Constantine Cannon LLP announced yesterday that two of its whistleblower clients will receive more than $1.13 million to settle their claims for whistleblower awards for information they provided to the U.S. government in its criminal case against Takata, the now-bankrupt maker of defective airbags which exploded and claimed the lives of 22 people and set off a worldwide recall of nearly 100 million airbag inflators.
The whistleblowers, Mark Lillie and another man who remains anonymous, are both former Takata employees who provided extensive assistance to government investigators under the newly enacted Motor Vehicle Safety Whistleblower Act, a federal whistleblower-reward program. The information they supplied to the Department of Justice, Federal Bureau of Investigation, and Department of Transportation’s National Highway Traffic Safety Administration was vital in prosecuting Takata and bringing justice and compensation to Takata’s victims. In January 2017, Takata pled guilty to wire fraud and agreed to pay $1 billion in criminal penalties stemming from the company’s fraudulent conduct in relation to sales of defective airbag inflators. The criminal action also resulted in three high-level Takata executives pleading guilty to wire fraud and conspiracy charges.
Lillie, the first whistleblower in the case, resigned from his position as a top-level engineer in 2001, after countless efforts to warn Takata executives that the company’s airbags would kill motorists. Lillie resigned in protest after Takata switched to a lethal and cheaper propellant to inflate its airbags, ammonium nitrate, the same explosive compound used in the Oklahoma City bombing.
Lillie warned high-level Takata executives, “If we go forward with this, somebody will be killed.” Lillie’s warnings were ignored.
Lillie handed evidence to the government showing Takata knew as early as 1999 that its airbags could be deadly. He also provided emails, designs, witness lists, and other crucial information that helped steer the criminal case. U.S. senators interested in unmasking Takata’s cover-up got evidence from Lillie that was critical in the Senate’s investigation.
The second whistleblower to step forward helped prove Takata falsified data, subverted testing procedures, and concealed reports its airbags were prone to failure. He then recounted how Takata systematically terminated employees who objected to the fraudulent production practices. Ultimately, Takata admitted to blatant manipulation of the lot-acceptance-testing process, the very conduct the second whistleblower reported.
After Congressional hearings on Takata, Senator John Thune (R-SD) and Senator Bill Nelson (D-FL) co-sponsored and led Congress to enact the Motor Vehicle Safety Whistleblower Act of 2015. That law offers monetary rewards to auto-industry insiders who report serious safety violations. The program allows auto-industry employees or contractors who report serious violations of federal vehicle-safety laws to receive between from 10 percent to 30 percent of any monetary sanction over $1 million that the government recovers based on the whistleblower’s information. Lillie and the second whistleblower submitted tips under the law.
Congress directed DOT to propose rules to implement the program by June 2017. Unfortunately, DOT has not yet done so, which has had the effect of leaving auto whistleblowers in limbo.
“Takata essentially installed 100 million ticking time bombs in the steering wheels and glove compartments of millions of cars,” said Lamprey, a San Francisco partner. “Without our clients’ assistance, when would Takata have been stopped? How many more lives would have been taken? We owe these whistleblowers gratitude for taking a stand against this menace to auto safety.”
“Whistleblowers from the world’s leading countries for car manufacturing—Germany, the UK, Italy, South Korea, Japan, South Africa—must step forward and alert U.S. DOT authorities on current auto safety lapses,” said Inman, a London partner. “If they exhaust their options to warn companies internally and decide to blow that whistle—like our clients did—they will not only stand to reap financial rewards but will help prevent needless deaths.”
“Whistleblower-reward programs are immensely valuable because they shine a light on corporate white-collar crimes, but we can’t expect whistleblowers to step up until they know the rules of the road,” said Ari Yampolsky, an associate in San Francisco. “It’s a dark irony that Congress was forced to step in to fix the auto industry’s failures to keep motorists safe from a safety device. But now, DOT needs to make the rules for the auto-safety whistleblower program. If DOT’s mission is to protect the public, it needs to offer more guidance than just suggesting we buckle up.”
In addition to announcing the settlement, Constantine Cannon recognizes the efforts of the legislators and public servants who brought Takata to justice. These include Senators Thune and Nelson, who co-sponsored the Motor Vehicle Safety Whistleblower Act, and Senator Richard Blumenthal (D-CT), who took particular interest in Takata’s threat to safety, as well as the staff of the Senate Committee on Commerce, Science and Transportation. Also deserving of thanks are the dedicated staff of the National Highway Traffic Safety Administration who investigated Takata, including Otto Matheke, Arija Flowers, Stephen Hench, and Elizabeth H. Mykytiuk (former). Finally, Constantine Cannon thanks the lawyers who prosecuted Takata, John K. Neal and Erin S. Shaw in the U.S. Attorney’s Office in the Eastern District of Michigan and Brian K. Kidd, Christopher D. Jackson, and Andrew R. Tyler at the U.S. Department of Justice.
The criminal case is United States of America v. Takata Corporation, 16-cr-20810-GCS (E.D. Michigan).
About Constantine Cannon’s Whistleblower Practice:
Constantine Cannon’s team of dedicated whistleblower lawyers has extensive experience representing whistleblowers in federal and state courts and before the Securities and Exchange Commission, the Internal Revenue Service, the Commodity Futures Trading Commission, and the Department of Transportation. With a total of 21 attorneys, who have more than 100 years of collective experience in whistleblower cases, Constantine Cannon is one of the largest and most expert whistleblower law firms in the United States. Additionally, the firm’s London office allows for the unique ability to serve whistleblower clients in Europe and Asia. The firm’s expansion of its American whistleblower practice to London, an international port-of-call for whistleblowers worldwide, was featured recently in the New York Times. To learn more about Constantine Cannon’s whistleblower practice, click here.
About Constantine Cannon LLP
Constantine Cannon, with offices in New York, Washington, D.C., San Francisco and London, has deep expertise in practice areas that include antitrust and complex commercial litigation, whistleblower representation, government relations, securities, and e-discovery. The firm’s antitrust practice is among the largest and most well recognized in the nation. Constantine Cannon’s experience spans multiple industries, including healthcare, banking, electronic payments, insurance, high tech, telecommunications, the Internet, and government contracting. To learn more about the firm generally, click here.
PRCG | Haggerty LLC
Andrea M. Garcia
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