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The recalls keep coming. On Tuesday NHTSA urged the nationwide expansion of a current recall of vehicles containing airbags made by Takata. The recall is currently limited to automobiles in Florida, Hawaii, the Virgin Islands and Puerto Rico, and has lead to the recall of more than 14 million vehicles since 2008 in those states. A nationwide expansion of the recall could lead to millions more recalled vehicles.

 

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These ever increasing recalls should prompt suppliers, whether directly involved in this recall or not, to review the terms and conditions of their contracts with their customers to determine what protections they may contain in the event of a recall. In some cases suppliers will have the opportunity to limit exposure to recall related damages.


Suppliers should also prepare for their customer’s likely investigation before and during a recall. Be cognizant of protecting the confidentiality of information during the investigation process, and also have an eye toward future litigation when responding, including issuing litigation hold letters to prevent destruction of documents. Once a recall is on the horizon, a Supplier should:

  • Review contracts with customers and downstream suppliers;
  • Identify potentially relevant documents and issue litigation holds;
  • Develop your response to the recall;
  • Be cognizant of criminal penalties;
  • Avoid public comment regarding the recall; and
  • Retain outside counsel to assist in developing and managing the recall strategy.

 

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