Toyota hit with $1.2B fine by U.S government

The U.S. Department of Justice announced Wednesday it had leveled the largest fine ever imposed on an automotive company related to Toyota’s unintended acceleration issues in 2009.

The $1.2 billion penalty was announced by U.S. attorney general Eric Holder and various representatives from the Department of Transportation, National Highway Traffic Safety Administration (NHTSA) and Federal Bureau of Investigation (FBI).

Holder noted this sum is in addition to the $1.6 billion Toyota has already forked over to car owners and fines related to delays in reporting the previously identified safety issues.

“Rather than promptly disclosing and correcting safety issues about which they were aware, Toyota made misleading public statements to consumers and gave inaccurate facts to Members of Congress,” Holder said in a statement.

“When car owners get behind the wheel, they have a right to expect that their vehicle is safe. If any part of the automobile turns out to have safety issues, the car company has a duty to be upfront about them, to fix them quickly, and to immediately tell the truth about the problem and its scope. Toyota violated that basic compact.”

In an interesting choice of words, the attorney general warned other car companies to not repeat Toyota’s mistake, this at a time when U.S. authorities are questioning what General Motors knew internally about safety defects with certain ignition systems related to a current recall of more than 1 million GM vehicles.

“A recall may damage a company’s reputation, but deceiving your customers makes that damage far more lasting.”

The extensive justice department release details the issues with floor mat entrapment and sticky pedals.

After an fatal floor-mat entrapment accident in San Diego in August 2009, several articles critical of Toyota appeared in U.S. newspapers. The articles reported instances of Toyota customers allegedly experiencing unintended acceleration and the authors accused Toyota of, among other things, hiding defects related to unintended acceleration.
 
On Nov. 25, 2009, Toyota, through a U.S. subsidiary, announced its floor-mat entrapment resolution with NHTSA.

In a press release approved by Toyota, the U.S. subsidiary assured customers: “The safety of our owners and the public is our utmost concern and Toyota has and will continue to thoroughly investigate and take appropriate measures to address any defect trends that are identified.” 

A spokesperson for the subsidiary stated during a press conference the same day: “We’re very, very confident that we have addressed this issue.” 
 
The justice department said that in truth, the issue of unintended acceleration had not been “addressed” by the remedies announced. A-Pedal Company pedals, which could experience stickiness, were still on the road and still, in fact, being installed in newly-produced vehicles. 

And the best-selling Corolla, the Highlander, and the Venza – which had design features similar to models that had been included in the earlier floor-mat entrapment recall – were not being “addressed” at all.

Toyota also faces one criminal charge of wire fraud. Officials said if the automaker abides by all of the terms of the agreement, the government would defer prosecution on the information for three years and then seek to dismiss the charge.
 
In related news, lawyers representing a class action in Canada first announced last August said Monday the deal was approved by the courts in Ontario, Quebec, Nova Scotia and Saskatchewan.

That case was settled by law firms Rochon Genova LLP and Kim Orr PC, Consumer Law Group and Merchant Law Group of Regina.

The settlement resolves claims for economic loss related to alleged unintended acceleration, commenced against Toyota on behalf of certain Canadian owners and lessors of Toyota and Lexus vehicles with an electronic throttle control system (”ETCS-i”).



The approval of the settlement does not impact ongoing litigation for personal injury or wrongful death claims related to alleged unintended acceleration.



The settlement provides class members with a Customer Support Program for a minimum of three years and up to 10 years, to cover all parts and labour costs for certain vehicle components related to ETCS-i. 

Toyota class members may also have their vehicles equipped with a Brake Override System (”BOS”) free of charge, or will receive cash payments “in lieu” of the BOS upgrade where their vehicle is not eligible to receive the BOS. 



In addition, Toyota has agreed to fund scholarships at five Canadian engineering schools totalling $600,000.



Toyota has also provided funding for claims administration, notice costs, honoraria for the representative plaintiffs, legal fees, disbursements and taxes.