The Chicago Personal Injury Law Blog

Toyota Settles Most Unintended Acceleration Suits for $1.1 Billion

And so ends perhaps the most embarrassing chapter in Toyota’s history. The Japanese automaker, which made its mark worldwide on its reputation for safety and reliability, has agreed to settle claims arising out of an unintended acceleration problem that affected about 16 million Toyota, Lexus, and Scion branded vehicles, reports Reuters.

Though the $1.1 billion settlement covers repairs and economic losses resulting from the accelerator issue, the company will not admit fault as part of the deal. This likely has something to do with still-pending litigation over deaths and injuries resulting from the acceleration problem. The wrongful death and injury claims were not included in the settlement, though many have already been handled.

The staggering amount may sound like a significant settlement, and it certainly eclipses previous automobile defect settlements (such as the $240 million Firestone and Ford Explorer settlement), it will only have a small effect on the company's bottom line. The company forecasts an operating profit of $12.3 billion for the fiscal year that ends in March 2013, according to Reuters.

Of course, Toyota owners are rightfully wondering what this settlement will mean to them. The settlement covers economic losses to owners of the affected vehicles. Because the alleged defect was so newsworthy, lawyers representing owners of the affected vehicles argued that the negative press would diminish the value of the vehicles and make them harder to sell.

WSJ - Settlement Infographic
Image courtesy of the Wall Street Journal

According to the Wall Street Journal, the fund could be as large as $1.4 billion and will provide $250 million to those who have already sold or traded in their vehicles (for presumably less value), $250 million for those whose brakes cannot be upgraded, $200 million in attorneys' fees, $400 million to cover the cost of extended warranties on certain components, and somewhere between $200 and $400 million to install a brake-override system affected vehicles capable of handling the upgrade. The system would override the accelerator if the brake is pressed.

Though this is certainly a milestone in putting the recall madness behind them, Toyota still has much more legal wrangling to handle. In addition to any remaining accelerator cases, including some involving deaths, there is also the possibility of litigation after Toyota announced another recall, covering 7.4 million cars globally, back in October.

When a manufacturer releases a defective product, they are strictly liable for damages caused by that product. For example, Toyota's most recent recall involved an under-lubricated window switch that can catch fire. Should that burn down a vehicle, killing any passenger stuck inside, Toyota would liable for the vehicle and the person's death.

The economic loss argument flows from this same theory. Defects cause diminished resale value, especially when the alleged defect causes something as terrifying as uncontrollable and unintended acceleration. Though these cases are typically hard to prove, after all, cars depreciate for a number of reasons, credible cases can be brought for the larger and more significant defects.

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