The Need For Whistleblowers in the Motor Vehicle Industry

By Tony Munter of Price Benowitz, LLP

It will not surprise you to learn that the motor vehicle industry is big business. Toyota’s global revenue for the fiscal year before the pandemic was more than $274 billion, with North American Vehicle sales at 2.7 million units. Ford had $127 billion in revenue for the calendar year 2020 during the pandemic and announced it is investing $22 billion in electric vehicles and $7 billion in autonomous vehicles. That’s just two of the top companies.

The Department of Transportation says that about 8.8 million vehicles were produced in the United States in 2020. The number of motor vehicles registered in the U.S. (including busses, trucks, motorcycles) is more than 276 million. That’s room for everyone in the U.S.A. to ride in the front seat.

Since the Motor Vehicle Safety Act was passed in 1966, the National Highway and Transportation Safety Administration has recalled “more than 390 million cars, trucks, buses, recreational vehicles, motorcycles, and mopeds, as well as 46 million tires, 66 million pieces of motor vehicle equipment, and 42 million car seats due to safety defects."

Given the safety issues in this huge and critical industry, it makes sense that Congress created incentives for motor vehicle safety whistleblowers as part of the FAST Act of 2015, which became effective on January 3, 2016.

Under the law, a whistleblower can report safety information and be eligible for an award of 10-30% of what the government collects. Unlike other federal whistleblower laws, the law only allows “any employee or contractor of a motor vehicle manufacturer, part supplier, or dealership” to be eligible motor vehicle safety whistleblowers. That still leaves millions of people in the industry who are potential whistleblowers.

The FAST Act left it to the Secretary of Transportation to issue regulations to guide whistleblowers on how to report information and collect their award. But in the five years since the law was passed and went into effect, zero regulations have been enacted for the program.

Recently, the National Highway Traffic Safety Administration (NHTSA) created a website for the whistleblower program. The web page does not report any awards made to motor vehicle safety whistleblowers. (To our knowledge, there has been at least 1 case that has resulted in a shared award under the law.)

The law came into being at least in part as a result of whistleblowers who reported safety issues related to the Takata air bag disaster that led to Takata being prosecuted and fined. Takata paid at least $1 billion in fines and went through bankruptcy as a result of the scandal.[8]

If there is any other action which has produced another whistleblower award under the NHTSA whistleblower program, the NHTSA has not announced it on their whistleblower program webpage—in fact, the website does not even mention the Takata case as being the subject of a whistleblower award.

The NHTSA does say, many years after whistleblowers reported problems and Takata went bankrupt, “Seventeen million inflators have yet to be repaired or otherwise accounted for” and “there were two fatal incidents in 2020."

The NHTSA Whistleblower website provides some information on how to report violations including an email address. As to its lack of regulations implementing the whistleblower program, the NHTSA says “…it is important to note that whistleblowers are protected by law, without need for regulations. NHTSA may also make monetary awards to whistleblowers before it issues regulations.”

Meanwhile, the auto industry is going through massive changes. The White House put out statements from Ford, GM, Stellantis (successor to Fiat Chrysler) VW, BMW and Volvo that the automakers are attempting to make 40-50% of their sales in electric vehicles by 2030. The industry-wide shift to new electric vehicles could create potential safety issues.

The Takata Air bag disaster shows that whistleblowers are needed to detect major systematic safety issues. How many more safety issues could be detected if whistleblowers were fully engaged in the process?