were defective, Defendants for years neither adequately investigated nor disclosed the lethal nature of the problem, and affirmatively downplayed and concealed the pervasiveness of the problem. 53. Defendants failures to warn or take timely remedial action constitute substantial factors in causing Plaintiffs current injuries. 54. Defendants are under a continuing duty to disclose the true character, quality, and nature of the Takata airbags used in their vehicles, and because Defendants concealed the true character, quality, and nature of these airbags, they may not assert any statute of limitations defense. 55. The claims alleged herein did not accrue until Plaintiffs and the other members of the Class discovered that their vehicles had the Defective Airbags. 56. Plaintiffs and other members of the Class had no realistic ability to discern that the vehicles were defective. 13

15 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 15 of 57 B. Estoppel 57. Defendants were and are under a continuous duty to disclose to Plaintiffs and Class Members the true character, quality, and nature of the Class Vehicles and the Defective Airbags therein. They actively concealed the true character, quality, and nature of the Class Vehicles and the Defective Airbags therein, and knowingly made misrepresentations about the quality, reliability, characteristics, and performance of the Class Vehicles and their Defective Airbags. Plaintiffs and Class Members reasonably relied upon Takata and Honda s knowing and affirmative misrepresentations and/or active concealment of these facts. CLASS ACTION ALLEGATIONS 58. Plaintiffs bring this lawsuit as a class action on their own behalf and on behalf of all other persons similarly situated as members of the proposed Class, pursuant to Fed. R. Civ. P. 23(a) and (b)(3) and/or (b)(2) and/or ( c)(4). This action satisfies the numerosity, commonality, typicality, adequacy, predominance, and superiority requirements of those provisions. 59. Plaintiffs seek to represent the following Class (the National Class ): All persons or entities who purchased or entered into a lease for one or more vehicles in the United States for personal use and not for resale that contained Defective Airbags. 60. Plaintiffs further seek to represent the following Subclass (the Alabama Subclass ): 14

16 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 16 of 57 All persons or entities who purchased or entered into a lease for one or more vehicles in the state of Alabama for personal use and not for resale that contained Defective Airbags. 61. The National Class and the Alabama Subclass are collectively referred to as the Classes. Excluded from the Classes are Defendants, their employees, co-conspirators, officers, directors, legal representatives, heirs, successors, and wholly or partly owned subsidiaries or affiliated companies; and the judicial officers and their immediate family members and associated court staff assigned to this case. Also excluded from the Classes are any individuals claiming damages from personal injuries allegedly arising from the Class Vehicles. 62. Plaintiffs reserve the right to modify or amend the definition of the Classes before the Court determines whether certification is appropriate. 63. Certification of Plaintiffs claims for class-wide treatment is appropriate because Plaintiffs can prove the elements of her claims on a class-wide basis using the same evidence as would be used to prove those elements in individual actions alleging the same claims. A. Numerosity 64. Members of the proposed Classes are so numerous that joinder of all s u c h members would be impracticable. On information and belief, there are millions of Class Vehicles nationwide, and thousands of Class Vehicles in each state. The individual Class Members are also ascertainable, as the names and 15

17 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 17 of 57 addresses of all Class Members can be identified in Defendants books and records, as well as registration and sales records. The precise number of Class Members numbers at least in the thousands and can be obtained only through discovery, but the numbers are clearly more than can be consolidated in one complaint such that it would be impractical for each member to bring suit individually. Plaintiffs do not anticipate any difficulties in the management of the action as a class action. B. Commonality 65. There are questions of law and fact that are common to all of the Plaintiffs and the Class Members claims. These common questions predominate over any questions that go particularly to any individual member of the Classes. Among such common questions of law and fact are the following: (a) whether the impacted vehicles contain or contained Defective Airbags; (b) whether the vehicles containing Defective Airbags have suffered diminution of value as a result of having the Defective Airbags; (c) whether Defendants knew or should have known about the Defective Airbags; 16

18 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 18 of 57 (d) whether Defendants had a duty to disclose the Defective Airbags to Plaintiffs and other members of the proposed Classes; (e) whether Defendants omitted or failed to disclose material facts that might affect Plaintiffs and the Class Members decision whether to purchase or lease vehicles with Defective Airbags; (f) whether Defendants misrepresented that the vehicles containing Defective Airbags were safe; (g) whether Defendants engaged in unfair, deceptive, unlawful, and/or fraudulent acts or practices by failing to disclose that the vehicles with Defective Airbags were manufactured with defective airbag inflators; (h) whether a reasonable consumer would be likely to be misled by Defendants conduct; (i) whether Defendants have been unjustly enriched by their conduct; (j) whether the vehicles containing Defective Airbags were unfit for the ordinary purpose for which they were purchased or leased; and 17

19 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 19 of 57 (k) whether Plaintiffs and the Classes are entitled to equitable relief, including injunction. C. Typicality 66. Plaintiffs are members of the Classes they seek to represent. Plaintiffs claims are typical of the Nationwide Class and the Alabama Subclass claims because of the similarity, uniformity, and common purpose of Defendants unlawful conduct. Each Class Member has sustained, and will continue to sustain, damages in the same manner as Plaintiffs as a result of Defendants wrongful conduct. D. Adequacy of Representation 67. Plaintiffs are adequate representatives of the C lasses they seek to represent and will fairly and adequately protect the interests of those Classes. Plaintiffs are committed to the vigorous prosecution of this action and have retained competent counsel, experienced in litigation of this nature, to represent them. There is no hostility between Plaintiffs and the unnamed Class Members. Plaintiffs anticipate no difficulty in the management of this litigation as a class action. 68. To prosecute this case, Plaintiffs have chosen the undersigned law firms, which are very experienced in class action litigation and have the financial and legal resources to meet the substantial costs and legal issues associated with this type of litigation. E. Requirements of Fed. R. Civ. P. 23(b)(3) 18

20 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 20 of The questions of law or fact common to Plaintiffs and each Class Members claims predominate over any questions of law or fact affecting only individual members of the Classes. 70. Common issues predominate when, as here, liability can be determined on a class-wide basis. 71. When determining whether common questions predominate, courts focus on the liability issue, and if the liability issue is common to the class as is the case at bar, common questions will be held to predominate over individual questions. F. Superiority 72. A class action is superior to individual actions in part because of the non- exhaustive factors listed below: (a) joinder of all Class Members would create extreme hardship and inconvenience for the affected customers as they reside all across the states; (b) individual claims by Class Members are impractical because the costs to pursue individual claims exceed the value of what any one class member has at stake. As a result, individual Class Members have no interest in prosecuting and controlling separate actions; 19

21 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 21 of 57 (c) there are no known individual Class Members who are interested in individually controlling the prosecution of separate actions; (d) the interests of justice will be well served by resolving the common disputes of potential Class Members in one forum; (e) individual suits would not be cost effective or economically maintainable as individual actions; and (f) the action is manageable as a class action. G. Requirements of Fed. R. Civ. P. 23(b)(2) 73. Defendants have acted or failed to act in a manner generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the Classes as a whole. FACTUAL ALLEGATIONS 74. Takata is one of the largest manufacturers in the world of automotive safety devices, including airbags. It was established in 1933 as a textile 20

22 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 22 of 57 manufacturer in Japan. In or around 1976, Takata began manufacturing airbags for automobiles. 75. Starting in 1983, Takata began supplying airbags to United States customers, including police agencies for use in an airbag fleet test program as part of a safety campaign started by the United States Department of Transportation. 76. In 1987, Takata began production of its driver s side airbag modules and supplied those to American customers. 77. In 1988, Takata established Highland as a production base for textiles, airbags, and other automobile interior components. In 1989, Takata established TK Holdings as a designer, manufacturer, distributor, seller, and tester of airbags in the American market. 78. In 1990, Takata began the production and sale of its passenger seat airbags in the United States and internationally. 79. Takata not only makes airbags, but also the high-explosive devices that inflate them, using technology borrowed from rocket engines. Airbags evolved from an expensive option to become standard equipment on millions of cars, and Takata became one of the top three manufacturers worldwide. 80. By 2006, airbags accounted for approximately 37.3% of Takata s sales, and since then, that figure has increased. In 2011, airbags accounted for approximately 46.2% of Takata s sales. 21

23 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 23 of After a series of accidents, including those described above and the deaths of at least four people, Takada has become the epicenter of the largest airbagrelated recall in history. 82. The Vehicle Manufacturers have used Takata s Defective Airbags for lengthy periods of time. 83. This lawsuit concerns the following Class Vehicles equipped with Takata airbags: BMW: 627,615 total number of potentially affected vehicles Series Sedan Series Coupe Series Sports Wagon Series Convertible M3 Coupe M3 Convertible Ford: 58,669 total number of potentially affected vehicles 2004 Ranger GT Mustang Chrysler: 371,309 total number of potentially affected vehicles Dodge Ram Dodge Ram Dodge Ram Dodge Ram Dodge Ram Dodge Durango Dodge Dakota Chrysler Chrysler Aspen General Motors: undetermined total number of potentially affected vehicles Pontiac Vibe 2005 Saab 9 2X 22

24 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 24 of 57 Honda: 5,051,364 total number of potentially affected vehicles Honda Accord) Honda Accord Honda Civic Honda CR V Honda Element Honda Odyssey Honda Pilot 2006 Honda Ridgeline Acura MDX Acura TL/CL 2005 Acura RL Mitsubishi: 11,985 total number of potentially affected vehicles Lancer Raider Subaru: 17,516 total number of potentially affected vehicles Baja Legacy Outback Impreza Mazda: 64,872 total number of potentially affected vehicles Mazda MazdaSpeed Mazda RX MPV 2004 B Series Truck Nissan: 694,626 total number of potentially affected vehicles Nissan Maxima Nissan Pathfinder Nissan Sentra Infiniti I30/I Infiniti QX Infiniti FX35/FX45 Toyota: 877,000 total number of potentially affected vehicles Lexus SC Toyota Corolla Toyota Corolla Matrix Toyota Sequoia Toyota Tundra 84. The airbags installed in the Class Vehicles were designed, manufactured, and tested by Takata in the 1990s and early 2000s. The airbags in the Class Vehicles represented a redesign of earlier airbag models and relied on inflation through an explosive based on a compound used in fertilizers, which is housed in a 23

25 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 25 of 57 metal structure (the Inflator ). The redesign was done to make the airbags more compact, and to also reduce the toxic fumes that were emitted after deployment in earlier models. 85. The Inflator is, however, defective. Upon deployment of the Class Vehicles airbags, the Inflator explodes and ruptures the metal structure housing in the process. Upon rupture, the Inflator and metal debris and shrapnel puncture the airbag and are expelled into the interior of the Class Vehicles, placing the driver and any occupants of the Class Vehicles at risk of serious bodily injury or death. 86. The Takata airbags were propelled with a blend of chemicals that included ammonium nitrate (a common explosive also used to make fertilizer). Azides, which previously were used in most airbags, were phased out early in the 2000s, which caused Takata s new, azide-free inflators to be in high demand. 87. The ammonium nitrate mix generates gas more efficiently than other chemicals used by some rivals, but it can also be unstable, and particularly so if exposed to moisture. 88. Machines at Takata s factories packed the chemical propellant into wafers, which are then stacked inside the inflator, a device that shoots out hot gas to inflate an airbag within thousandths of a second after sensors detect a car crash. 89. But if the wafers crumble or break, they can burn too fast, creating a high- pressure explosion. 24

26 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 26 of Takata now acknowledges where it went wrong was in making those wafers. Takata identified a list of problems to United States safety regulators, including that it failed to properly store propellant to shield it from moisture, which can cause wafers to crumble many years later, and that some wafers were pressed together with too little force. In some cases, inflators were even made with just six wafers, instead of the required seven. 91. According to an anonymous former Takata insider, the defective wafers were made at a period when the company was under intense pressure from its customers to boost output to meet surging demand. Takata said at the time: Production demands vary over time, but our company s commitment to delivering quality products never varies. 92. This turned out not to be so. The two Takata plants that manufactured the Defective Airbags at issue here, located in Moses Lake, Washington and Monclova, Mexico, respectively, have made Defective Airbags that have been installed in vehicles manufactured by no fewer than ten different automakers. 93. While Takata s own philosophy statement claims that Takata is motivated by the preciousness of life and further pledges to communicate openly and effectively, this has proven not to be the case. Takata has fallen woefully short of living up to its dream of a society with zero fatalities from traffic accidents[,] 25

27 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 27 of 57 and particularly so where people are being severely injured, and in some cases dying, not from the traffic accident, but from Takata s airbags themselves. 94. Starting in or about 2000 and continuing until at least 2002, Takata experienced problems in its manufacturing plants in Moses Lake, Washington and Monclava, Mexico. Specifically, propellant wafers in units manufactured at Moses Lake were improperly compressed, and wafers at the Mexican plant had been exposed to excess moisture. 95. Also in the early 2000s, Takata had weak and insufficient controls over the transportation of its airbag units to manufacturers. Takata s internal safety rules for storing, handling and transporting airbag components and units required that any dropped or impacted device must be immediately recycled as an unsafe device because [s]uch impact to a device can cause several problems that may result in an increased potential for an energetic disassembly (i.e., uncontrolled explosion). Similarly, a warned employees that [t]he propellant arrangement inside [the Inflator] is what can be damaged when the airbags are dropped. Here you can see why it is important to handle our product properly. 96. Internal Takata videotapes from that period show pallets of airbags toppling off a forklift onto a loading dock at a Takata plant, and then being loaded onto trucks for delivery. Manufactured Takata airbags were also exposed to moisture during shipment, despite efforts to seal trucks from inclement weather. 26

28 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 28 of Takata has known about the Defective Airbags since at least early 2001, when Isuzu recalled various models of its vehicles due to a number of airbag explosions caused by the defective Inflators. 98. Likewise, in April 2002, a Takata airbag exploded in a Toyota Corolla. Shortly thereafter, Takata made certain changes and/or upgrades to its production facility in Moses Lake, changes it claims are unrelated to the 2002 incident, but should have stopped the factory from producing airbags with a defect. 99. Between 2004 and 2010, there were numerous reported incidents of Takata airbags exploding in various makes and models of the Class Vehicles In Alabama in 2004, a Takata airbag exploded in a Honda Accord, shooting out metal fragments and severely injuring the car s driver. Honda and Takata could not explain it, deemed it an anomaly, and did not issue a recall or seek involvement of federal safety regulators. Though Takata reported to Honda that it was unable to find a cause, Honda determined that Takata provided reasonable explanation of the event as an anomaly, and did not tell regulators about this incident for more than four years after it happened In February and June 2007, Honda told Takata about additional airbag ruptures that year, but, again, Honda did not initiate a recall or provide information about the ruptures to federal regulators. According to regulatory filings, Honda wanted to wait for results from a failure mode analysis being conducted by Takata. 27

29 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 29 of The danger was not disclosed for years after the first reported incident in 2004, despite warning signs, including three additional ruptures reported to Honda in In each of the incidents, Honda settled confidential financial claims with the injured, but did not issue a safety recall until late 2008, and even then, for only a small fraction (some 4,200) of its vehicles eventually found to be equipped with the potentially explosive airbags Honda had filed standard reports on the initial air bag injury in 2004 and followed up with similar filings for the 2007 incidents, yet in none of the four instances of ruptured airbags did Honda go beyond the standard form which requires automakers to list the component (i.e., the airbag) that was responsible for an injury, but does not allow for elaboration about the circumstances (like a rupture) and separately alert safety regulators about the most critical detail: that the air bags posed an explosion risk In late 2007, Takata engineers claimed that they had discovered the potential source of the Defective Airbags: between late 2001 and late 2002, workers at a Takata plant in Monclova, Mexico, had left moisture-sensitive explosives out on the plant floor, which made them prone to combustion. Takata shared the results of its inflator survey analysis with Honda in November 2008, which indicated an airbag inflator issue. This triggered a Honda recall, but for only about 4,200 of its 28

30 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 30 of 57 vehicles. This recall took place four years after the first airbag explosion in a Honda vehicle In April 2009 the airbag of Jennifer Griffin s 2005 Honda Civic exploded after a minor traffic accident in Orlando, Florida. State troopers investigating the incident were baffled by the fact that such a minor accident could cause a 2-inch piece of metal shrapnel to tear through Ms. Griffin s neck. Although Ms. Griffin somehow survived this explosion, she sustained devastating injuries In May 2009, 18 year old Ashley Parham was killed in Midwest City, Oklahoma, when the airbag in her 2001 Honda Accord exploded out of her steering wheel in a minor crash In December 2009, Gurgit Rathore collided with a mail truck in Richmond, Virginia in her Honda Accord. The airbag exploded, propelling shrapnel into her neck and chest. The injuries caused by the shrapnel caused her to bleed to death in front of her three children In April 2010, Kristy Williams stopped at a red light in Georgia. Her airbags spontaneously deployed, and the inflator canister exploded, sending metal shards through the airbag. The shards punctured her neck and carotid artery, causing extreme bleeding, strokes, and seizures In or about September 2011, a driver in Puerto Rico was injured when his Honda Civic was involved in an accident and the defective Takata airbags 29

31 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 31 of 57 exploded, sending sharp pieces of metal into his body and causing extensive injuries Takata provided another report to Honda in June 2009 concerning its 2008 analysis, stating that issues related to propellant production appeared to have been responsible for the improper inflator performance. Honda would receive two more claims of unusual deployments, including Ms. Parham s May 2009 accident and death described above, and another in June Takata engineers claimed that the defect was linked to Takata s factory in Moses Lake, Washington: between 2000 and 2002, a defect in a machine that pressed air bag explosives into wafers had made the explosives unstable. Honda then recalled approximately 510,000 Honda and Acura vehicles. Again, Honda failed to mention the injuries and deaths it was aware of at the time In total, the Vehicle Manufacturers have blamed Takata s Defective Airbags for at least 139 injuries Subsequent to these incidents, Defendants failed to issue a sufficient recall or announcement to inform owners of the Class Vehicles that their vehicles contained Defective Airbags that were prone to rupture and expulsion of metal fragments and shrapnel. Rather, Defendants conducted various internal investigations and secret testing that did not result in sufficient recalls or announcements to the public over a decade later. 30

32 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 32 of In February 2010, Honda ordered a recall of an additional 438,000 Honda and Acura vehicles. Honda did not mention past injuries and/or deaths that sparked the recalls Honda issued subsequent recalls in April and December 2011, April 2013, and August The total number of recalled Honda vehicles with Takata s Defective Airbags now exceeds six million Yet, Defendants have continued to attempt to limit the recalls to certain consumer states, and as of this date, have refused to issue the broad-based recall that is critical to protect occupants of the Class Vehicles This pattern of incomplete disclosure resulted in the NHTSA issuing a special order on November 3, 2014, directing Honda to fully explain its failure to fully report deaths and injuries related to possible auto safety defects, as is required by the Transportation Recall Enhancement, Accountability and Documentation Act ( TREAD Act ) On November 24, 2014, Honda disclosed to the NHTSA that it had failed to report 1,729 deaths and injuries since 2003, including one death and seven injuries caused by eight Takata airbag inflator ruptures The other Vehicle Manufacturers who sold Class Vehicles containing the Defective Airbags were misled by Takata s concealment of the true nature of the Defective Airbags. 31

33 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 33 of In March 2010, BMW wrote a letter to Takata seeking assurances with respect to why Takata believed its BMW vehicles were not affected by the airbag explosion risks in Honda vehicles. Takata responded that BMW s airbags were manufactured on a different production schedule and were therefore unaffected. In 2014, however, Takata reversed its position and informed BMW that its airbags suffered from the same defect as those installed in Honda vehicles. BMW has since recalled over 1.8 million vehicles Ford and Nissan did not even write to Takata to inquire about the defects in the Honda Defective Airbags. Notwithstanding the potentially deadly consequences of the Defective Airbags, and the substantial possibility that the Takata airbags installed in their automobiles were equally defective, Ford and Nissan made no efforts to determine whether the Takata airbags installed in their vehicles suffered the same defects as the Honda Defective Airbags The other Vehicle Manufacturers have followed BMW with belated recalls of their vehicles that contain Takata s Defective Airbags Over the last decade-plus, Takata was in frequent communication with the NHTSA. Takata concealed the true facts known to it regarding its Defective Airbags, and provided NHTSA with materially misleading and/or incorrect information. 32

34 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 34 of On November 20, 2009, the NHTSA requested information from Takata as part of its investigation into the scope and causes of the airbag injuries. Takata s responses, a partial response issued on December 23, 2009, and a full response on February 19, 2010, provided the NHTSA with materially misleading information and concealed the degree and widespread nature of the Defective Airbags For example, Takata s February 19, 2010 response claimed, inter alia, that the Defective Airbags were limited to specific production dates. Takata also claimed that it had not provided any Defective Airbags that were the same or similar to the airbags subject to Honda s recalls. Takata also stated that the number of vehicles with Defective Airbags was small. These statements were all false Takata admitted it did not have the dates on which the inflators were shipped (it concededly kept flawed records), and instead gave the manufacturing dates. 3 In both its responses, Takata stated it did not provide to anyone other than Honda the type of airbag inflators associated with the recalls in 2008 and 2009, claiming the inflator housing used in the Honda vehicles was unique to Honda. This was also untrue. 3 Takata s factory workers kept important records in unreliable, nonstandardized ways, which were often handwritten, making it nearly impossible to identify which airbag production batches contained defective parts. This prevented Takata from identifying the shipment dates for the Defective Airbags when requested by NHTSA in December

35 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 35 of Honda and Takata represented to NHTSA and to the consuming public that the total number of affected vehicles was relatively small, but by 2010 only months after the last recall Honda announced a third recall for an additional 379,000 vehicles. Honda would have another recall in 2011, and by 2013 it became apparent that the defective airbag issue was of far greater magnitude than disclosed by Honda or Takata in their initial NHTSA reports In April 2013, Takata filed a report that identified the Defective Airbags: certain airbag inflators installed in frontal passenger-side airbag modules equipped with propellant wafers manufactured at Takata s Moses Lake, Washington plant during the period from April 13, 2000 through September 11, 2002, and certain airbag inflators manufactured at Takata s Monclova, Mexico plant during the period from October 4, 2001 to October 31, Based on these and other admissions, six major automakers, including Defendants Nissan, BMW, and Mazda, issued recalls affecting over 3.5 million motor vehicles containing Takata s Defective Airbags Takata s acknowledgement of the greater problem led other automakers to issue recalls, and, in October 2014, NHTSA issued a revised list of vehicles affected by recall Through the present, over 14 years after manufacture of the Defective Airbags began, Takata has failed to accurately disclose the precise cause of the 34

36 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 36 of 57 airbag explosions and the actual number of Defective Airbags Takata produced. Furthermore, Takata has identified inflators that were improperly welded or sealed because of mistakes by workers at the Monclova, Mexico plant or because Takata had been using the wrong type of steel tube. Takata s Monclova plant has experienced a defect rate that was six to eight times above the acceptable range Approximately 16 million motor vehicles have been recalled worldwide as a result of Takata s Defective Airbags, and it is likely that many more vehicles will also be recalled On November 6, 2014, the New York Times reported that, according to two former employees, one of whom was a senior member of its testing lab (the former employees ), Takata secretly conducted tests in 2004 on at least 50 of its airbags retrieved from scrapyards. These tests were initiated as a reaction to the ruptured airbag that spewed metal debris into the driver in the Alabama accident described above, and the secret tests were conducted after normal work hours and on weekends and holidays at Takata s American headquarters in Auburn Hills, Michigan While Takata and Honda had declined to disclose details of the initial Alabama accident, which ended in a confidential settlement with the driver, the former employees said that Takata was determined to know more. Tests on the 50 airbags were supervised by Al Bernat, Takata s then-vice president for engineering, 35

37 Case 2:14-cv SLB Document 1 Filed 12/16/14 Page 37 of 57 and were unknown to all but a small group of people, including lab technicians, fabricators, and engineers The former employees said that the steel inflators in two of the airbags cracked during the tests, which can lead to rupture. This result was so alarming that engineers began designing possible fixes in preparation for a recall Rather than alerting federal safety regulators of this possible danger, Takata executives discounted the results of these tests and ordered the lab technicians to delete the testing data from their computers and dispose of the airbag inflators in the trash The former employees, who between them had four decades of experience at the Company, said they are now speaking up because of concerns that their former employer is not being forthright about the Defective Airbags. One of the former employees said, All the testing was hush-hush, and one day, it was, Pack it all up, shut the whole thing down, which was not standard procedure Engineers had theorized that the problem was due to the welding of the inflators canisters (intended to hold the airbag s explosives), making its structure vulnerable to splitting and rupturing. The engineers accordingly designed prototypes for possible fixes, including a second canister to strengthen the unit But after three months, the testing was ordered halted. Laboratory employees were instructed that all data, including video and computer backups, must 36