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Old April 19th, 2010, 04:24 PM
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Arrow Toyota to pay record $16.4 million recall fine

Automaker also announces recall of Lexus SUV due to rollover concerns


WASHINGTON - Toyota Motor Corp. said Monday it will pay a record $16.4 million fine for its huge acceleration recalls and then moved to recall new Lexus SUVs to address potential rollover problems. Despite paying the fine, the Japanese auto giant denied violating any U.S. laws.

The penalty, the largest the Transportation Department could legally seek, was the equivalent of Toyota paying more than $2 for every vehicle it sold around the globe in 2009. Analysts said the penalty would have little impact on dozens of lawsuits, which have been combined before a federal judge in Santa Ana, Calif.

"In the court of public opinion, paying the fine speaks volumes. But at the end of the day, the fines are simply background noise in terms of the civil litigation," said Richard Arsenault, a plaintiff's attorney in Alexandria, La. "What's really important are the facts that were the catalyst for the fines."

Addressing more safety concerns, Toyota planned to recall the 2010 Lexus GX 460 to address a potential problem with the SUV rolling over, said a Transportation Department official familiar with the plans. The official spoke on condition of anonymity because a formal announcement had not yet been made.

The new recall affects about 6,000 vehicles that have been sold since the SUV went on sale in late December. Consumer Reports issued a "Don't Buy" warning last week, saying the vehicle was susceptible to rolling over. Toyota responded by halting sales of new GX 460s and conducting tests on all of its SUVs.

Transportation Secretary Ray LaHood said Toyota "put consumers at risk" in the earlier recall by failing to promptly notify the government about potentially defective accelerator pedals on 2.3 million vehicles. LaHood said Toyota knew about the problem in late September but failed to issue the recall until late January, violating a federal law that requires an automaker to notify the government of a safety defect within five business days.

"They did not disclose within five days that there was a problem. They didn't disclose it for several months, so we fined them the maximum amounts and they decided to pay it and that means they knew they did something wrong," LaHood told reporters in St. Louis. "They did try to hide it — that's what we accused them of — and they've agreed to that."

Toyota said it agreed to the penalty "to avoid a protracted dispute and possible litigation" but denied the government's allegation that it violated the law.

"We believe we made a good faith effort to investigate this condition and develop an appropriate countermeasure. We have acknowledged that we could have done a better job of sharing relevant information within our global operations and outside the company, but we did not try to hide a defect to avoid dealing with a safety problem," Toyota said.

The fine does not free Toyota from potential civil and criminal penalties. The Japanese auto company still faces dozens of personal injury and wrongful death lawsuits in federal courts, and federal prosecutors and the Securities and Exchange Commission also are conducting investigations.

The four-page legal agreement says Toyota denies it violated federal law and says that it will pay the civil penalty "without (the National Highway Traffic Safety Administration) making any formal findings with respect to Toyota's violations" of the law.

The penalty, the most the government could seek, is largely symbolic, given Toyota's strong balance sheet. The company had cash assets of $23.6 billion as of Dec. 31 and has said it expects to post a net profit of $885 million for the fiscal year that ended March 31.

The previous record fine was $1 million paid by General Motors in 2004 for responding too slowly on a recall of nearly 600,000 vehicles over windshield wiper failure.

Toyota announced the recall to address sticking pedals in January, affecting popular vehicles such as the Camry and Corolla. The automaker has recalled more than 8 million vehicles worldwide because of acceleration problems in multiple models and braking issues in the Prius hybrid.

The fine was based upon timelines provided by Toyota that showed it had known about the defect at least since Sept. 29, 2009, when it issued repair procedures to distributors in 31 European countries to address complaints of sticking pedals, sudden increases in engine RPM and unexpected vehicle acceleration.

The documents also indicated that Toyota knew that owners in the U.S. had experienced the same problems.

The penalty is the largest the government can assess under law. Without the cap, government lawyers said Toyota could have faced fines of $13.8 billion, or $6,000 for each of 2.3 million vehicles that were sold with defective pedals.

Transportation officials have not ruled out additional fines. The department is reviewing whether Toyota delayed for six weeks the late January recall of the 2009-2010 Venza in the United States to address floor mats that could trap accelerator pedals after making a similar recall in Canada.

Toyota recalled the Venza in Canada in December and reported to the U.S. government on Dec. 16 that the floor mats could move forward and interfere with the pedal. Toyota told U.S. authorities at the time that the floor mats in question were not imported into the U.S. but the Venza was added to the floor mat recall in late January.

The Associated Press





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Big T



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