Toyota to pay over $1 billion in recall case

The Japanese automaker had recalled more than 14 million vehicles worldwide due to acceleration problems and brake defects.

LOS ANGELES — Toyota Motor Corp. has agreed to pay more than $1 billion to settle U.S. litigation over claims that its vehicles suddenly and unintentionally accelerated, according to court filings made public on Wednesday.

Toyota has recalled more than 14 million vehicles worldwide due to acceleration problems in several models and brake defects with the Prius hybrid. Toyota has blamed driver error, faulty floor mats and sticky accelerator pedals for the unintended acceleration.

Toyota said it will take a one-time pre-tax charge of $1.1 billion to cover the estimated costs of the settlement.

Hagens Berman, the law firm representing Toyota owners who brought the case in 2010, said in a press release the settlement was valued between $1.2 billion and $1.4 billion. In a plaintiff memo filed in court, the firm estimated that the total package was "conservatively valued" at more than $1.3 billion.

The deal amounts to "a landmark, if not a record, settlement in automobile defect class action litigation in the United States," according to the plaintiff memo. Toyota described the settlement as a "significant step forward" for the Japanese automaker, which has seen its image take a hit from the controversy.

The settlement, which must be approved by a California federal judge, includes direct payments to customers as well as the installation of a brake override system in about 3.25 million vehicles, plaintiff attorneys said.

The terms include a $250 million fund for former Toyota owners who sold vehicles at reduced prices because of bad publicity, and a separate $250 million fund for owners not eligible for the brake override system.

Plaintiff attorneys are slated to receive up to $200 million in fees and $27 million in costs, according to court documents.

 

Reporting by Deepa Seetharaman and Bernie Woodall; additional reporting by Dan Levine and Jonathan Stempel

Associated Press contributed to this story.

 

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