Reference no: EM133100850

Toyota has reached a settlement agreement in a product liability lawsuit brought by the family of two people killed in an accident, which was allegedly caused by sudden acceleration of their Toyota Camry. Problems with uncontrollable acceleration led to the recall of millions of Toyota vehicles in 2009 and 2010, and the auto maker still faces hundreds of lawsuits brought on behalf of vehicle owners. The settlement came in a Toyota wrongful death lawsuit brought by the family of Paul Van Alfen and Charlene Lloyd, about one month before the lawsuit was scheduled to go before a California jury on February 19. Details of the settlement have not been disclosed.

Van Alfen and Lloyd were killed in 2010, when the Camry driven by Van Alfen allegedly accelerated out of control and failed to stop when he applied the brakes. The car slammed into a rock wall and the two were killed. Two other passengers in the car, Van Alfen's wife and son, were injured in the crash. They have indicated that Van Alfen slammed on the brakes to stop the car, to no avail. The agreement comes less than a month after Toyota announced it was setting aside $1.1 billion to settle claims by Toyota customers that the resale value of their Toyota vehicles was damaged by reports of sudden acceleration problems and the recall of more than 10 million Toyota and Lexus vehicles. However, that amount did not address personal injury and wrongful death lawsuits filed against the company.

All lawsuits over the Toyota recalls have been centralized and consolidated under Judge James V. Selna for pre-trial proceedings in the U.S. District Court for the Central District of California in Santa Ana as part of a multidistrict litigation (MDL). The first trial is slated to begin in February 2013. The claims allege that the vehicles accelerated out of control, and that applying the brakes did not help. The company blames the problem on floor mats that were too thick, but some accusations claim that the problem is electrical or mechanical in nature. In addition to the growing costs of the lawsuits, Toyota was also fined $66.2 million by the U.S. National Highway Traffic Safety Administration (NHTSA) for failing to address the problems in a prompt manner, and also paid investors $25.5 million to settle claims that the company tried to conceal the problem, resulting in inflated stock value.

Toyota Motor Corp. said it has agreed to pay about $1.1 billion to settle a class-action lawsuit launched by U.S. vehicle owners affected by a series of mass recalls from the Japanese automaker. Toyota did not accept any blame but agreed to compensate owners who argued that the value of about 16.3 million vehicles took a hit from dozens of deadly accidents allegedly caused by Toyota vehicles speeding out of control in 2009.

The deal will cover the cost of installing a free brake-override system in about 2.7 million vehicles. It also will provide cash payments to those who sold their vehicles in the wake of the recalls or who own vehicles ineligible for the override system. The huge payout will "sting" Toyota, but it also will allow the Japanese giant to "leave these troubles behind and move forward in the new year," said Michelle Krebs, an analyst with Edmunds.com.

Once lauded for its safety standards, Toyota has been forced into damage-control mode in recent years after recalling millions of vehicles due to a series of serious defects. The firm's biggest domestic rivals, Nissan and Honda, also have issued huge recalls over their own safety and quality problems. Earlier this year, Toyota added two models to the 2009-2010 recalls launched after it was discovered that floor mats were trapping the accelerator pedal. Toyota's mishandling of the initial problem and other reports of sudden, unintended acceleration led to a U.S. congressional probe, more than $50 million in fines from U.S. regulators and public apologies by its chief. Earlier this month, the company agreed to pay a record $17.4 million fine for failing to promptly notify U.S. authorities that the floor mats also could be trapped under the accelerators of 2010 Lexus models. And in November, Toyota agreed to pay $25.5 million to settle claims from shareholders who lost money after the automaker's stock price plummeted in the wake of the recalls.

Toyota has worked hard to regain its reputation for safety, while at the same time fighting off the impact of the economic crisis, a strong yen and the devastating 2011 earthquake-tsunami disaster. The settlement helps Toyota avoid a lengthy and risky court battle with angry owners who also argued that its technology -- not the trapped floor mats -- was behind the deadly instances of sudden, unintended acceleration. "This was a difficult decision -- especially since reliable scientific evidence and multiple independent evaluations have confirmed the safety of Toyota's electronic throttle-control systems," Christopher Reynolds, Toyota Motor North America's chief legal officer, said in a statement. "However, we concluded that turning the page on this legacy legal issue through the positive steps we are taking is in the best interests of the company, our employees, our dealers and, most of all, our customers."

QUESTION:

Examine FOUR (4) major defects or non-safety features by Toyota cars that forced the company to recall its cars from the market.