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Toyota Reaches $1 Bil Deal in Runaway Cars Case

Deal closes 100s of cases -- but 100s more still unresolved.

by on Dec.27, 2012

Lexus agreed to a record fine this month for delaying the recall of the RX crossover due to unintended acceleration issues.

Toyota Motor Co. has reached a more than $1 billion settlement intended to put an end to 100s of lawsuits stemming from the maker’s problems with unintended acceleration. But Toyota still faces a separate series of lawsuits from those who claim to have been injured by runaway vehicles.

The proposed settlement specifically covers lawsuits filed by owners who alleged that the value of their cars, trucks and crossovers had plummeted substantially as a result of the crisis triggered by a series of revelations and recalls that eventually involved more than 14 million Toyota products worldwide.

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The maker said it also will launch an extended warranty program covering 16 million current owners while also installing additional safety technology on 3.2 million of its vehicles. But in light of other recent recalls that have involved millions more Toyota products it remains unclear if the settlement will be enough to repair the Japanese giant’s once shining image.

“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 and doing everything we can to meet their needs,” said Christopher P. Reynolds, Group Vice President and General Counsel, Toyota Motor Sales, U.S.A, and Chief Legal Officer, Toyota Motor North America.

The deal must still receive the approval of U.S. District Judge James Selna, who has been overseeing 100s of lawsuits that have been filed since late 2009 when the maker launched the first in a series of recalls related to unintended acceleration.

The first action involved loose carpets that could jam accelerator pedals making it difficult to slow a vehicle. A subsequent recall announced in early 2010 involved sticky accelerator assemblies. Toyota has since announced several other recalls related to unintended acceleration.

A pair of studies conducted for the National Highway Traffic Safety Administration dismissed allegations that Toyota vehicles also suffered from defective engine control systems that could lead to unintended acceleration.  But the agency has nonetheless fined the Japanese maker repeatedly for failing to act upon a known safety defect in reasonable time, as required by law.

Earlier this month, Toyota agreed to pay a $17.35 million fine for delaying a recall involving loose floor carpets in its Lexus RX crossovers.  It paid $48.8 million in fines in 2010 for similar delays.

(For more on Toyota’s record fines, Click Here.)

The maker has faced a variety of different lawsuits which were consolidated under the auspices of the U.S. District Court in Santa Ana, California.  The proposed settlement only involves those suits alleging that owners saw the value of their vehicles decline as a result of the unintended acceleration scare.

A total of $250 million will be offered to those who sold or turned in a leased vehicle between September 2009 and December 2010, at the height of the scandal.

Another $250 million will be used to extend the warranty coverage on select vehicle components for owners and lessors of 16 million Toyota products and to retrofit 3.2 million vehicles with a brake override system.  That technology is intended to automatically reduce engine power when the brakes are touched, even if a driver inadvertently also applies the throttle.

The remaining funds will be used for safety research and driver education programs.

“We think (this) was a good settlement given the risks of this litigation,” Steve Berman, a lawyer representing Toyota owners, told the Associated Press.

It is not clear how much of the settlement, which Berman estimated at $1.2 billion to $1.4 billion, will go to plaintiffs attorneys. Toyota, meanwhile, said it would take a one-time charge against earnings of $1.1 billion.

As for those who claim to have been injured in unintended acceleration crashes – and those who are suing on behalf of deceased family members – that case is currently scheduled to see the first trial begin in February, barring any additional settlement.

Toyota appears to be hoping that it can defend itself by referring to findings of the two NHTSA studies, one conducted by the National Academy of Sciences, the other by NASA. Neither could find any proof that Toyota vehicles suffered from electronic gremlins – though the NASA study did leave open the possibility that such issues did exist but were difficult to trace.

During an emotional February 2010 hearing before Congress, Toyota President Akio Toyoda promised to step up efforts to ensure the safety of the company’s vehicles – and to increase the response time when problems are discovered.

The maker has pointed to its strong performance in recent quality and reliability surveys. But skeptics also note not only the latest fine for recall delays but the fact that Toyota has recalled millions more vehicles this year. That includes the maker’s largest recall ever due to faulty window switches that could catch fire.

But industry analysts say that the maker’s problems appear to have had relatively little impact on its sales.

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4 Responses to “Toyota Reaches $1 Bil Deal in Runaway Cars Case”

  1. Jorge M. says:

    It’s sad to see Toyota punished for the incompetence of U.S. drivers. After countless investigations not a single entity was able to find anything other than human error responsible for the alleged Toyota “unintended acceleration”. This is very similar to the Audi 5000 “witch hunt” several decades ago… where no one ever found anything wrong with the cars and that the accidents were the result of human error.

    The sticky accelerator pedals supplied by a vendor were also supplied to Ford and Chrysler.

    • Paul A. Eisenstein says:

      Hi, Jorge,

      I need stress that the two NHTSA-sponsored studies, and the NASA study in particular, indicated no specific evidence of electronic gremlins could be traced. But there were some disturbing findings, such as short-making “tin ears.” NASA’s summary left open the possibility of issues not identified by the study.

      Meanwhile, your statement that “not a single entity” found an issue other than human error is erroneous. It is clear that a number of accidents were caused by pedal entrapment, most notably the San Diego crash of a Lexus that killed a California Highway Patrol officer and several family members. That said, your point is taken: a significant number of “unintended acceleration” crashes, all the way back to the Audi 5000 scare, WERE the result of driver error, ie one Toyota case where it was discovered the driver was, indeed, pressing the throttle, not the brake, and so hard the linkage assembly was bent.

      What concerns me is that Toyota has frequently delayed recall actions over the years looking for a less publicized (and often far cheaper) way out. That should not be ignored despite any other mitigating factor.

      Paul A. Eisenstein

  2. Jorge M. says:

    No one has EVER shown that “tin ears” could or did cause any malfunction of Toyota’s or anyone else’s ECMs or other automotive computer controls. The ECM and accelerator systems have a dual input safety system which means two matching inputs signals – one digital and one analog are required for any action of the accelerator. There is no way possible “tin ears”, RFI or EMI can cause two matching digital/analog signals to occur. It’s physically impossible.

    Yes floor mats did and can get under the accelerator pedal and that is something any properly trained driver should be able to correct without crashing their car or they shouldn’t have a driver’s license.

    The unfortunate fatality of the CA. police officer and his family was due to driver error. He likely panicked and didn’t do the most basic response which is to lock up the brakes and stop the car or shut off the ignition or shift the trans into neutral. Any of those three actions would have stopped the car and prevented an accident and death.

    I can understand him not knowing he had to hold the on/off start button in for three seconds to shut the engine off as he was unfamiliar with the loaner car, but failing to slam on the brakes instead of riding them for miles until they burned up – was ignorant and deadly. Failing to shift into neutral was ignorant and deadly. Not pulling off in the field along side the freeway was ignorant and deadly. Calling on a cellphone asking the police to clear traffic ahead was ignorant and deadly.

    This driver made so many mistakes…and they proved fatal. I have been in vehicles with a sudden stuck WOT throttles and the first thing I did was slam on the brakes and kill the ignition. In the U.S. we don’t teach people how to drive, we issue a driver’s license and allow them to “practice” on the roadways daily, with deadly consequences sometimes.

    The delays in reporting safety issues to NHTSA should result in serious fines. BMW was hit with a $300 Million fine for this but that is a drop in a bucket for them as is the Toyota fine is in this incident. Toyota however should not be fined or sued for operator error just because there is public outcry based on technical ignorance and money to be made by siren chasers.

    It’s worth noting that shortly after this CA. police officer’s fatal crash, numerous entities conducted tests of the same model and various other model cars. Every single car tested was able to completely bring the car to a stop with a WOT by pressing hard on the brake pedal – which this officer certainly should have been able to do.

    I did some extreme speed/brake testing in Germany at the time to see if I couls burn out the brakes and I was able to bring numerous current model vehicles to a screeching halt from speeds in excess of 100 mph with a constant WOT, so it should be obvious that the braking systems in today’s autos are fully capable and have been for decades, of bringing a vehicle to a dead stop even with a stuck WOT accelerator – which the police officer’s car did NOT have. He only had a partially open throttle allegedly due to the floor mat being under the accelerator pedal, which would not provide any where near the engine power/drive torque seen at WOT, so stopping the vehicle should have been much easier than at WOT or 100+ mph.

    • Paul A. Eisenstein says:

      Agreed, the tin ears issue is NOT a proven problem but it WAS of enough concern as to be cited by NASA.

      As to the officer doing a series of wrong moves that eventually led to the crash, also agreed…BUT…to simply deny Toyota some culpability is wrong. Yes, consumers should conceivably be able to pull it all together, not panic and do exactly what’s needed in an emergency…just as a great receiver should always be able to catch a well-thrown ball no matter the pressure. It doesn’t happen. And if a vehicle has defects, even something like a loose carpet, that creates a crisis situation then the wrong things will be done at least occasionally. No, I do not hold a maker responsible for someone t-boning me in an intersection if I run a light. But if there’s a problem that I don’t deal with properly that leads me to run the light there is some potential culpability.

      Paul E>