In August 2006, the National Highway Traffic Safety Administration, or NHTSA,
issued a closing report based on a multi-year investigation which found that the fire incidents were caused by system-related factors. On October 14, 2009, the NHTSA issued a closing report associated with a more recent recall which modified
the findings of the 2006 report but continued to emphasize system factors.
As of December 31, 2009, we were a defendant in 26 lawsuits in which plaintiffs have alleged property damage and various personal injuries from the system and switch. Of these cases, 17 are pending in a
state multi-district litigation in the 53rd Judicial Court
of Travis County, Texas, In re Ford Motor Company Speed Control Deactivation Switch Litigation, Docket No. D-1-GN-08-00091, and three are pending in a federal multi-district litigation in the United States District Court for the Eastern
District of Michigan, Ford Motor Co. Speed Control Deactivation Switch Products Liability Litigation, Docket No. 05-md-01718. The remainder are in individual dockets in various state courts of California, Georgia, Tennessee and Texas and
the federal court for the Southern District of Iowa.
For the most part, these cases seek an unspecified amount of compensatory and exemplary damages. For the plaintiffs that have requested a specific amount, the range of the demand is $50,000 to $3.0 million. Ford and Texas Instruments are
co-defendants in each of these lawsuits.
accordance with terms of the acquisition agreement entered into in connection with the 2006 Acquisition, we are managing and defending these lawsuits on behalf of both our company and Texas Instruments. The majority of these cases are in discovery.
Two have been set for trial and one is on appeal.
During fiscal year 2008, we settled all outstanding wrongful death cases related to these matters for amounts that did not have a material effect on our financial condition or results of operations. As for the cases that are still pending,
we have included a reserve in our financial statements in the amount of $0.7 million as of December 31, 2009. There can be no assurances, however, that this reserve will be sufficient to cover the extent of our costs and potential liability from
these matters. Any additional liability in excess of this reserve could have a material adverse effect on our financial condition or results of operations.
Whirlpool Recall Litigation: We are involved in litigation relating to certain control products that Texas Instruments sold between
2000 and 2004 to Whirlpool Corporation. The control products were incorporated into the compressors of certain refrigerators in a number of Whirlpool brands, including Maytag, Jenn-Air, Amana, Admiral, Magic Chef, Performa by Maytag, and Crosley.
Whirlpool contends that the control products were defective because they allegedly fail at excessive rates and have allegedly caused property damage, including fires. During fiscal years 2007 and 2008, we paid Whirlpool for certain costs associated
with third-party claims and other external engineering costs, in amounts that did not have a material adverse effect on our financial condition or results of operation. During 2009, Whirlpool in conjunction with the Consumer Product Safety
Commission, or CPSC, announced voluntary recalls of approximately 1.8 million refrigerators.
On January 28, 2009, Whirlpool Corporation, as well as its subsidiaries Whirlpool SA and Maytag Corporation, filed a lawsuit against
Texas Instruments and our subsidiary, STI. The lawsuit was filed in the Circuit Court of Cook County, Illinois, under the name Whirlpool Corp. et al. v. Sensata Technologies, Inc. et al., Docket No. 2009-L-001022. The complaint asserts,
among other things, contract claims as well as claims for breach of warranty, fraud, negligence, indemnification and deceptive trade practices. It seeks an unspecified amount of compensatory and exemplary damages. We and Texas Instruments have
answered the complaint and denied liability.
and Texas Instruments subsequently filed a cross claim for indemnification against Empresa Braseila de Compressores, S.A., n/k/a Whirlpool SA, and Embraco North America, Inc., together Embraco. We assert, among other things, that Embraco
was responsible for testing the compatibility of the control product with its compressors, and that we and Texas Instruments have become exposed to litigation because of Embracos actions and inactions. We believe that Embraco is now a
wholly-owned subsidiary of Whirlpool SA.