US files charge against Toyota, $1.2B penalty

[BenK]

FYI...no OEM is immune from bean counter management decisions...



US files charge against Toyota, $1.2B penalty

US files charge against Toyota, $1.2B penalty
By ERIC TUCKER and TOM KRISHER, Associated Press
Updated 11:20 am, Wednesday, March 19, 2014


WASHINGTON (AP) — The U.S. government announced a $1.2 billion settlement with Toyota Motor Corp. on Wednesday and filed a criminal charge alleging the company defrauded consumers by issuing misleading statements about safety issues in Toyota and Lexus vehicles. The penalty is the largest of its kind ever imposed on an auto company, the Justice Department said.

The action concludes a yearslong criminal investigation into the Japanese automaker's disclosure of safety problems, which focused on whether Toyota was forthright in reporting problems to unintended acceleration troubles.

The company admitted to misleading consumers and regulators in providing assurances that it had addressed the problems — which became public in 2009 following a car crash in San Diego that killed a family of four — through a limited safety recall of certain models. Toyota knew at the time that other models susceptible to the same acceleration problem had not been recalled and also took steps to conceal a separate acceleration problem related to a faulty pedal, according to the Justice Department.

"In other words, Toyota confronted a public safety emergency as it if were a simple public relations problem," Attorney General Eric Holder said at a news conference.

The company faces a criminal wire fraud charge in New York that prosecutors say they will move to dismiss in three years if Toyota complies with the terms of the deal. Under a deferred prosecution agreement, an independent monitor will review policies, practices and procedures at the company.

No Toyota executives were charged under the deal. U.S. Attorney Preet Bharara of the Southern District of New York, whose office brought the case, said he expected the agreement to be a "final resolution."

"As you might imagine, when you have a company with individuals who are responsible for unlawful conduct in other jurisdictions, there are problems of evidence and problems of proof," he said.

In a statement, Toyota said that at the time of the recalls, "we took full responsibility for any concerns our actions may have caused customers, and we rededicated ourselves to earning their trust," said Christopher P. Reynolds, chief legal officer of Toyota Motor North America.

"In the more than four years since these recalls, we have gone back to basics at Toyota to put our customers first," he said.

Toyota said it had "made fundamental changes to become a more responsive and customer-focused organization, and we are committed to continued improvements."

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 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.

Toyota's U.S. market share, however, has fallen more than 4 percentage points since unintended acceleration came to the forefront in August of 2009, when a California Highway Patrol officer and three others were killed in a fiery crash. The officer's runaway car was traveling more than 120 mph when it crashed and burst into flames. One of his family members called police about a minute before the crash to report the vehicle had no brakes and the accelerator was stuck.

At the time, Toyota controlled 17.8 percent of the U.S. market. Gas prices were high, playing to Toyota's fuel-efficient small cars and hybrids. Detroit automakers were in serious financial trouble and had few fuel-efficient cars for sale.

By last month, though, Toyota's share fell to 13.3 percent, according to Autodata Corp., as the company faced intense competition in small and midsize cars from resurgent Detroit automakers and Korean brands Hyundai and Kia.

The Toyota criminal charge and settlement could foreshadow what's in store for General Motors. The same U.S. attorney's office is investigating the Detroit auto giant for its slow response to a faulty ignition switch problem in older compact cars that has been linked to at least 31 crashes and 12 deaths. NHTSA also is investigating whether GM withheld information about the problem and could fine the automaker $35 million.

__

Krisher contributed from Detroit

[mich800]

Hannibal wrote:
I'm also having a hard time believing a Toyota could run away through the brakes, Parking pawl, neutral, ignition off, merciful God, whatever it takes. We used to do brake burnouts with our old muscle cars with drum brakes until the transmission burned out our wallets. NASCAR drivers do it after every race with well over 800hp and the car doesn't run away and that's with the rear brakes disabled. Apparently, it's cheaper in many ways to settle.

Drive by wire adds an entire new dimension. I am sure each individual sub-component has a fail safe. So that tells me that for some reason the computer did not recognize a failure on some level. I have not researched the Toyota issue so that is just my take based on what I have read here.

[Hannibal]

Perrysburg Dodgeboy wrote:
When someone posts an link hat says All Of these reported incidents were caused by the floor mat or mat stacked on top of another then I will say I was wrong. But sorry it has to be a third party not Toyota.

http://www.caranddriver.com/features/its-all-your-fault-the-dot-renders-its-verdict-on-toyotas-unint...

[kmfvfr]

If my Tundra ever exhibits unintended acceleration I am going to hang on for dear life and steer it straight to the dealer, get it stopped somehow, and buy another...

[Hannibal]

I'm also having a hard time believing a Toyota could run away through the brakes, Parking pawl, neutral, ignition off, merciful God, whatever it takes. We used to do brake burnouts with our old muscle cars with drum brakes until the transmission burned out our wallets. NASCAR drivers do it after every race with well over 800hp and the car doesn't run away and that's with the rear brakes disabled. Apparently, it's cheaper in many ways to settle.

[Perrysburg_Dodg]

I want to know why when someone says something about a brand they don't have they said to be bashing? I never "bashed Toyota" inany of my responses. I posted links a stated what I believed to be ture. When someone posts an link hat says All Of these reported incidents were caused by the floor mat or mat stacked on top of another then I will say I was wrong. But sorry it has to be a third party not Toyota.

When I posted a thread about GM facing fines that could exceed any other fines handed out at the time. I was painted as a GM bashing Chrysler worker. Sorry but that just isn't the fact, I like GM my father worked for them.

[Ron3rd]

1.2B; Lunch money for Toyota

[spoon059]

DaveF-250SD wrote:
The sudden unintended acceleration is indeed a real issue. Of the 97 deaths in the United States, one third were in cars which had the floor mats already removed by their owners. There were also deaths from this issue in South America, Africa, Asia, and even in Japan. There are two ways any electronic throttle can fail, to wide open or to closed (idle).

One of the great things about the internet is that one can make any claim that why want and not have to provide proof...

[DaveF-250SD]

The sudden unintended acceleration is indeed a real issue. Of the 97 deaths in the United States, one third were in cars which had the floor mats already removed by their owners. There were also deaths from this issue in South America, Africa, Asia, and even in Japan. There are two ways any electronic throttle can fail, to wide open or to closed (idle).

[DavinD]

Bumpyroad wrote:
if you turn off the ignition, do the air bags still deploy?
bumpy

Too soon. 😉

[spoon059]

Bumpyroad wrote:
if you turn off the ignition, do the air bags still deploy?
bumpy

Whoa... how dare you make reference to an actual defined mechanical safety issue that a manufacturer knew about ahead of time and refused to take steps to prevent tragedy...

I did notice that in the midst of the Toyota bashing, nobody mentioned this...

[Bumpyroad]

if you turn off the ignition, do the air bags still deploy?
bumpy

[mich800]

spoon059 wrote:

Perrysburg Dodgeboy wrote:
Last point, this vehicle was a loaner car from a Lexus Dealership and was loaned out days before. The car was reported to have had a uncontrolled acceleration. The driver reported this to the dealership. But the person did not say the mat or mats were stuck under the peddle.

Don, did you actually read the linked article? This is an exact quote from the article...

article wrote:
Bernard noticed the floor mat had become stuck under the accelerator pedal. After he cleared the mat, he drove normally, although likely a little shaken.

When Bernard returned the vehicle to Bob Baker Toyota/Lexus on the evening of August 25, he reported the problems to the receptionist.

"I think the mat caused it," he told the receptionist upon handing her the keys. "You need to tell someone."

FYI, Bernard is the name of the guy that used the same exact vehicle immediately before the CHP officer did.

Also, I am a police officer. I work with several idiots. I'm sure everyone here has either run into, or heard a story about a stupid cop. I don't know the CHP officer that died, I make ZERO representation about his level of training or intelligence. I am simply stating the fact that police officers are all human. In every subsection of human, you are going to find idiots. In my 12 years on the job, I have never received training in how to remove a stuck carpet from under the accelerator. People make the argument that this simply couldn't be the cause because he is a well trained cop. One has nothing to do with the other.

I potentially understand the reason he didn't turn off the car, you have to hold the button for 3 seconds. I can assume that he had driven the car before and turned it off before by holding the button for 3 seconds... but I don't know for certain. I do know that ANY vehicle can be placed in neutral (or clutch pushed in) and the vehicle can coast to a stop. Also, the braking action wouldn't be fighting the acceleration from the engine at that point.

Bottom line, I have heard ZERO factual evidence that there was anything other than misplaced floormats causing this accidents. Toyota's recall was threefold... They visually check every vehicle for improperly placed floormats and removed all non factory floormats. The shimmed the accelerator pedals to place them higher (further from the floormats) to prevent then from getting stuck under misplaced floormats. Finally, they installed a brake override feature that cuts the "drive by wire" input when the brakes are pushed.

All of these "fixes" were put in place to prevent problems with floormats. If the NHTSA had ANY proof at all that anything other then floormats caused this issue, why weren't there any other requirements of the recall? I have a 2010 Tundra and a 2008 Camry. They were both subject to these recalls and that is all that was "fixed".

That is so true about the human factor. I do not care how "trained" an individual is they are still human and until they are tested in a real event there is no way to know if they will react correctly. That is just a fact of life. I am not assuming that is the case here but the simple fact he was a police officer does not guaranty the decisions made on that day were correct.

[larry_barnhart]

45Ricochet wrote:
I certainly wouldn't pay out $1.2 BILLION if I had a slim case. No case guess I'd pay up. It's pretty oblivious big T had no case because of the facts. Chi* happens with all of them, it's how the corporation reacts to a known problem. That speaks volumes. Step up, own up, fix it and move on. Sweeping it under the rug is just asking for high dollar suits to get involved.
Ask Paula Dean her advice :E
Having said this we had a 4runner for like 7 years, great vehicle.

The good thing is we have the money for the trip to china this week.

Sometimes it works ok.

chevman

[BenK]

Wow...posted as a FYI...

My point is that in the old days, a Japanese CEO would have committed hari kari

Today's Japanese CEO's are now more bean counter mentality than old

I've kept abreast of the Toyota throttle issue and saw another old way gone.
In the old days...Japanese OEMs would source, say that throttle assembly, from
MANY providers...not one humongo supplier

If one should have an issue, they would NOT be fired as most in NA CEO's or
managers would do, but put on notice and in a penalty box till they solved whatever
their issue was

The other suppliers would take up the slack

Japanese processes have been copied...thinking that would solve everything.

Not so. Anyone remember how JIT (just in time) inventory management was going
to solve all the ills the Big Three were facing? Nope, but it did help

Now it's 'lean' and also touted as the solution to end all...nope...just one
aspect of the whole, which is more cultural than anything else

Little known this...that the Japanese learned the HOW2's of their now world
famous 'Quality' metrics from the Big Three. Plus during that period they also
reaped the benefit of mostly all brand new manufacturing equipment

This is just after WWII.

The US sent tons of stuff to help rebuild. All the while 'most' USA CEO's did
NOT upgrade their factories to keep up.

That is also a ditto for Germany

I remember as a kid watching the news of all these Japanese guys touring the
Big Three's factories. Taking copious notes and pictures. That is well documented
in any 'the history of quality classes'

Back to the unattended acceleration...I owned a 80's Audi 5000S that had this
happen. Brakes did not hold, nor shifting it into N or Park. Just turned off
the key and then the brakes were enough. Sold that as soon as I could by trading
it in on a Japanese Lux sedan

My favorite off roader was my 1970 Toyota FJ40. Before that built up an old WWII
Jeep, made my own dune buggy and three friends had CJ5's (one raced it).

For the price, decided to buy that used FJ40 over the used Nissan patrol or CJ5
was also looking at

Engaged and she didn't like the FJ40, so sold it for the K5 Blazer....she is now
'the ex' and in hind sight...shoulda tossed her and kept the FJ40...

[W_E_BGood]

spoon...THANK YOU for just about the only cogent, FACTUAL, and rational comment to this thread. I supervised enough "highly trained" LEO's during my career to confirm your observation that the "bell curve" of common sense and "rational decision-making" exists in the profession just as it does in the general population.