The National Traffic Highway Safety Administration (NHTSA) is the federal agency charged with overseeing the safety of vehicles on the country’s roadways. After an eight-year investigation, the Knoxville company, ARC Automotive of Knoxville, Inc., has been told to recall roughly 67 million inflators in the United States because they could explode and hurl shrapnel. According to the NHTSA, two people have been killed and seven have been injured in the United States and Canada. Here is what you need to know and some legal thoughts on this issue.
- The NHTSA has said that vehicles manufactured by twelve companies are encompassed in the investigation of this component part produced by ARC.. To date, however, the NHTSA has not yet said which ones. We do know that some General Motors vehicles are included as that company has already recalled almost 1 million vehicles related to the ARC inflators. Currently, there is no fix for those recalled vehicles and GM has said that it will pay for courtesy transportation on a case-by-case basis to owners who are afraid to drive their cars because of the ARC inflators. Some news outlets are reporting the inflators also affect Ford, BMW and Volkswagen.
- Apparently, ARC has indicated that there is not a design defect in the ARC inflators but the problem with the inflators is limited to isolated manufacturing issues. A design defect is one that is present in an entire product line. A manufacturing defect is one that is present only occasionally because of some problem during the assembly process. By couching the problem as a manufacturing defect, ARC is hoping to prevent the recall of all the inflators. In doing so, the company almost seems to concede there are problems with some of the inflators making one wonder if they have made a decision that it is cheaper to pay settlements to those injured and killed than it is to recall 67 million inflators. Unfortunately, there are multiple instances in the history of product manufacturing of companies putting profits over safety. We hope that ARC has concrete evidence of which inflators suffer from what they are calling a manufacturing defect and the ability to track those inflators to particular vehicles so that they can be recalled and the inflators replaced.
- ARC also contends the NHTSA cannot compel it to issue a recall for the inflators because the federal agency can only compel a vehicle manufacturer like GM to perform a recall but it does not have the authority to compel a component supplier to recall a product. While an interesting argument, it probably does not have much practical effect. If forced to do so, the NHTSA can compel the vehicle manufacturers to recall those vehicles with the problematic ARC inflators. In turn, the vehicle manufacturers will seek compensation in the form of indemnification from ARC as, almost certainly, the contracts between the vehicle manufacturers and ARC require this.
- One last thing that jumped out at us: this investigation took 8 years. And while the NHTSA has reached a tentative conclusion, nothing has been done. If ARC continues to fight the agency, nothing will be done for some time. This is important because the Tennessee Legislature created a 10 year statute of repose for product liability cases. A statute of repose cuts off your rights even if they have not accrued. In other words, ten years after your car was sold to the first purchaser of it, any claims you have related to the car are barred (with certain exceptions for minors). So if a recall of the ARC inflator is not mandated, Tennessee buyers could be stuck with a dangerous product and zero recourse if it injures or kills them.
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