Products Liability: The Innovation Responsible for the Rise and Fall of Takata

by: Dana Muir, Sean P. Burns

Publication Date: April 3, 2020
Length: 20 pages
Product ID#: 6-824-314

Core Disciplines: Ethics, Leadership/Organizational Behavior, Strategy & Management

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Teaching Note

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This case begins with post-deposition thoughts of Sean Burns, a 23-year veteran of Takata Corp. The lawsuit that gave rise to the deposition was brought as a class action on behalf of people who alleged Takata’s airbags caused them economic damages and/or personal injuries. In 2003, Takata learned that an inflator had ruptured in a driver-side airbag it had developed and manufactured. Another inflator ruptured in 2004, three in 2007, and more from 2008 through 2010. Throughout this time, Burns worked in concert with employees in other functional areas at Takata to determine the root cause of the inflator ruptures. He had led the team that developed the propellant inside the inflator and was part of the team that developed the inflator design that came under scrutiny.

In addition to their deep concerns with safety, Burns and his Takata colleagues were confronting the complex type of situation that arises for a company facing potential liability for a defective product. Eventually, more than 40 million vehicles in the United States and over 100 million globally were recalled due to concerns with airbags manufactured by Takata.

Teaching Objectives

After reading and discussing the material, students should:

  • Describe how pre-production testing might give rise to liability for negligence.
  • Explain the importance of a thorough root cause analysis of product failure in meeting Takata’s obligation of reasonable care for negligence analysis.
  • Formulate potential warranty claims that Takata might expect as a result of malfunctioning airbags.
  • Analyze, in a complex environment with accelerating numbers of product defects coming to light, whether the defects were due to the manufacturing process or problematic design and then identify the legal implications of that determination.
  • Assess the safety trade-offs in new product development and describe how that complicates litigation. Also, consider the ways in which actual defects may give rise to strict products liability litigation over nondefective products.
  • Consider the ethical tensions and conflicts of interest that Takata employees faced.