Business and Finance

New! Week 1 – Nam Cho
Nam Cho(Jun 3, 2019 7:06 AM)– Read by: 4Mark as Read Reply

In this week’s forum, I’ve chosen Takata, a Japanese auto parts maker, as my company of choice to discuss two legal topics from the reading.

The first legal topic that applies to Takata is the negligence. According to the reading, the negligence is “the mishap due to failure to exercise a reasonable standard of care” (Hasl-Kelchner, 2006). Meaning, if a company knew about a product that may caused a mishap, but knew about the possible consequences, then the company may face civil or criminal court under negligence. This exactly what happened to Takata in 2009. Takata knew about the cheaper alternative chemical that inflates airbag during an accident had a possible horrific consequence in a humid location. With knowing this, the company continued to sell their products to car manufacturers which end up being the leading airbag provider in the world. It wasn’t until 2013 when Takata has finally admitted for its fault and knew about the possible consequences for using the alternative chemical (Padmanabahn, 2017). Like so, the company was selling a product with possible deadly consequences but hid from the regulators in sole purpose of making money more than consumer safety. At the end of the day, the company had pleaded guilty for hiding a vital information and pay $1 billion in criminal penalties (Takata, 2017). Therefore, Takata was being neglected for not doing further research regarding the chemical that inflates the airbag.

The second legal topic is the post-sale duty to warn that pertains to Takata. Like many recalls in the automotive industries, when Takata’s airbag had an issue, “19 different automakers have been recalled to replace frontal airbags …” (Reports, 2019). Despite the blame was at Takata, the automakers were the ones sold the complete product to the consumers. Therefore, it is their duty to conform with the post-sale duty to warn so that the consumers are taken care of before the problem occurs. In this case, the Consumer Reports is reporting that the recall is “expected more than 41.6 million vehicles in the U.S., involving 56 million inflators” (Reports, 2019). And this is possible due to the post-sale duty to warn under product liability.

Hasl-Kelchner, H. (2006). Business guide to legal literacy: What every manager should know about the law. Place of publication not identified: John Wiley And Sons.

Padmanabhan, K. (2017). Takata Fined $1 Billion For Hiding Information on Exploding Car Airbags. Retrieved from https://corpwatch.org/article/takata-fined-1-billion-hiding-information-exploding-car-airbags

Reports, C. (2019). Takata Airbag Recall: Everything You Need to Know. Retrieved from https://www.consumerreports.org/car-recalls-defect…

Takata Corporation Agrees to Plead Guilty and Pay $1 Billion in Criminal Penalties for Airbag Scheme. (2017). Retrieved from https://www.justice.gov/opa/pr/takata-corporation-agrees-plead-guilty-and-pay-1-billion-criminal-penalties-airbag-scheme

New! Re: Week 1 – Nam Cho
Bradley Briggs(Jun 4, 2019 5:08 PM)– Read by: 2Mark as Read Reply

Hey Nam,

The company I chose also fell under product liability, however Takata was hit much harder than Nestle was. Nestle took a decent loss but nothing close to the 1 billion range. Nestle actually ended up putting their product back on the market roughly a year later once they found out the testing that was conducted was erroneous. The automotive industry seems to be plagued with the examples you provided. I know there was a tire company years ago that had an issue with blow outs that caught the mainstream news. I don’t know the specifics but I’m pretty sure it had to do with using faulty materials and the results were drivers experiencing random blow outs while driving. The sad part with the auto industry is that these issues never seem to be corrected or found until that one major event unfolds that leads to an investigation. Of course the companies get hemmed up quickly and usually end up paying out some enormous amount of money, but from what I’ve read it’s usually as a result of loss of life. Great post to start the class off, enjoyed reading through the examples you provided.

Brad