Motor vehicle crashes are a leading cause of death in the United States. Although manufacturers have made significant strides in decreasing the number of fatalities since the late 1960s and early 1970s, there have been several significant instances of auto manufacturers delaying recalls and leaving potentially defective vehicles on the road after they knew or suspected problems.
In 2014, National Highway Traffic Safety Administration (NHTSA) issued more than $126 million in civil penalties, its highest annual total ever to that point. In 2015, it quickly exceeded that amount as it continued to heavily fine auto manufacturers and part suppliers for delayed recalls and inadequate reporting of issues.
The adoption of the Motor Vehicle Safety Whistleblower Act as part of the FAST Act in December 2015 is meant to help the U.S. Government address this problem. The law authorizes the Transportation Secretary to issue rewards to auto industry employees of up to 30% of monetary sanctions over $1 million related to defective vehicles and parts. By incentivizing external reporting of problems, the U.S. Government hopes to encourage timely recalls and stop delayed recalls quickly when they do occur.
The adoption of this whistleblower law means that we will be adding the representation of auto whistleblowers to the practice of our whistleblower attorneys. So we thought it worth a look at some of the largest fines of car and auto parts manufacturers that the U.S. Government has handed down over the past few years.
You may be wondering how some of these fines exceeded the maximum cap for civil penalties imposed on the NHTSA. In some cases, the maximum fine was higher than $35 million because more than one car/problem was at issue. In other cases, the Justice Department determined that criminal charges were warranted and there is no maximum penalty in the potential criminal fines to be imposed. Future fines may be larger as the FAST Act increased the maximum penalty the NHTSA can impose.
Here are the largest fines that we have discovered so far:
Toyota Motors – $1.26 Billion
Toyota Motors agreed to pay $1.2 billion to settle the Justice Department’s criminal investigation into whether the company hid safety defects related to unintended acceleration. Toyota also agreed to pay $48.8 million in 2010 and $17.4 million in 2012.
General Motors – $935 Million
General Motors agreed to pay $900 million in September 2015 to settle the criminal investigation into its ignition switch recall. In May 2014, it also agreed to pay $35 million to the NHTSA over the delayed recall.
Hyundai and Kia – $300 Million
Hyundai Motor Group affiliates Hyundai and Kia agreed to pay the United States civil fines of $100 million and forgo $200 million in regulatory credits as a result of the overstating fuel economy claims. The company was investigated by the U.S. Environmental Protection Agency and the Department of Justice. Hyundai also settled a class action lawsuit over the fuel economy issues for nearly $400 million.
Takata – $200 Million
The NHTSA fined Takata a total of $200 million for selling defective air bag inflators but only $70 million would be due if the company met its commitments and no other violations were discovered. In connection with the Consent Order, the company admitted that it was aware of a defect but failed to issue a timely recall. At the time of the settlement, the Justice Department was still conducting its own investigation into the company for potential criminal charges.
Fiat Chrysler – $105 Million
In July 2015, a civil penalty of $105 million was imposed by the NHTSA for failing to complete 23 safety recalls of more than 11 million vehicles.
Honda Motor – $70 Million
In January 2015, the NHTSA fined Honda for under-reporting hundreds of death and injury claims in violation of the TREAD Act.
BMW – $40 Million
The NHTSA in December 2015 agreed to a consent order with BMW North America for recall failures with the Mini Cooper. BMW agreed to a fine of $10 million, $10 million in spending to overhaul procedures and $20 million in deferred fines.
Ford – $17.35 Million
Ford settled an NHTSA investigation into the timeliness of its recall of certain Ford Escape because of a potential issue with a “stuck throttle” after the release of the accelerator pedal.
Hyundai – $17.35 Million
The company failed to timely notify regulators of a corrosion risk to 2012 Hyundai Genesis sedans because of their brake fluid.