December 27, 2012 in Business

Toyota settles lawsuit

Deal includes installation of brake-override system, compensation to car owners
W.J. Hennigan Los Angeles Times
 
Key provisions of agreement

Some of the key provisions of the settlement agreement – estimated between $1.2 to $1.4 billion – which must be approved by a federal judge:

• A fund of $250 million will be established to pay former Toyota owners who sold their cars during the period from Sept. 1, 2009, through Dec. 31, 2010. The money is intended to compensate those owners for the reduced value of their vehicles that is alleged because of publicity concerning unintended acceleration.

• Toyota will install a brake-override system in an estimated 3.25 million vehicles subject to floor mat entrapment recalls. Brake-override systems cut power to the throttle under certain circumstances when the car receives simultaneous signals from the brake and accelerator pedals.

• A separate fund of $250 million will be established to compensate current owners whose vehicles are not eligible for a brake-override system.

• All 16 million current owners will be eligible for a customer care plan that will warranty parts that plaintiffs allege are tied to unintended acceleration for between three and 10 years.

• $30 million in education grants will be provided to independent academic institutions to further the study of auto safety and to enhance driver education.

Limited details of the settlement are available at www.hbsslaw.com/toyota, www.ToyotaELsettlement.com, or by calling (877) 283-0507.

Associated Press

LOS ANGELES – Toyota Motor Co. has announced an agreement worth more than $1 billion to settle a lawsuit involving unintended acceleration in some of its vehicles.

Under terms of the settlement, filed Wednesday in federal court in Santa Ana, Calif., Toyota will install a brake-override system in an estimated 3.25 million vehicles and compensate car owners for the alleged reduced value of the vehicles, among other terms.

According to attorneys for the plaintiffs, the estimated value of the settlement makes it the largest of its kind, although there have been larger nonauto industry class settlements in recent years. They said the settlement provides that 16 million current Toyota owners will be eligible for a customer care plan that provides a warranty for certain parts alleged to be tied to unintended-acceleration claims.

After a fiery crash of a Lexus, Toyota’s luxury brand, killed four near San Diego in August 2009, the National Highway Traffic Safety Administration concluded that floor mats could entrap pedals in Toyota vehicles, leading the Japanese automaker to issue its largest recall ever. That, in turn, led to a series of subsequent investigations and recalls stretching over several years.

Toyota has maintained that its vehicles were free from electronic flaws that caused sudden acceleration. The NHTSA and the National Aeronautics and Space Administration investigated, but were unable to trace the defect.

“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 P. Reynolds, Toyota Motor North America’s chief legal officer, said in a 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.”

The total value of the settlement is estimated to be between $1.2 and $1.4 billion, according to Steve Berman, the lawyer in charge of directing the class litigation and leading settlement discussions.

“After two years of intense work, including deposing hundreds of engineers, poring over thousands of documents and examining millions of lines of software code, we are pleased that Toyota has agreed to a settlement that was both extraordinarily hard-fought and is exceptionally far-reaching,” Berman said in a statement.


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