The automaker hopes to 'turn the page' by ending the case that dogged it in 2010.
LOS ANGELES — After years of litigation and probes, Toyota announced a $1.1 billion settlement Wednesday to resolve lawsuits alleging "unintended acceleration" in some Toyota and Lexus models.
Toyota recalled millions of vehicles in 2009 and 2010 related to charges that throttles could jam in the open position.
Toyota will create a fund for retrofitting 3.2 million Toyota and Lexus cars with technology that makes them easier to stop in a panic situation, as part of the settlement in a U.S. District Court case that sought class-action status. Owners of models that can't be retrofitted will receive cash payouts. And those who sold their vehicles in late 2009 and all of 2010 will be eligible for compensation due to lowered resale value due to the issue.
In all, the company says the agreement affects 16 million owners of vehicles with electronic throttle controls, whether or not they were part of the recalls.
Toyota maintains that the bulk of unintended acceleration cases were due to floor mats that slid underneath accelerators and became trapped — and not the result of electronic defects in the cars' engine computers.
"We felt we achieved our objective, to defend the safety of the product," says spokesman Mike Michels. That having been done, the settlement is "a business decision and we turn the page on a lot of this."
The settlement is expected to be approved Friday by U.S. District Court Judge James Selna.
"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," says Steve Berman, co-lead counsel for plaintiffs in the cases.
At least one industry analyst says the settlement is proof that Toyota was culpable. "Automakers don't pay billions of dollars to get rid of litigation involving driver error," says Sean Kane of Safety Research Strategies.
The settlement comes more than three years after the fatal crash of a Lexus that killed an off-duty California Highway Patrol officer and his family near San Diego erupted into a full-blown scandal for the automaker.
At first, Toyota answered the sudden acceleration charges by saying that floor mats could become trapped under acceleration pedals. Then later, Toyota announced a series of worldwide recalls involving millions of cars, including some for potentially defective accelerator assemblies.
Toyota executives appeared before congressional hearings and were questioned about the issue. The National Highway Traffic Safety Administration launched an engineering investigation that was never able to show any electronic bugs were the cause of unintended acceleration. But the agency never dropped the issue.
Last week, NHTSA levied a $17.35 million fine against Toyota — the maximum currently allowed for a single violation — for waiting too long to report the issue that led to just one of the series of recalls, involving the 2010 Lexus RX 350 and RX 450h crossover SUVs.
To settle the unintended acceleration cases, Toyota agreed to:
- Install a brake-override system in non-hybrid vehicles that were subject to floor-mat entrapment recalls. The systems, which are now common in new Toyota and Lexus vehicles, cut power to the engine when they sense that the driver is trying to stop the vehicle as if in a panic, such as by repeatedly pushing the brake pedal. Toyota says its hybrids don't need the system.
- Put $250 million into a fund for former owners who sold their cars between Sept. 1, 2009, and Dec. 31, 2010, or leased them during the period to compensate them for reduced value of their vehicles due to publicity around issues of Toyota's unintended acceleration. The actual amount that will go to any individual owner wasn't immediately disclosed. It may become more clear, says Berman spokesman Mark Firmani, after Friday's hearing.
- Create a separate $250 million pool to compensate owners of non-hybrid cars that can't be retrofitted with the brake-override system. Toyota spokesman Michels says cars without the system are still safe because the brake-override system is "not a prevention or cure" for floor mats that can become trapped under pedals.
- Establish a "customer care plan" for all 16 million affected Toyota customers to add another three to 10 years to the warranty period for parts that could be related to unintended acceleration.
- Pay $30 million to issue grants for study of auto safety and enhanced driver education.
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