A Santa Ana-based federal judge said today he will sign off on an “extraordinary” $1.6 billion settlement of a class-action lawsuit against Toyota over runaway vehicle problems.
U.S. District Judge James Selna ladled praise on the attorneys involved in the settlement, which was about 18 months in the making. The judge repeatedly referred to the agreement as “extraordinary,” stressing how “every single dollar is going to a class member” and that those who put in a formal claim will get full value.
The settlement covers Toyota customers whose cars lost value as a result of publicity about the sudden-acceleration issues with the company’s vehicles.
“It’s extraordinary in its complexity,” Selna said, adding that the attorneys on both sides showed “extraordinary flexibility” as they worked to settle the case.
The lead attorneys on the case and Selna all praised Special Master Pat Juneau, who helped referee the settlement discussions.
“These negotiations were like a boxing match, like Ali and Frazier,” plaintiffs’ attorney Frank M. Pitre said. “It isn’t perfect and no settlement ever is, but it is the best settlement.”
Steven W. Berman, the lead attorney for the economic-loss plaintiffs, pointed to Toyota attorney John Hooper and quipped, “With respect to Mr. Pitre’s remarks, I was Ali and he was Frazier.”
Hooper said on the last day of settlement negotiations, after putting in about 14 hours of work, a paralegal noted it was Juneau’s 75th birthday, but he hadn’t mentioned it.
Hooper told the judge that while the company felt it could prevail at trial, Toyota executives wanted to put the issue behind them.
“The reason why Toyota is pleased today … is we’ve been trying to find a resolution that would drive value to the customers while putting this past” the company, Hooper said.
Toyota issued notices to 22.5 million customers about the settlement and how to make a claim. To date, about 500,000 claims have been made, which attorneys said is relatively high in such class-action cases.
Claims will be taken until July 29. Berman said he expects up to one million Toyota customers will put in claims by the end of the month.
For the rest of the customers in the class, checks — that are good for 90 days — will be issued to them for less value, Berman said. If they do not respond then, another check good for 90 days will be sent out along with a reminder letter, he said.
Those who take the time to fill out claim forms ill get the full value of their loss as determined by an expert no matter which state they live in, Berman said. Since each state has different rules in settlements of this nature, those who do not put in a claim will receive checks based on their state’s laws That means Toyota owners in some states will receive 30 percent of damages, others will receive up to 70 percent and in states like California, customers will get the full value owed to them, Berman said.
Customers due a brake-override system can either opt for $125 or take the mechanical upgrade on their vehicle, Berman said.
The payoff for customers making a claim range from $125 to $10,000 depending on the value of the vehicle, Berman said.
Selna also approved $200 million in attorneys’ fees for about 100 lawyers who worked on the case, Berman said.
Objectors have 30 days to appeal. Any appeals will delay payments to customers, but Toyota intends to install the brake-override systems regardless.
Berman believes it is the largest settlement of its kind in the country’s history in terms of dollars and number of consumers affected. The installation of brake-override systems also makes the settlement novel, he added.
For example, a customer who bought a 2009 Avalon and sold it before March 2010 would receive about $4,600, Berman said. A customer who bought a 2008 Prius stands to get about $3,418, he said.
Selna rejected the objections coming from some claimants because they filed their paperwork too late, and he noted that their complaints would be addressed in other ways. For example, some objectors argued they should be compensated for ill-fitted floor mats, but the judge noted Toyota has already offered replacements in an agreement with the National Highway Traffic Safety Administration.
Toyota attorney J. Gordon Cooney Jr. noted that Toyota’s dealers even offered free cleanings of the mats at the company’s request.
Still to be decided are the fates of personal injury and wrongful death cases. One of those trials is set to begin next week in Los Angeles County Superior Court.
Attorney Mark Robinson, the lead attorney on the wrongful death and personal injury cases, said one case is set to go on trial before Selna in November. Another case will go before a Michigan jury in November.
Robinson settled the first of the “bellwether” cases meant to lay the groundwork for the other sudden-acceleration claims in January. He could not disclose the terms.
The other cases are expected to go to trial and, depending on the outcome, Toyota will either quickly settle most of them or keep contesting them, said attorney Wylie Aitken, who is the lead liaison counsel for plaintiffs in the economic loss, personal injury and wrongful death cases.
If juries rule against Toyota, “it could lead to a singular settlement of the wrongful death and personal injury cases,” he said.
In the past, Toyota has blamed the sudden acceleration incidents on sticky gas pedals and poorly fitted floor mats. Plaintiffs have alleged Toyota knew of problems with its electronic throttle-control systems and did not fix them with brake-override devices as rival companies did.
Toyota agreed to put $250 million into a fund for some consumers who lost money on their vehicles from Sept. 1, 2009, to Dec. 31, 2010, because of publicity about the sudden acceleration issues. Another $250 million will be available for current consumers ineligible for a brake-override system.
The cost of installing brake-override systems for some Toyota consumers was estimated at $406 million.
The company will provide a customer care plan to 16 million Toyota owners offering warranties on some parts that plaintiffs allege contributed to runaway vehicles. That plan will be offered for three to 10 years. The cost of the customer care plan will not exceed $200 million, according to the agreement.
Additionally, Toyota will contribute $30 million in education grants to fund automobile safety research related to the issues in the litigation.
Paul Anderson | City News Service