Toyota Settlement: $1.2B to Resolve Precedent-Setting Safety Case

Image: Toyota Settlement: $1.2B to Resolve Precedent-Setting Safety Case U.S. Attorney General Eric Holder and Transportation Secretary Anthony Foxx (L) hold a news conference at the Justice Department in Washington.

Thursday, 20 Mar 2014 08:46 AM

By Michael Mullins

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Toyota and the Justice Department have reached a settlement regarding how the automaker has handled customer complaints over safety issues, specifically about cars that accelerated when the driver was attempting to slow down.

The Japanese automaker has agreed to pay $1.2 billion to resolve the case, stemming from an ignition switch failure that was later linked to a dozen deaths. As part of the settlement, Toyota admitted to misleading American consumers about the issue, Reuters reported.

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"Toyota has cooperated with the U.S. attorney's office in this matter for more than four years," a Toyota spokeswoman said on Wednesday. "During that time, we have made fundamental changes to become a more responsive and customer-focused organization, and we are committed to continued improvements."

In response to the settlement, Attorney General Eric Holder held a press conference Wednesday.

"Rather than promptly disclosing and correcting safety issues, Toyota made misleading public statements to consumers and gave inaccurate facts to members of Congress," he said. "My hope and expectation is that this resolution will serve as a model for how to approach future cases involving similarly situated companies."

Manhattan U.S. Attorney Preet Bharara led the investigation over the course of four years, CNN reported.

Though no one at Toyota was charged, it was the first federal criminal case of its kind since the passage of the first U.S. auto safety law 48 years ago, Reuters noted.

Starting in 2009, Toyota issued massive recalls, mostly in the U.S., for 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 of more than $66 million for delays in reporting unintended acceleration problems, The Associated Press reported.

In 2013, Toyota resolved hundreds of lawsuits filed over ignition switch failures and agreed to pay upwards of $1 billion to the plaintiffs for economic losses associated with the recalls. The payout, however, did not include wrongful death and injury lawsuits, the AP noted.

In response to Toyota's settlement with the Justice Department this week, Toyota President Akio Toyoda told reporters in Tokyo on Thursday that the company is working hard to change.

"It was a significant turning point that allowed us to go back to our basic philosophy of prioritizing our customers," he said.

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