Settlement Reached in Toyota Acceleration Cases

The company said the deal will resolve hundreds of lawsuits from Toyota owners who said the value of their cars and trucks plummeted after a series of recalls stemming from claims that Toyota vehicles accelerated unintentionally.

Steve Berman, a lawyer representing Toyota owners, said the settlement is the largest in U.S. history involving automobile defects.

"We kept fighting and fighting and we secured what we think was a good settlement given the risks of this litigation," Berman told The Associated Press.

The proposed deal was filed Wednesday and must receive the approval of U.S. District Judge James Selna, who was expected to review the settlement Friday.

Toyota said it will take a one-time, $1.1 billion pre-tax charge against earnings to cover the estimated costs of the settlement. Berman said the total value of the deal is between $1.2 billion and $1.4 billion.

Hundreds of lawsuits have been filed against Toyota since 2009, when the Japanese automaker started receiving numerous complaints that its cars accelerated on their own, causing crashes, injuries and even deaths.

The cases were consolidated in U.S. District Court in Santa Ana and divided into two categories: economic loss and wrongful death. Claims by people who seek compensation for injury and death due to sudden acceleration are not part of the settlement; the first trial involving those suits is scheduled for February.

As part of the economic loss settlement, Toyota will offer cash payments from a pool of about $250 million to eligible customers who sold vehicles or turned in leased vehicles between September 2009 and December 2010.

The company also will launch a $250 million program for 16 million current owners to provide supplemental warranty coverage for certain vehicle components, and it will retrofit about 3.2 million vehicles with a brake override system. An override system is designed to ensure a car will stop when the brakes are applied, even if the accelerator pedal is depressed.

The settlement would also establish additional driver education programs and fund new research into advanced safety technologies.

"In keeping with our core principles, we have structured this agreement in ways that work to put our customers first and demonstrate that they can count on Toyota to stand behind our vehicles," said Christopher Reynolds, Toyota vice president and general counsel.

Current and former Toyota owners are expected to receive more information about the settlement in the coming months. Some information is also available at http://www.ToyotaELsettlement.com , a website created for Toyota owners affected by the settlement.

"We are extraordinarily proud of how we were able to represent the interests of Toyota owners, and believe this settlement is both comprehensive in its scope and fair in compensation," Berman said.

Toyota has recalled more than 14 million vehicles worldwide due to acceleration problems in several models and brake defects with the Prius hybrid. The automaker has blamed driver error, faulty floor mats and stuck accelerator pedals for the problems.

Plaintiffs' attorneys have spent the past two years deposing Toyota employees, poring over thousands of documents and reviewing software code, but the company maintains those lawyers have been unable to prove that a design defect — namely Toyota's electronic throttle control system — was responsible for vehicles surging unexpectedly.

Both the National Highway Traffic Safety Administration and NASA were unable to find any defects in Toyota's source code that could cause problems.

The company has been dogged by fines for not reporting problems in a timely manner.

Earlier this month, NHTSA doled out a record $17.4 million fine to Toyota for failing to quickly report floor mat problems with some of its Lexus models. Toyota paid a total of $48.8 million in fines for three violations in 2010.

Toyota President Akio Toyoda appeared before Congress last year and pledged to strengthen quality control. Recent sales figures show the company appears to have rebounded following its safety issues.

___

Online:

Settlement website: http://www.ToyotaELsettlement.com

View the original article here

Toyota to Settle Class-Action Suits Over Sudden Accelerations

The proposed settlement, filed in a Federal District Court in California, would be one of the largest of its type in automotive history. If the agreement is approved by Judge James V. Selna, Toyota would make cash payments for the loss of value on vehicles affected by multiple recalls and install special safety features on up to 3.2 million cars.

While there are still individual personal-injury and wrongful death lawsuits pending against Toyota, in addition to an unfair business practice case brought by the attorneys general of 28 states, the class-action case was the largest legal action related to economic losses by vehicle owners.

The suit was filed in 2010 after numerous complaints were made to federal regulators that Toyota vehicles were accelerating suddenly without warning and causing accidents and injuries. Toyota has recalled more than eight million vehicles in the United States for problems related to floor mats that could become entangled with accelerator pedals, or pedals that could stick with the throttle open.

But the class-action case contended that Toyota’s electronics systems were at fault. After a long investigation, government officials concluded last year that there was no evidence that faulty electronics systems contributed to the acceleration issues. But a subsequent review of that inquiry by a branch of the National Academy of Sciences found that federal regulators had lacked the expertise to monitor electronic controls in automobiles.

The company has been fined more than $60 million by the National Highway Traffic Safety Administration for failing to inform regulators of internal information about the sudden acceleration, which the company has largely attributed to driver error.

The recalls mushroomed into broader problems for Toyota, which had long enjoyed a pristine reputation for quality, safety and reliability, and the class-action suit was a lingering obstacle to its steady comeback from the acceleration issues, which included testimony by its chief executive, Akio Toyoda, before Congress.

“This agreement marks a significant step forward for our company, one that will enable us to put more of our energy, time and resources into Toyota’s central focus: making the best vehicles we can for our customers,” said Christopher P. Reynolds, Toyota’s chief legal officer in the United States.

Under the proposed settlement, Toyota agreed to create a fund of $250 million to pay claims to former owners of cars affected by the acceleration recalls. The company also agreed to install so-called brake override systems on cars whose pedals could stick or become trapped in floor mats. The company said it had already installed the systems on 2.6 million vehicles but that an additional 550,000 cars had not received the equipment.

In addition, the settlement provides a customer support program for more than 16 million current Toyota owners, who will be eligible for free repairs on certain parts for up to 10 years.

Toyota has also agreed to contribute $30 million to finance automotive safety research related to driver behavior and unintended acceleration.

The lead law firm for the plaintiffs estimated that the overall settlement could total $1.2 billion to $1.4 billion.

“We are pleased that Toyota has agreed to a settlement that was both extraordinarily hard-fought and is exceptionally far-reaching,” said Steve Berman, the lawyer who led the settlement talks for the plaintiffs.

The amount a Toyota owner may receive for economic loss will be determined by a settlement administrator.

In its statement, Toyota said it would take a one-time charge of $1.1 billion against earnings to cover the costs of the class-action case as well as possible costs to resolve a consumer-protection lawsuit filed in California and the unfair-business-practices case.

One legal expert said the settlement appeared large but may be part of Toyota’s longer-term strategy to move beyond the acceleration scandal.

“The class is very large, so each plaintiff will not receive very much,” said Carl Tobias, a law professor at the University of Richmond. “The timing of this and the huge fine Toyota recently agreed to pay suggest Toyota may be concerned about the personal injury cases, in which several trials are set for this spring.”

Toyota has recovered much of the sales lost in the aftermath of the sudden-acceleration problems in 2010 and its supply-chain troubles caused by the Japanese earthquake and tsunami in 2011.

The company’s sales in the United States have increased 28 percent this year, about double the pace of growth for the overall market. One industry analyst said the proposed class-action settlement would help Toyota continue to rebuild its reputation and market share.

“Toyota wants to put its unintended acceleration recalls behind it once and for all,” said Jesse Toprak, an analyst with the auto research site TrueCar.com. “As costly as it may be, this settlement will allow them to remove most of the lingering financial uncertainty.”

View the original article here