In re: TK Holdings, Inc.

CourtDistrict Court, D. Delaware
DecidedJuly 14, 2021
Docket1:20-cv-01480
StatusUnknown

This text of In re: TK Holdings, Inc. (In re: TK Holdings, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re: TK Holdings, Inc., (D. Del. 2021).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE IN RE: TK HOLDINGS, INC., et ai., : Chapter 11 : Case No. 17-11375 (BLS) Debtors. : (Jointly Administered)

JAMES F. DEBOUNO, JR., : Appellant, : Vv. : . : Civ. No. 20-1480-RGA ERIC D. GREEN, in his capacity as Trustee ofthe : PSAN PI/WD Trust d/b/a the Takata Airbag Tort: Compensation Trust Fund, and TK HOLDINGS, : INC., ef al., □□ Appellees. :

MEMORANDUM OPINION

James F. DeBouno, Jr., Ph.D., Voorhees, New Jersey, pro se Appellant.

Stanley B. Tarr, Esq., Blank Rome LLP, Wilmington, Delaware; David J. Molton, Esq., D. Cameron Moxley, Esq., Gerard T. Cicero, Esq., Uchechi A. Egeonuigwe, Esq., Brown Rudnick LLP, New York, New York, attorneys for Eric D. Green, in his capacity as Trustee of the Takata Airbag Tort Compensation Trust.

July 14, 2021

/s/ Richard G. Andrews ANDREWS, UNITED STATES DISTRICT JUDGE: This appeal, filed by appellant James F. DeBouno, Jr., arises in the chapter 11 bankruptcy cases of TK Holdings, Inc. and its affiliated debtors (collectively, “TKH” or “Debtors”) and in connection with the Takata Airbag Tort Compensation Trust Fund (“TATCTF”) established under TKH’s confirmed Chapter 11 plan. The Bankruptcy Court granted the motion of Eric D. Green, the Trustee of TATCTF, seeking to expunge and disallow Appellant’s claim for recovery (and those of other claimants) against the TATCTF (D.I. 1-1 (“Opinion”); D.I. 1-2) (“Order”). For the reasons set forth herein, the Court will affirm the Order. I. BACKGROUND TKH was a leading global developer and manufacturer of automotive safety and non- safety systems including airbags and seat belts. TKH manufactured airbag inflators containing phase-stabilized ammonium nitrate (“PSAN”), which had the potential to rupture upon airbag deployment, causing death and serious injury to automobile occupants. In response to multiple reports of injuries caused by PSAN inflators in vehicles, the National Highway Traffic Safety Administration (“NHTSA”) initiated the largest product recall in U.S. history. □ Each of the TKH affiliated debtors filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. The Bankruptcy Court confirmed a Plan of Reorganization of TK Holdings Inc. and its Affiliated Debtors (“Plan”). (See Bankr. D.I.. 2116, 2120).! The Plan became effective on April 10, 2018 (Bankr. D.I. 2646) (the “Effective Date”). The Plan divides personal injury and wrongful death claims (“PI/WD”) claims related to Takata Products into two classes: (I) Class 5 PSAN PI/WD Claims for claims related to an injury

- 1 The docket of the Chapter 11 cases, captioned Jn re TK Holdings, Inc., No. 17-11375 (BLS), is □□ cited herein as “Bankr. DI...”

or death allegedly caused by a PSAN inflator, and (ii) Class 7 Other PI/WD Claims for claims, other than PSAN PI/WD Claims, arising out of or relating to an injury or death allegedly □□□ by a TKH Product. Any unsecured claim other than a Class 5 PSAN PI/WD Claim or a Class 7 Other PI/WD Claim is classified as a Class 6 Other General Unsecured Claim. Upon the

Effective Date, the TATCTF was established, in relevant part, for the purpose of administering, resolving, liquidating, and satisfying the Class 5 PSAN PI/WD Claims, the Class 7 Other PI/WD Claims, as well as other claims described in Section 5.10 of the Plan. The Trustee of the TATCTF and TATCTF professionals review and reconcile personal injury and wrongful death claims with the Debtors’ books and records to determine the validity of those claims. At issue in this appeal are the Trustee’s third, eighth, and ninth omnibus claim objections (Bankr. D.I. 3528, 3671, and 3943) (“Claim Objections”). The Claim Objections □□□□ to disallow 283 claims filed by parties alleging that they were injured as a result of an airbag’s failure to deploy during an automobile accident (“No Liability Claims” or “Claimants”). Claimants filed responses objecting to the disallowance or expungement of their claims. Appellant, whose claim for $38,500 (see D.I. 1-2 at 5 of 6; D.I. 7 at 11)? was included among the No Liability Claims, filed a response (Bankr. D.I. 3549) ( “DeBouno Response”) in opposition to the Claim Objections along with several other claimants (together, the “Responses”). Each of the Claimants asserted a claim of recovery against the TATCTF on the theory that injuries suffered by an airbag’s failure to deploy — just as those from a too-violent deployment — are the fault of products manufactured by the Debtors. The Trustee did not dispute, with respect to any of the Claims at issue, that an airbag failed to deploy, or that the failed deployment caused

2 Appellant states he is seeking relief for the claim of Edwina Gonzales of San Diego. (D.I. 7 at 11; see D.I. 1-2 at 6 of 6). I doubt that Appellant, who is not a lawyer, can represent any individual other than himself. □

injuries to the applicable Claimant. Rather, the Trustee argued that, even if an airbag failed to □

deploy during a vehicle accident that resulted in injury to a Claimant, such an event could not be attributed to a component manufactured by the Debtors, and, therefore, the Debtors’ estates had no liability for such claims. The Claim Objections sought to disallow the No Liability Claims in their entirety. The Trustee based his argument on expert and fact witness testimony. First, the

TATCTF retained the services of Harold R. Blomquist, Ph.D. (“Dr. Blomquist”), a chemist with 37 years of industrial research and development experience, to consult on scientific issues related to the TATCTF’s administration of Class 7 Claims (Other PI/WD Claims). As set forth in the Declaration (Bankr. D.I. 3530) (“Blomquist Declaration”) filed in support of the Claim Objections, Dr. Blomquist concluded that the deployment of an airbag is determined by sensors located on various parts of a vehicle, along with an electronic control unit (“ECU”) that processes data obtained from the sensors. Inflators themselves — the sort manufactured by the Debtors — are not responsible for the mechanism in a vehicle that determines if an airbag will deploy. The Blomquist Declaration provides as follows: The airbag system is comprised of a computer processor called the electronic control unit (“ECU”) and the airbag module, which consists of a plastic cover, a folded airbag cushion, the housing, and the inflator. The process of deploying an airbag upon collision begins with crash sensors—small electronic components that detect changes in the velocity and direction of the automobile. Upon impact, these sensors measure how quickly a vehicle slows down in a frontal crash or accelerates to the side in a side-impact □ crash. The data collected by these sensors is sent to the ECU, which then assesses the severity and direction of the impact. The ECU uses software algorithms to determine whether or not airbag deployment is necessary, depending on variables such as the speed of the crash, the angle of the crash, and the position of the vehicle occupant. If the ECU determines that a deployment should occur, it then within milliseconds sends a signal (electrical current) to the inflator. Upon receiving the signal, the inflator converts the signal to a chemical combustion reaction, which generates a harmless gas that releases into the airbag, causing the airbag to fill with gas. In other words, the

inflator is a chemical component that merely and irreversibly responds to the signal it is given from the ECU and has no role in the failure of an airbag to deploy. The manufacturer of the inflator or airbag module cannot be in any way responsible Jor failure to deploy events, since their components are not involved in determining whether a deployment should occur. (Blomquist Decl. at {| 7-9 (emphasis added)). Dr.

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