Toyota has reached a settlement with the U.S. Department of Justice to settle a four-year criminal investigation into whether the company misled investigators and the public about a sudden-acceleration defect that has caused injuries and deaths. The settlement — for $1.2 billion, among the largest ever paid by an automaker — included an unusual admission of wrongdoing by the company. Attorney General Eric H. Holder, Jr., at a news conference announcing the settlement, said:
Toyota’s conduct was shameful. He added that “Toyota intentionally concealed information and misled the public.”
The agreement stems from the unintended acceleration of Toyota cars, a problem that has already cost the automaker billions of dollars. Toyota has issued recalls for almost 10 million vehicles. While it’s rare for automakers to be held criminally liable for defects, it’s even more rare for such accusations to lead to a significant fine. The fact that Toyota admitted fault, which included lying to the government and to the public, is unparalleled.
After initially denying publicly and in conversations with federal regulators that it knew about the defect, an FBI investigation found that Toyota had publicly played down the extent of the problem even though internal company records showed that the automaker knew about the full extent of the problem. Our law firm had access to internal documents, including emails, from Toyota that showed employees at the very top level of the company knew about the safety problems back in 2003-2004. George Venizelos, a senior FBI official, said in a statement:
Toyota put sales over safety and profit over principle. The disregard Toyota had for the safety of the public is outrageous.
Separate from the criminal matter, Toyota is currently in talks to settle state and federal lawsuits filed against it involving wrongful death and personal injury. As was widely reported, our law firm won the first sudden acceleration lawsuit against Toyota in October of last year. An Oklahoma jury found that the Toyota Camry’s electronic throttle system was defective and that Toyota had acted with “reckless disregard” for safety, despite having knowledge of computer problems with the cars. The jury found Toyota liable for the crash that killed one woman and injured another.
The jury in Oklahoma City awarded $3 million in compensatory damages to the Plaintiffs in the case. The jurors found that the 2005 Camry the women were riding in suddenly accelerated through an intersection couldn’t be stopped and crashed into an embankment. Toyota settled the punitive aspect of the case with our clients after the jury’s compensatory damages verdict was returned. That settlement was on the very same day. The amount of the settlement with the families was confidential at Toyota’s request. The jury was to go forward with the punitive damages phase of the trial the next day.
Based on what we were told by the jurors in a post-verdict conference in the presence of the trial judge, the jury was going to “light up” Toyota in the punitive phase. The jurors said they were outraged over Toyota’s conduct and cover up of a known defect. They also said that Toyota’s expert witnesses had no credibility. The jurors saw all of the damaging Toyota documents and said they were shocked at what they contained. For example, one Toyota official told the president that “if we don’t stop lying to the government, we are all going to jail.”
Legal analysts said at the time that the verdict most likely spurred Toyota to pursue a broad settlement of its remaining cases. Separately, Toyota ordered a global recall in February of nearly 2 million gas-electric Prius vehicles because of a programming error that could cause the engine to shut down. The speed and extent of the recall was seen as an attempt to prevent the regulatory and public scrutiny of the sudden-acceleration problem.
The settlement of Toyota’s sudden acceleration problems should provide a template for the authorities pursuing a similar case against General Motors (GM) linked to a defect that caused GM vehicles to shut down unexpectedly. That’s the opinion of a number of legal analysts. Attorney General Holder seemed to signal as much, saying at the news conference that the Toyota settlement was “a model for future cases” involving “similarly situated companies.” He said that “other car companies should not repeat Toyota’s mistake.” I sincerely hope they all got the message and will follow up on it.
Sources: New York Times; Los Angeles Times; CNN and Reuters
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