Toyota Motor North America is seeking to settle a class-action suit, filed by car owners who allege that the Japanese automaker’s vehicles would suddenly accelerate, for $1.1 billion, the company announced Wednesday.
http://www2.toyota.co.jp/en/news/12/12/1227.html
According to Reuters, court filings said that some 16 million Toyota, Lexus and Scion cars from the model years 1998 to 2010 are covered by the action. The litigation involves some of Toyota’s most popular cars, such as the Camry and the Corolla. The automaker had to recall more than 10 million cars from 2009 to 2011.
http://www.reuters.com/article/2012/12/27/us-usa-toyota-settlement-idUSBRE8BP0G620121227
Toyota’s press release on its proposed settlement is a classic example of spin and corporate speak.
“Toyota Motor North America today announced an agreement to resolve economic loss litigation in the U.S. related to previous recalls by committing to actions that deliver value to its customers,” the first paragraph says.
“This was a difficult decision — especially since reliable scientific evidence and multiple independent evaluations have confirmed the safety of Toyota’s electronic throttle control systems,” Christopher Reynolds, Group Vice President and General Counsel, Toyota Motor Sales, U.S.A, and Chief Legal Officer, Toyota Motor North America, said in a prepared statement.
“However, we concluded that turning the page on this legacy legal issue through the positive steps we are taking is in the best interests of the company, our employees, our dealers and, most of all, our customers,” he said.
The controversy and lawsuits filed over Toyota’s electronic throttle system sullied Toyota’s reputation for making reliable, long-lasting vehicles. The suits followed instances where drivers claimed that their cars suddenly accelerated without them touching the gas pedal.
The trouble became public in 2009, according to Reuters, when off-duty California Highway Patrol officer Mark Saylor and three others were killed when his Lexus ES 350 accelerated and crashed at a high speed. That case was already settled out of court.
Nearly all of the remaining litigation will be done with if the settlement is approved.
Toyota has said that its electronic throttle control system didn’t cause the accidents, and it still said that Wednesday. Studies by NASA and the National Highway Safety Administration also cleared Toyota’s throttle system in the sudden accelerations.
“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,”Reynolds said.
“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,” he said.
If the settlement is approved by the judge supervising multidistrict litigation (MDL) pending in the U.S. District Court for the Central District of California, Toyota said it will launch a new customer-support program that will provide prospective supplemental coverage for certain vehicle components and will retrofit additional non-hybrid vehicle models subject to the floor mat recall with a free brake override system (BOS) to provide an added measure of confidence.
And assuming any appeals are resolved in favor of the settlement, Toyota will offer cash payments to eligible customers who sold or turned-in their leased vehicles in a period from 2009 to 2010, as well as other specified persons, and to eligible current owners and lessees who will not be offered BOS.
The proposed settlement would also establish additional driver education programs and fund new research into advanced safety technologies.
Toyota said it will take a one-time, $1.1 billion pre-tax charge against earnings to cover the estimated costs of the economic loss settlement and possible resolution costs of civil litigation brought in California by the District Attorney of Orange County and an investigation by a multi-state group of Attorneys General stemming from previous recalls.
Reuters reported that according to settlement papers filed with the court, there will be a $250 million fund for ex-Toyota owners who sold their cars at reduced prices, as well as a $250 million fund for car owners who don’t qualify for the new brake override system.
The lawyers for the plaintiffs will get up to $200 million for legal fees and $27 million in costs.
There is more information on the settlement at www.toyotaelsettlement.com.