Toyota agrees $1b payout for sticky accelerator class action
The proposed settlement, filed in US District Court in California, would be one of the largest of its type in automotive history. If the agreement is approved, Toyota would make cash payments for the loss of value on vehicles affected by multiple recalls and install special safety features on up to 3.2 million cars.
While there are still personal-injury and wrongful death lawsuits pending against Toyota, the class action was the largest legal action related to losses by vehicle owners.
The suit was filed in 2010 after many complaints to federal regulators that Toyota vehicles were accelerating without warning, causing accidents and injuries. Toyota has recalled more than 8 million vehicles in the US for problems related to floor mats that could become entangled with accelerator pedals, or pedals that could stick.
But the class action claimed Toyota's electronics systems were at fault. After a long investigation, government officials concluded last year that there was no evidence that faulty electronics systems contributed to the acceleration issues. But a subsequent review of that inquiry by a branch of the National Academy of Sciences found that federal regulators had lacked the expertise to monitor electronic controls in automobiles.
The company has been fined more than $US60 million by the National Highway Traffic Safety Administration for failing to inform regulators of internal information about the sudden acceleration, which the company has largely attributed to driver error.
The recalls mushroomed into broader problems for Toyota, which had long enjoyed a pristine reputation for quality, safety and reliability. The class action suit was a lingering obstacle to its steady comeback from the acceleration issues, which included testimony by its chief executive, Akio Toyoda, before Congress.
Toyota has recovered much of the sales lost in the aftermath of the sudden-acceleration problems in 2010 and its supply-chain troubles caused by the Japanese earthquake and tsunami last year.
Frequently Asked Questions about this Article…
Toyota agreed to pay more than US$1 billion to settle a class action over unintended acceleration. The proposed settlement, filed in US District Court in California, would be one of the largest automotive class-action settlements if a judge approves it.
If approved, the settlement would provide cash payments to owners for loss of value on vehicles affected by multiple recalls and require Toyota to install special safety features on up to 3.2 million cars.
Toyota recalled more than 8 million vehicles in the US for problems related to floor mats that could become entangled with accelerator pedals, or accelerator pedals that could stick—issues linked to the sudden-acceleration complaints.
Yes. While the class action covers owner losses, personal-injury and wrongful-death lawsuits remain pending against Toyota, separate from the class-action settlement.
A lengthy government investigation concluded there was no evidence that faulty electronics caused the acceleration issues. However, a subsequent review by a branch of the National Academy of Sciences found regulators had lacked the expertise to properly monitor electronic controls in cars.
Yes. The National Highway Traffic Safety Administration fined Toyota more than US$60 million for failing to inform regulators about internal information related to the sudden-acceleration incidents. Toyota has largely attributed the problems to driver error.
The recalls and legal issues dented Toyota’s reputation for quality, safety and reliability and were a lingering obstacle to its comeback. According to the article, Toyota has since recovered much of the sales lost after the 2010 acceleration problems and after supply-chain disruptions from the Japanese earthquake and tsunami.
Everyday investors should monitor whether the court approves the settlement, the progress of remaining personal-injury and wrongful-death suits, any further regulatory fines or findings, and whether these legal matters continue to affect Toyota’s brand perception and sales recovery.
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