Toyota will pay fines of $1.2 billion to settle a four-year criminal investigation into its handling of sudden unintended acceleration defects in millions of its vehicles, the U.S. Department of Justice announced Wednesday.
The settlement is the highest to be paid by an auto manufacturer in U.S. history to resolve allegations of criminal wrongdoing. According to the Justice Department, Toyota failed to recall millions of vehicles in the U.S. and allowed its sudden acceleration defects to escalate for years. The company then misled investigators and the public, concealing evidence about the defects and mounting a cover-up instead of addressing the problems honestly.
The Japanese automaker ultimately recalled about 9.4 million Toyota and Lexus vehicles between 2009 and 2010 to correct defects that gave vehicles the potential to speed out of control without warning. Toyota attributed the problem to floor mat entrapment and sticking accelerator pedals.
“Those incidents produced one of the largest consumer recalls in the history of the automotive industry,” the U.S. Justice Department said in a statement. “Today, we can say for certain that Toyota intentionally concealed information and misled the public about the safety issues behind these recalls.
“Put simply, Toyota’s conduct was shameful. It showed a blatant disregard for systems and laws designed to look after the safety of consumers,” the Justice Department statement reads. “By the company’s own admission, it protected its brand ahead of its own customers. This constitutes a clear and reprehensible abuse of the public trust.”
As part of the settlement, Toyota fully admitted to the wrongdoing and later issued a rare apology. In a statement on its website, Toyota said that it has rededicated itself to safety by implementing “fundamental changes” throughout its operations and has “gone back to basics” by putting customers first.
Last year it appeared Toyota might be gaining some momentum in the courts. The company won three consecutive sudden-acceleration lawsuits but suffered a huge blow in October when an Oklahoma jury found that electronic throttle defects were to blame for a 2007 crash that killed one woman and left another seriously injured. The jury awarded $1.5 million to the families of both women, who were riding in a 2005 Camry when it suddenly accelerated off an Oklahoma highway and careened into an embankment.
Before the jury could deliberate on punitive damages, Toyota reached a separate confidential settlement with the families. The New York Times notes the verdict “most likely spurred Toyota to pursue a broad settlement of its remaining cases.”
“The Bookout and Schwarz families had the fortitude to take on the corporate giants when the deck was stacked against them. We were able to help them prove that Toyota knew about the electronic throttle defect,” said Jere Beasley of the Montgomery, Alabama-based law firm Beasley Allen, which represented the families.
He added that the Oklahoma verdict is important because it “turned things around for both Toyota’s victims and the federal government.”
“We proved that Toyota had failed to report over 60,000 complaints of SUA incidents in one year (2003) and had a 400 percent increase in the incidents in 2004 and continued to hide from NHTSA the real problem – electronics in the throttle system – for years. We also proved that the President of Toyota USA had intentionally lied to Congress,” Mr. Beasley said.
“If they paid $1.2 billion for that, they owe the government a whole lot more for the rest of it,” The National Law Journal quoted Mr. Beasley as saying. “Their biggest problem—95 percent of their problems—have nothing to do with mats or sticky pedals. It’s strictly a bad computer, and they know this.”
Toyota is currently in talks to settle additional state and federal civil lawsuits filed for claims of wrongful death and personal injury related to the sudden unintended acceleration defect.
U.S. auto giant General Motors is also likely following the news of Toyota’s sudden-acceleration debacle closely as it deals with the fallout from withholding its knowledge of deadly ignition switch defects from the public and failing, for a decade or more, to issue a recall. Like Toyota, GM faces civil and criminal fines for its actions in addition to mounting personal injury and wrongful death lawsuits.
GM may be right to worry. In a news conference announcing the Toyota settlement, U.S. Attorney General Eric Holder said, “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.”
It appears Toyota has learned its hard lesson about notifying the government and the public about recalls in a timely manner. When it recalled nearly 2 million hybrid Prius vehicles in February of this year for a programming error that could cause the engine to shut down, it was with remarkable speed after learning of the potential problem.