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Toyota Settles Class Action Lawsuit for More Than $1 Billion

January 9, 2013

This past December, automotive giant Toyota Motor Corporation settled a class action lawsuit filed in 2010 after a recall of many of its vehicles. The settlement totals over $1 billion, and comes in the wake of complaints that the accelerator pedals on some Toyota models became stuck in an open position while driving. Many of these incidents occurred when the pedal was tangled in the vehicle’s floor mats. In other words, the cars were speeding up when they should not have been. The $1.1 — $1.4 billion settlement “includes no admission of fault or unlawful conduct by Toyota and allows the company to avoid the risks associated with battling a lengthy trial” according to a Wall Street Journal article. In the same piece, one of the lead plaintiff attorneys in the case mentioned that this is “one of the largest [settlements] in a lawsuit involving the automotive industry.”

The New York Times notes that this settlement does not even spell the end of payouts for Toyota for faulty accelerator problems: “While there are still individual personal injury and wrongful death lawsuits pending against Toyota, in addition to an unfair business practice case brought by the attorneys general of 28 states, the class action case was the largest legal action related to economic losses by vehicle owners.” Moreover, the National Highway Traffic Safety Administration has fined Toyota over $60 million for not informing their regulators of this problem when they first learned of it.

Toward the end of The New York Times article, the author cites a law professor who hints that the company is worried about the prospect of the remaining individual cases related to the auto defect recall: “‘[t]he class is very large, so each plaintiff will not receive very much,’ said Carl Tobias, a law professor at the University of Richmond. ‘The timing of this and the huge fine Toyota recently agreed to pay suggest Toyota may be concerned about the personal injury cases, in which several trials are set for this spring.’”

According to The Wall Street Journal, the settlement allocates about $250 million to Toyota owners who sold or traded in their vehicle for lost value (based on the accelerator issue), $250 million to those owners who have cars with brake systems that cannot be repaired, $400 to deal with extended warranties on parts and components, $200 — $400 to install brake override systems on as many as 3 million vehicles and $200 million in legal fees (this last figure still has to be approved by a judge). On top of all of this, Toyota is also pledging $30 million toward highway safety research, specifically targeted toward fixing accelerator problems.

This is a great example of attorneys and consumers uniting to take on a huge corporation in the interest of safety. Large companies should not only have to play by the same rules as everyone else, they should compensate their customers when they provide them with a faulty product.

Feldman Shepherd has been closely involved with automotive class action in the past as well. Only one year ago, the Supreme Court of Pennsylvania upheld a 2005 class action verdict on behalf of 10,000 Pennsylvania consumers who bought or leased 1997 — 2000 Kia Sephia vehicles with manufacturing errors in their braking systems.

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