Unfortunately, things will continue to grow more complicated for those consumers in the months and years to come.
“We are at a critical juncture in the Takata airbag litigation,” says Melton. “Over the next few weeks, the Delaware Court presiding over the Takata bankruptcy proceeding will review and rule upon Takata’s proposed reorganization plan; that ruling will have permanent ramifications for current and future Takata airbag victims.”
Melton explains that while the Takata-DOJ plea deal set aside a fund of money for current and future Takata airbag injury victims, that pot is very limited. “The headlines stated that Takata agreed to establish a $1 billion restitution fund. But only $125 million of that fund was set aside for consumers. The rest was earmarked for the auto manufacturers.”
So where can consumers look for relief in the years to follow? The answer to that question is currently up in the air, and may very well be determined by the Delaware bankruptcy court.
Back in November, Takata filed its proposed reorganization plan. Part of that plan calls for the imposition of a so-called “channeling injunction,” which would funnel current and future injury and death claims into a bankruptcy trust for compensation.
“Channeling injunctions have been used in the past, but only rarely, and typically in the asbestos context,” explains Melton. “What is rather unique, and I think unheard of, in this case is that the proposed injunction would extend beyond just Takata—the debtor—and would include third-party automakers that used Takata’s airbags in their vehicles.”
The Bankruptcy Code only references channeling injunctions in one place—Section 524(g). This section was enacted back in the 1990s, and essentially acted to retroactively bless a bankruptcy court’s action in an asbestos proceeding. Notably, Section 524(g) is specific to asbestos, and contains several specific constraints on the use of a channeling injunction, including the requirement that 75% of the current asbestos claimants vote in favor of the injunction.
“The procedural mechanisms for asbestos channeling injunctions—including the notice and voting requirements—in Section 524(g) clearly do not apply to non-asbestos cases. So it’s not clear what procedures would have to be observed in the Takata bankruptcy proceeding, or whether such an injunction could or would ultimately withstand appellate review,” says Melton.
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Frank Melton has successfully litigated numerous complicated products liability cases all over the U.S. to help make the public aware of dangerous situations and force those who are responsible to fix them. Frank and his team received one of the largest jury verdicts in Florida for a tread separation/rollover case.