What do whistleblowers and class actions have to do with one another? Until now, very little. That is changing according to a recent announcement by noted whistleblower attorney Brian Mahany. He claims defective Takata airbags have killed 13 people and seriously injured up to 200 others.
Takata pleaded guilty to criminal charges and is now insolvent after being hit with almost $1 billion in fines.
Mahany says that the auto manufacturers share equal blame. This week he announced an investigation of Volkswagen and Audi. He seeks both inside whistleblowers and owners of cars affected by the recalled airbags.
According to records from the National Highway Transportation Safety Administration, approximately 42 million cars have been recalled because of potentially explosive airbags.
Drivers and front seat passengers in high heat and high humidity areas are most at risk of explosions. (If you aren’t sure if your car is on the recall list or is even safe to drive, check the NHTSA Takata Recall Database.)
One of the first people killed was a Texas teenager who died just days after her high school graduation. What should have been a minor finder bender became fatal when a defective airbag actuator made by Takata shot shrapnel into her neck.
Mahany says that instead of saving lives as they were designed, Takata airbags can become lethal hand grenades. Because of problems with the propellant, some airbags explode with such force that the metal canister breaks apart and sends metal shards into the face and neck of front seat occupants.
To date, several automakers have resolved both individual injury claims and class action claims filed on behalf of all owners of the recalled vehicles.
Court records indicate Subaru has agreed to pay $68 million, Mazda $75 million, BMW $131 million and Toyota $278 million. Honda has settled claims but some of those settlements remain confidential.
Considering that 42 million cars have been recalled, Mahany says that the automakers have got off too easy.
He and his firm are planning on filing a class action case against Volkswagen and Audi. “The first recalls began in 2008, yet just this month Volkswagen admitted it is still making cars with the dangerous Takata airbags,” says Mahany. “That pure lunacy, VW seems more driven by profit rather than safety. Clearly they didn’t learn after the diesel emissions scandal,” he added.
What makes his proposed class action different from the normal class investigation is his search for whistleblowers. Mahany says he hopes to bring one of the first cases under the new Motor Vehicle Safety Whistleblower Program.
That program pays whistleblowers – motor vehicle company insiders – from 10% to 30% of any fines levied against the company. For example, if DOT fines a company $10 million, the whistleblower would likely receive an award of between $1 and $3 million.
“Can you imagine if the Motor Vehicle Safety Whistleblower Program was around when GM was fined $35 million in 2014 for bad ignition switches. The whistleblower who stepped forward could have received $10 million,” said Mahany.
Motor Vehicle Safety Whistleblower Program
The new Motor Vehicle Safety Whistleblower Program (“MVSWP”) was passed by Congress in 2016. Similar bills had been attempted in prior years but either the whistleblower award language was stripped or the bills died in the House. President Obama signed the law last summer.
Whistleblower award programs have been around since the Civil War but generally require a loss of government funds. Common examples are the federal False Claims Act and IRS Whistleblower Program.
The MVSWP is more akin to the relatively recent SEC whistleblower program. Awards are available even in the absence of a loss to the government.
The new law applies to any cover up of defects “likely to cause unreasonable risk of death or serious physical injury.” With approximately 200 deaths and serious injuries, Takata airbags likely qualify.
Workers at Takata can’t participate as the company has already been prosecuted and is now insolvent. Whether it can be extended to auto manufacturers that cover up defects remains to be seen. Most whistleblower lawyers believe it can.
To qualify for an award, one must be an employee or contractor working for an automaker or supplier. You also must have original (“inside”) information about a serious safety defect that was not timely reported.
During the debates over the bill, several Congress members discussed the Takata airbag crisis and why it took so long to recall affected vehicles. The Senate held its first hearing on the airbags in November of 2014.
Many lawmakers hope the bill will encourage workers to come forward more quickly.
Although the law was passed eight years after the Takata airbag problem first became public, several automakers recently announced that they were still using Takata airbags in new vehicles.
It wasn’t until June 14, 2017 that Volkswagen announced it was still selling new cars with Takata airbags. Those vehicles have now all been recalled.
MVSWP Protects Against Retaliation
The new Motor Vehicle Safety Whistleblower Program contains important anti-retaliation provisions. The law incorporates the protections of the earlier Moving Ahead for Progress in the 21st Century Act (“MAP-21”).
Between the two laws, it is illegal for automakers, parts suppliers or dealers to discriminate or punish workers who report a defect, noncompliance or any violation of a motor vehicle defect reporting obligation. Violations can result in reinstatement, legal fees, damages and lost wages.
Another important feature of the new law is the anonymity offered to whistleblowers. Unless disclosure is required at a hearing, DOT has pledged to keep the identities of whistleblowers secret. Experts that will encourage more workers to step forward and report.
Mahany echoes advocates' sentiment saying he believes that people who died because of exploding Takata airbags might have been spared.