Published March 19, 2014
Toyota has reached a $1.2 billion settlement with the U.S. government that ends a four-year criminal investigation into the automaker’s response to safety issues, Attorney General Eric Holder announced Wednesday.
Under the agreement, the company will admit that it misled U.S. consumers by making deceptive statements about two safety issues affecting its vehicles. As a result, Toyota will pay a $1.2 billion financial penalty under a "deferred prosecution agreement."
Holder called Toyota's conduct in the matter "shameful," and said that the automaker showed "a blatant disregard for systems and laws designed to look after the safety of consumers. By the company's own admission, it protected its brand ahead of its own customers. This constitutes a clear and reprehensible abuse of the public trust."
The settlement represents the largest penalty of its kind imposed on an automotive company by the U.S.
Holder added that “other car makers should not make Toyota’s mistake,” while U.S. Attorney for the Southern District of New York Preet Bharara underlined this point, saying that Toyota’s public admissions should be a warning to other automakers.
In a statement early Wednesday, Toyota said it has "cooperated with the U.S. Attorney's office in this matter for more than four years" and had "made fundamental changes to become a more responsive and customer-focused organization, and we are committed to continued improvements."
The criminal investigation focused on whether Toyota was forthright in reporting problems related to unintended acceleration troubles.
Starting in 2009, Toyota issued massive recalls, mostly in the U.S., totaling more than 10 million vehicles for various problems including faulty brakes, gas pedals and floor mats. From 2010 through 2012, Toyota Motor Corp. paid fines totaling more than $66 million for delays in reporting unintended acceleration problems.
The National Highway Traffic Safety Administration never found defects in electronics or software in Toyota cars, which had been targeted as a possible cause.
The settlement continues a string of bad publicity for Toyota, which before the unintended acceleration cases had a bulletproof image of reliability. Since the cases surfaced, the company's brand image has been damaged and it has lost U.S. market share as competition has intensified.
Last year, Toyota agreed to pay more than $1 billion to resolve hundreds of lawsuits claiming that owners of its cars suffered economic losses because of the recalls. But that settlement did not include wrongful death and injury lawsuits that have been consolidated in California state and federal courts.
In December, Toyota filed court papers after a four-year legal battle saying that it's in settlement talks on nearly 400 U.S. lawsuits, but other cases aren't included in the talks.
The negotiations come less than two months after an Oklahoma jury awarded $3 million in damages to the injured driver of a 2005 Camry and to the family of a passenger who was killed.
The ruling was significant because Toyota had won all previous unintended acceleration cases that went to trial. It was also the first case where attorneys for plaintiffs argued that the car's electronics — in this case the software connected to a midsize Camry's electronic throttle-control system — were the cause of the unintended acceleration.
At the time, legal experts said the Oklahoma verdict might cause Toyota to consider a broad settlement of the remaining cases. Until then, Toyota had been riding momentum from several trials where juries found it was not liable.
Toyota has blamed drivers, stuck accelerators or floor mats that trapped the gas pedal for the acceleration claims that led to the big recalls of Camrys and other vehicles. The company has repeatedly denied its vehicles are flawed.
No recalls have been issued related to problems with onboard electronics. In the Oklahoma case, Toyota attorneys theorized that the driver mistakenly pumped the gas pedal instead of the brake when her Camry ran through an intersection and slammed into an embankment.
But after the verdict, jurors told AP they believed the testimony of an expert who said he found flaws in the car's electronics.
Toyota also had to pay millions for recalls, as well as a series of fines totaling $68 million to the NHTSA, the U.S. government's road safety watchdog, for being slow to report acceleration problems.
Still, the payments won't hurt Toyota's finances very much. In its last fiscal quarter alone, Toyota posted a $5.2 billion profit, crediting a weak yen and strong global sales.
The Associated Press contributed to this report.