U.S. judge approves Toyota's $1.1 billion acceleration deal

SAN FRANCISCO Sat Dec 29, 2012 10:42am IST

A Toyota logo covered with ice is seen on a HiAce van in Nasu, north of Tokyo December 8, 2012. REUTERS/Kim Kyung-Hoon

A Toyota logo covered with ice is seen on a HiAce van in Nasu, north of Tokyo December 8, 2012.

Credit: Reuters/Kim Kyung-Hoon

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SAN FRANCISCO (Reuters) - A U.S. judge granted preliminary approval on Friday to Toyota Motor Corp's (7203.T) $1.1 billion settlement of a class-action lawsuit brought by consumers who lost value on their cars due to sudden, unintended acceleration.

U.S. District Judge James Selna in Santa Ana, California, scheduled a hearing in June for final approval of the deal, which was announced this week. It provides $500 million in cash for plaintiffs, plus installation of break override systems and a customer support program valued at about $600 million combined.

"Settlement will likely serve the interests of the class members better than litigation," Selna wrote.

Plaintiff lawyer Steve Berman said he was pleased with the favorable comments in Selna's order. Toyota spokeswoman Julie Hamp said the company was gratified by Selna's approval of the settlement, "which will provide value to our customers and provides an extra measure of confidence in their vehicles."

About 16 million Toyota, Lexus and Scion vehicles sold in the United States spanning the model years 1998 to 2010 are covered by the settlement. Company officials have maintained that the electronic throttle control system was not at fault, instead blaming ill-fitting floor mats and sticky gas pedals.

A study by federal safety officials at the National Highway Traffic Safety Administration and NASA found no link between reports of unintended acceleration and Toyota's electronic throttle control system.

Toyota, the No. 3 automaker in the U.S. market, admitted no fault in proposing the settlement, one of the largest U.S. mass class-action litigations in the automotive sector. One plaintiff's law firm called it the largest settlement in U.S. history involving auto defects.

However, the deal does not cover wrongful death or injury lawsuits, believed to total more than 300 according to a Toyota filing in June.

Toyota's recall of its vehicles between 2009 and 2011 relating to the unintended acceleration issue hurt its reputation for reliability and safety.

But the automaker's sales were up almost 29 percent in 2012 through November, compared with a 14 percent increase in the industry, and Toyota's share of the U.S. market has risen to 14.4 percent from 12.7 percent in 2011.

In his order on Friday, Selna said the settlement is fair, given the risks of further litigation and the complicated legal rulings he has issued throughout the case.

"Some of these rulings have been favorable to plaintiffs, some have been favorable to Toyota," Selna wrote. "Were the parties to proceed to a fully litigated result, virtually any outcome would face the risk of uncertainty upon appellate review of these rulings."

Selna also approved up to $200 million in attorneys' fees, saying the amount falls within 25 percent of the total settlement which is the benchmark established by appellate law.

The case is In re: Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices and Products Liability Litigation, U.S. District Court, Central District of California, No. 10-ml-02151. (Reporting by Dan Levine and Edwin Chan; editing by Richard Chang and Matthew Lewis)

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