Toyota May Settle Criminal Investigation for $1 Billion
Since 2009, Toyota (NYSE:TM) has faced class-action lawsuits, personal injury claims, and further legal scrutiny related to acceleration issues in its automobiles. While making its case to federal agencies, the automaker was even charged by federal attorneys of submitting documents that misled government regulators. According to The Wall Street Journal, that criminal investigation may end with Toyota paying over $1 billion in fines and agreeing to probation.
Though the exact amount could not be confirmed by sources and may change, a person with knowledge of the investigation told WSJ the settlement would top the billion-dollar mark while ending the possibility of further prosecution as long as Toyota agreed to comply with guidelines set by U.S. attorneys.
Such a high-priced settlement would put Toyota’s cost of litigation over unintended accelerarion in the billions without a definitive showing that the automaker’s vehicles were defective. National Highway Traffic Safety Administration (NHTSA) regulators conducted a multi-year investigation into Toyota vehicles to determine whether actual components were responsible for the crashes that have killed scores of people and forced the automaker to recall nearly 14 million cars and trucks across the globe.
A class-action civil suit brought by Toyota owners claiming devalued investments ended with a settlement of at least $1.1 billion in 2012, which was a record amount of damages for an automaker. Hundreds of personal injury claims against Toyota over unintended acceleration are pending, but the overwhelming majority that have gone to trial went in the automaker’s favor. One case in which the jury ruled in favor of the plaintiff last October in Oklahoma forced Toyota to consider settling the remaining cases on the docket.
The massive recall and heavy legal charges only appeared to be a bump in the road for Toyota as the world’s top-selling automaker continues to post record profits. Settling the criminal charges brought by U.S. attorneys over statements to auto safety regulators would allow the automaker to continue putting the embarrassing issue behind it.
Whether or not the final analysis proves there was a mechanical or electronic malfunction that caused the automobiles to accelerate against the driver’s wishes, further talk in the press could only have negative consequences for Toyota.
Ford revisits dealer suit for third time
Ford (NYSE:F) is hoping the third time isn’t the charm for dealers suing the automaker over breach of contract, The Detroit News reports. In a case that has haunted Ford for over a decade, Ford avoided paying $2 billion in damages to dealers when an Ohio appeals court rejected Judge Peter Corrigan’s verdict in favor of the plaintiffs. A subsequent jury trial over the same matter also went in Ford’s favor.
Judge Corrigan, who presided over both trials, is now insisting on the third trial. According to The Detroit News, the matter is further complicated since Corrigan’s verdict was invalidated by the appeals court because it appeared the judge excluded evidence that would have helped Ford.