Toyota to Pay $1.4 Billion Settlement

Toyota Wednesday agreed to pay up to $1.4 billion to settle a class action lawsuit regarding runaway vehicle problems, the largest agreement of its kind in U.S. history, a plaintiffs' attorney said.

The settlement would cover claims of economic loss due to the sudden- acceleration issues, said Steven W. Berman, one of the lead attorneys representing consumers who say they lost value on their vehicles.

The personal-injury and wrongful-death claims against the automotive giant would be handled separately, Berman said.

Christopher P. Reynolds, group vice president and general counsel for Toyota, said: "This agreement marks a significant step forward for our company, one that will enable us to put more of our energy, time and resources into Toyota's central focus: making the best vehicles we can for our customers and doing everything we can to meet their needs."

According to Reynolds, "In keeping with our core principles, we have structured this agreement in ways that work to put our customers first and demonstrate that they can count on Toyota to stand behind our vehicles."

Reynolds said it was a tough decision to agree to the proposed settlement.

"This was a difficult decision -- especially since reliable scientific evidence and multiple independent evaluations have confirmed the safety of Toyota's electronic throttle control systems," Reynolds said.

"However, we concluded that turning the page on this legacy legal issue through the positive sets we are taking is in the best interests of the company, our employees, our dealers and, most of all, our customers."

Newport Beach attorney Mark Robinson, who was co-counsel in a 1978 lawsuit involving exploding fuel tanks on Ford Pintos, is one of the leading attorneys on the personal injury and wrongful death litigation. He confirmed the proposed settlement for the economic loss cases and said the personal injury cases would continue.

The first of the wrongful death cases was set to go to trial in February in federal court in Santa Ana.

"You have to put it in context," Berman said of the settlement proposal, which still must be approved by U.S. District Judge James Selna.

NASA and the National Highway Traffic Safety Administration "found nothing wrong with these cars and a settlement of $1.2 billion is the largest settlement of an automobile case in U.S. history, both in terms of dollars involved and people included, which is 16 million," Berman said. "In my view, that's an extraordinary settlement."

Attorneys have been working on a settlement for about a year, Berman told City News Service.

The attorneys will need the names, addresses and vehicle identification numbers of Toyota owners affected to notify them as soon as February or March about how to pursue claims, Berman said.

"Then they can get on a website, punch in their VIN and see how much they're entitled to," Berman said, referring to the vehicle identification number.

That process could be approved in a court hearing in June, with payments going out by July, Berman said.

Toyota would begin a new customer-support program that would retrofit some vehicles with a free brake override system, according to Toyota. The company would also establish driver education programs and pay for new research into advanced safety technology.

Robinson was also hired by Orange County District Attorney Tony Rackauckas to help with a consumer-protection lawsuit against Toyota in state court. Settlement discussions in that case are ongoing, said Rackauckas' chief of staff, Susan Kang Schroeder.

Robinson won a significant legal victory in June when Selna ruled he would punish Toyota for allowing an inspection of a vehicle, which is the subject of the first wrongful death lawsuit to go to trial, without an attorney for the victim present.

Selna said he would fashion a jury instruction advising jurors to give "greater caution" to the testimony of Toyota's witnesses at the inspection.

The first wrongful death lawsuit slated to go to trial stems from a Nov. 5, 2010, collision that killed 66-year-old Paul Van Alfen and 38-year-old Charlene Lloyd and injured Van Alfen's wife, Shirlene, and their son, Cameron, in Utah near the Nevada border.

In the past, Toyota has blamed the sudden acceleration incidents on sticky accelerator pedals and poorly fitted floor mats. Plaintiffs have alleged Toyota knew of problems with its electronic throttle-control systems and did not fix them with brake-override devices as rival companies did.

The settlement agreement is estimated to be $1.3 billion, according to court papers.

Toyota would put $250 million into a fund for some consumers who lost money on their vehicles lost from Sept. 1, 2009, to Dec. 31, 2010, because of publicity about the sudden acceleration issues, according to the proposed agreement.

Another $250 million would be available for current consumers ineligible for a brake-override system.

The cost of installing brake-override systems for some Toyota consumers was estimated at $406 million, according to the settlement proposal.

The company will also provide a customer care plan to 16 million Toyota owners offering warranties on some parts that plaintiffs allege contributed to runaway vehicles. That plan will be offered for three to 10 years.

The cost of the customer care plan will not exceed $200 million, according to the agreement.

Toyota would also contribute $30 million in education grants to fund automobile safety research related to the issues in the litigation, according to the proposal.

Toyota would also agree to pay up to $200 million in attorneys' fees and $27 million in costs.