SAN FRANCISCO -- The US Department of Justice today officially concluded its criminal investigation into Toyota’s sudden acceleration case, which led to a recall in 2009 and 2010. Federal officials said the company intentionally issued misleading statements and concealed information about safety issues in Toyota and Lexus vehicles.
The Justice Department issued a deferred prosecution agreement with Toyota, under which the company must pay $1.2 billion, admit to misleading customers, and one count of wire fraud. The agreement also requires an independent monitor to assess Toyota’s safety-related policies, practices, and procedures for public disclosure and reporting.
“Toyota stands charged with a criminal offense because it cared more about savings than safety and more about its own brand and bottom line than the truth,” U.S. Attorney Preet Bharara for the Southern District of New York said in a release. “In its zeal to stanch bad publicity in 2009 and 2010, Toyota misled regulators, misled customers, and even misstated the facts to Congress... Companies that make inherently dangerous products must be maximally transparent, not two-faced. That is why we have undertaken this landmark enforcement action. And the entire auto industry should take notice.”
Toyota agreed to pay the $1.2 billion penalty -- the largest penalty of its kind ever imposed on a car company -- under a final order of forfeiture in a parallel civil action filed today in the Southern District of New York. Should the agreement pass judicial review, the government will defer prosecution on the information for three years and then seek to dismiss the criminal charges.
“This agreement will enable us to accomplish a great deal more than we otherwise would have. And my hope and expectation is that this resolution will serve as a model for how to approach future cases involving similarly situated companies,” Attorney General Eric Holder said at a press conference.
Toyota’s admission of guilt is a reversal for the company. In a report last year, Junko Yoshida noted Toyota “strenuously denied any malfunction in its vehicles' electronic throttle control system.”
According to the National Highway Traffic Safety Administration (NHTSA), Toyota deceived consumers and its US regulator by claiming that it had addressed the root cause of unintended acceleration through a limited safety recall of eight models for floor-mat entrapment, where an all-weather floor mat can “trap” a depressed gas pedal causing the car to accelerate to a high speed.
Although Toyota conducted a limited recall of some vehicles with floor mat issues in September 2009, the company delayed a broader recall until early 2010 -- despite internal tests warning of the dangers posed by other, unrecalled vehicle models, Holder said.
One engineer working at a Toyota facility in California said the Toyota Corolla was among the three worst vehicles for floor-mat entrapment. In October 2009, Toyota engineers in Japan circulated a chart showing that the Corolla had the lowest rating for floor-mat entrapment under their analysis. None of the findings were shared with NHTSA at the time.
“They mounted this cover-up despite widely-documented incidents, and even tragic accidents, like the one that took the lives of an off-duty California Highway Patrol Officer and members of his family,” Holder said.
In 2007, the company initiated a limited recall of 55,000 mats in the Lexus ES350 model after an internal investigation revealed that certain Toyota and Lexus models had design features that made floor-mat entrapment more likely. Toyota didn’t share these results with the NTHSA and internally touted the recall as a major victory, and according to a DOJ statement: “had the agency... pushed for recall of the throttle pedal assembly (for instance), we would be looking at upwards of $100 million + in unnecessary costs.”
“Today’s penalties follow NHTSA’s own record civil penalties of more than $66 million -- together, they send a powerful message to all manufacturers to follow our recall requirements or they will face serious consequences,” Transportation Secretary Anthony Foxx said.
— Jessica Lipsky, Associate Editor, EE Times