Toyota Motor Corp. has reached a settlement agreement over a shareholder class action in the United States that accused the Japanese carmaker of failing to disclose safety and quality issues related to recalls and reports of unintended vehicle acceleration in 2010. Toyota agreed to pay $25.5 million to settle the lawsuit, as detailed in documents filed by the plaintiffs in the U.S. District Court in Los Angeles, California.
For the settlement agreement to become final and valid, it has first to be approved by U.S. District Judge Dale Fischer. Once approved, the settlement would lead to resolution of a major lawsuit that stumped Toyota since it announced the recall two years ago.
In a statement, Toyota spokesman Mike Michaels disclosed that the settlement contained no admission of wrongdoing. He noted that Toyota agreed to the settlement "to avoid the expense, distraction and uncertainty of further proceedings."
Michaels remarked that the carmaker is pleased “to be turning the page” on the issue, pending court approval and believing that it was a reasonable outcome.
Toyota investors started suing the carmaker for securities fraud in February 2010 after reports of accidents related to unintended acceleration by Toyota vehicles surfaced. Toyota then recalled around 10 million Toyota or Lexus vehicles, suffering $5 billion in costs.
Investors led by the Maryland State Retirement and Pension System alleged that Toyota concealed problems in its vehicles. The concealment led to a $30 billion drop in Toyota’s stock market value. In July 2011, Judge Fischer trimmed down the case significantly by ruling that investors who had purchased Toyota common stock couldn't sue under Japan's Financial Instruments and Exchange Act.
The ruling limited the case to covering claims only of investors in Toyota's American Depository Shares. A motion to certify the class had been fully briefed at the time of the settlement.