Toyota Motor Corp. and lawyers suing the company were given more time to win final approval of a $1.1 billion settlement of claims that recalls related to unintended acceleration hurt the value of U.S. customers’ vehicles. U.S. District Judge James V. Selna, after a hearing on June 14th granted requests from lawyers for both sides to provide updated figures about how the money will be allocated to beneficiaries in the settlement. Judge Selna scheduled a July 19th hearing for final approval. Judge Selna said that “A lot of hard work has gone into this and it’s been a remarkable effort on the part of everyone.” This came after lawyers for both sides said they will give financial details to overcome concerns the judge expressed about the disbursement of the settlement funds.
As you will recall, Toyota, based in Toyota City, Japan, recalled more than 10 million vehicles for problems related to unintended acceleration in 2009 and 2010. This process started with a September 2009 announcement that the company was recalling 3.8 million Toyota and Lexus vehicles because of a defect that may cause floor mats to jam accelerator pedals. The company later recalled vehicles over defects that it said involved the pedals themselves. Celeste Migliore, Toyota spokeswoman, said in an e-mailed statement after the hearing:
This agreement is structured in ways that we believe provide significant value to our customers and demonstrate that they can count on Toyota to stand behind our vehicles. We believe that approval of this settlement, as amended, is in the best interests of all affected parties.
The settlement would resolve the economic-loss portion of the Toyota sudden-acceleration litigation. Class actions were filed on behalf of Toyota owners who said the company drove down their vehicles’ value by failing to disclose or fix defects. One of the Plaintiffs’ lawyers, Steve Berman, who is co-lead attorney for the Plaintiffs, had this to say at the hearing:
This was a remarkable settlement. I believe this is the largest settlement in a U.S. automobile case in terms of the amounts of dollars and the number of class members.
The settlement came about after two years of intense negotiations and hard work. Judge Selna had previously agreed in a tentative order that the accord was “fair, adequate and reasonable,” but he delayed final approval. Judge Selna explained his decision, saying:
Certain difficulties in the plan of allocation of the settlement funds preclude the court’s final approval of the proposed settlement at this time. The court needs to ensure that class members are compensated to the maximum degree possible.
Judge Selna said that the settlement didn’t appear to precisely address the cost of administrating the accord. He also questioned whether more funds should be allocated to class members and Toyota owners who haven’t filed claims. Lawyers for both sides said that they had agreed on changes to the allocation of funds to address the judge’s concerns. Toyota agreed last year to the settlement, taking a $1.1 billion pretax charge against earnings without specifying the amount going to economic-loss plaintiffs in the cases before Judge Selna.
The value of the settlement is more than $1.6 billion, including noncash benefits. This was stated in the April 23rd filing seeking approval. The agreement includes $757 million in cash and $875 million in “non-monetary benefits,” including installation of brake overrides in eligible vehicles, the lawyers said. The economic-loss cases were combined in a multidistrict litigation (MDL) before Judge Selna, who is also handling federal personal injury and death suits related to sudden-acceleration claims. The personal injury and death cases remain pending, with the first federal trial set for November in Santa Ana.
Our firm will be involved in the first Toyota sudden unexpected acceleration trial in a state court in October. Lawyers from our firm will try this case, which involves the death of one woman and injuries to another, in Oklahoma. Obviously, this is a most important case. In January, Toyota settled the first federal case that had been set for trial before Judge Selna. Toyota also paid $66.2 million in fines to the U.S. National Highway Traffic Safety Administration for how some of the recalls were conducted. The company last year agreed to pay $25.5 million to settle an investor lawsuit claiming Toyota’s alleged failure to disclose information on unintended acceleration problems caused the stock to plunge in 2010.
Settlement notices have been mailed to more than 22.6 million potential class members. “There have been only 76 objections on behalf of 90 individual objectors,” he said. By June 7th, the administrator for the settlement had received requests from 1,949 plaintiffs to opt out of the agreement. The proposed accord includes $200 million in attorneys’ fees and $27 million in expenses. Objections filed with the court protested the amounts available to individual Plaintiffs and the size of the potential award for attorneys’ fees. Judge Selna said at the hearing that the objections were without merit and wouldn’t block final approval.
Under the settlement, Toyota will install a brake override system in more than 3 million vehicles that were subject to floor mat recalls, provide $250 million for former Toyota owners who sold their cars from September 2, 2009, to December 31, 2010, and provide another $250 million for current owners whose vehicles are ineligible for brake overrides, according to court filings. The federal cases are combined as In re Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices and Products Liability Litigation, in the U.S. District Court, Central District of California (Santa Ana).
Source: Insurance Journal
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