With the recent high-profile recalls involving Toyota and GM, auto suppliers are anticipating a spike in recalls and asking themselves how to prepare for this inevitability.
As a start, auto suppliers need to understand National Highway Traffic Safety Administration (NHTSA) procedures and regulatory concerns. Auto suppliers also need to consider the fact that liability is no longer limited to civil penalties and lawsuits, as the U.S. Department of Justice has turned its attention to potential criminal liability related to these recalls. Suppliers should take steps to ensure that their responses to recalls and potential defects are efficient, transparent, thorough, and timely. Auto suppliers need to remind themselves of best practices in contracting, particularly with respect to warranty provisions. Finally, suppliers must have pre-litigation protocols in place, including document and product preservation procedures, among others.
Foley has prepared this information to help suppliers make the necessary preparations and take steps to minimize liability as recalls in the industry increase and expose suppliers to significant risk.