Toyota to Settle Accelerator Case for $1.4 Billion
Toyota agreed on Dec. 26 to settle a class action accusing the auto maker of selling cars that are defective because they suddenly accelerate.
The total settlement amount is a reportedly record-breaking $1.4 billion, and while months remain before it is finally approved, a judge granted preliminary approval Dec. 28.
Error Hard to Find
Toyota faced a raft of legal problems following reports in 2009 and 2010 that its cars were unintentionally accelerating and causing horrible accidents. Congressional hearings, government investigations, and lawsuits focused on everything from floor mats to sticky gas pedals.
The National Highway Traffic Safety Administration and even the National Aeronautics and Space Administration investigated the problems but could find no defects in the computer parts involved, according to the plaintiffs’ law firm, Hagens Berman in Seattle.
Despite a government investigation concluding that driver error and not the throttle electronics were to blame, this class action reportedly alleged that a flaw in Toyota’s electronic throttle control system (ETCS) caused the cars to unintentionally accelerate out of control.
Largest Settlement in Auto History
The case was filed in 2010 and then consolidated into an even larger pool of similar cases in federal court in California. Reached three years later, the settlement covers the economic losses of a class of up to 19 million owners of Toyota, Lexus, and Scion vehicles.
Toyota admits no wrong-doing in the settlement. “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,” said one of Toyota’s chief legal officers in a statement.
Both sides seemed to believe the case could go either way, and that the risk and cost of litigation was too high. “Toyota was a tenacious opponent and there were many risks to proceeding,” said co-lead counsel Steve W. Berman of Hagens Berman in a Q&A provided to the media.
“Had we gone to trial and won, any trial victory would have been followed by years of appeals,” he explained. “Weighing all these factors, we felt the risks of going further outweighed the benefits. Finally, remember that no one has definitely discovered what causes unintended acceleration other than driver error, floor mats and sticky pedals.”
Berman told one news source that the settlement is the largest in the automotive industry. The settlement is still subject to final approval by a federal judge, who gave preliminary approval on Dec. 28. Berman’s firm says a hearing will be held regarding final approval on June 14, 2013.
Models with Electronic Throttles Covered
According to the proposed settlement, Toyota owners can get money for the lost resale value of their cars as well as free installation of a brake-override system in 3.25 million cars. They will also be covered by a new warranty of the parts at issue, including engine control parts, the cruise control switch, and parts for the accelerator pedal.
A $250 million fund covers former Toyota owners who sold their cars from September 2009 through December 2010 at a reduced value because of the bad publicity surrounding the unintentional acceleration, according to Hagens Berman.
If you own or lease any of a number of Toyota, Lexus or Prius models (from a 1998 Supra to a 2010 Lexus LS), and your car had an ETCS, you are eligible for some relief under the settlement.
Hagens Berman says consumers should not contact their Toyota dealers. “If the court approves the settlement, a court-approved notice with more information will be sent to about 19 million Toyota, Lexus and Scion owners and former owners,” it says.
More information about the proposed settlement, including which models are covered, can be found by visiting www.ToyotaELsettlement.com or www.hbsslaw.com/toyota or by calling 1-877-283-0507.