Toyota Motor Corp. [corporate website] agreed to a $25.5 million settlement on Tuesday in a class action lawsuit [case materials] arising out of issues with unintended vehicle acceleration recalls in 2010. The lawsuit [Detroit News report] was brought by shareholders who argued that they were harmed by the company's recalls. They argue that the company's failure to disclose vehicle quality issues cost shareholders $30 billion in market capitalization. The settlement covers shareholders who bought shares between May 2005 and February 2, 2010.
In 2010 Toyota settled [JURIST report] US federal investigations by agreeing to pay a record $32.4 million in extra fines for product defects and poor handling of a recall. The fines stem from two investigations conducted by the National Highway Traffic Safety Administration (NHTSA) [official website]. The first, a fine of $16.375 million, concerned nearly five million vehicles with accelerator pedals entrapped by floor mats, which caused at least one fatal accident in California. The second, a fine of $16.050 million, resulted from Toyota's failure to notify the NHTSA of a safety defect in several Toyota models' steering relay rods. Toyota has been under federal scrutiny since December 2009, and has conducted several recalls. JURIST Guest Columnist Bruce Aronson says that recent corporate scandals in Japan, including the Toyota recalls, highlight the need for the reform [JURIST report] of that country's corporate governance structure.