Toyota settles U.S. ‘unintended acceleration’ lawsuits for $1.2 billion

Toyota announced that it reached an agreement with the U.S. Attorney’s Office for the Southern District of New York to resolve its investigation initiated in February 2010 into the communications and decision-making processes related to the company’s 2009-2010 recalls to address potential “sticking” accelerator pedals and floor mat entrapment.  As part of the agreement, Toyota will make a payment totaling $1.2 billion.

The U.S. Attorney’s office announced a criminal wire fraud charge against Toyota Motor Corporation, but will defer prosecution for three years. Under the agreement, Toyota admits that it misled U.S. consumers by concealing and making deceptive statements about two safety issues affecting its vehicles, each of which caused a type of unintended acceleration.

“Rather than promptly disclosing and correcting safety issues about which they were aware, Toyota made misleading public statements to consumers and gave inaccurate facts to Members of Congress,” said Attorney General Eric Holder.  “When car owners get behind the wheel, they have a right to expect that their vehicle is safe.  If any part of the automobile turns out to have safety issues, the car company has a duty to be upfront about them, to fix them quickly, and to immediately tell the truth about the problem and its scope. Toyota violated that basic compact.  Other car companies should not repeat Toyota’s mistake: a recall may damage a company’s reputation, but deceiving your customers makes that damage far more lasting.”

“Safety is our top priority,” said Transportation Secretary Anthony Foxx.  “Throughout this recall process, NHTSA investigators worked tirelessly to make sure that Toyota recalled vehicles with defects causing unintended acceleration, and to determine when they learned of it, and as we learned today, they succeeded in this effort in spite of extraordinary challenges.  Today’s penalties follow NHTSA’s own record civil penalties of more than $66 million – together, they send a powerful message to all manufacturers to follow our recall requirements or they will face serious consequences.”

“Toyota stands charged with a criminal offense because it cared more about savings than safety and more about its own brand and bottom line than the truth,” said U.S. Attorney Preet Bharara for the Southern District of New York.  “In its zeal to stanch bad publicity in 2009 and 2010, Toyota misled regulators, misled customers, and even misstated the facts to Congress.  The tens of millions of drivers in America have an absolute right to expect that the companies manufacturing their cars are not lying about serious safety issues; are not slow-walking safety fixes; and are not playing games with their lives.  Companies that make inherently dangerous products must be maximally transparent, not two-faced.  That is why we have undertaken this landmark enforcement action.  And the entire auto industry should take notice.”

“At the time of these recalls, we took full responsibility for any concerns our actions may have caused customers, and we rededicated ourselves to earning their trust,” said Christopher P. Reynolds, chief legal officer, Toyota Motor North America.  “In the more than four years since these recalls, we have gone back to basics at Toyota to put our customers first.”

 
The problem was brought to popular attention by the crash of a Lexus ES 350 sedan being driven by an off-duty California Highway Patrol Officer. The estimated 200 kph crash resulted in the death of the officer and members of his family, who were his passengers. Sticking accelerator pedals and mismatched floor mats were blamed by federal regulators for this and other incidents. Software and electronics faults were not proven, after an investigation involving engineers from NASA. Conspiracy theorists pointed out the timing of the investigation coincided with the US bailout and takeover of American car company General Motors.

The $1.2 billion financial penalty is the largest penalty of its kind ever imposed on an automotive company.