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Toyota may pay $1 billion fine to settle criminal investigation

Here's how Toyota plans to finally put the sudden-acceleration issue to rest: pull out the checkbook.

The automaker is reportedly close to paying a $1 billion fine to settle a four-year federal criminal investigation into whether it properly reported safety complaints to regulators. Meanwhile, Toyota's lawyers are in settlement talks over hundreds of civil lawsuits alleging wrongful deaths or injuries, potentially adding hundreds of millions to the tab.

Previously, Toyota agreed to pay $1.6 billion to settle a class-action case brought by thousands of Toyota owners who contended sudden-acceleration problems reduced their vehicles' value.

The automaker has repeatedly denied any serious safety defect that caused its cars to take off at high speeds, causing wrecks that killed or injured occupants. Toyota appeared ready for a protracted legal battle to fight hundreds of legal claims to the contrary.

Now, Toyota appears ready to pay what it takes to move the story off front pages and newscasts.

"Toyota is trying to put this entire episode behind it," said John Goldberg, a Harvard Law School professor and product liability expert.

Investors and shareholders generally react positively to "closure," even when that comes at a price, Goldberg said.

"Given that the allegations of at least some injury victims were credible, and given the attention of government regulators, Toyota wasn't going to be able to resolve things without negotiating substantial settlements," he said.

The potential for a $1 billion settlement of the criminal investigation was first reported by the Wall Street Journal. Citing unnamed sources, the newspaper reported that an agreement with the U.S. Attorney's Office in New York could come within weeks. But the deal is not done and could change, according to the Journal.

Toyota confirmed the talks, issuing a statement that it continues to cooperate with the U.S. Attorney's Office. "In the nearly four years since this inquiry began, we have made fundamental changes to become a more responsive and customer-focused organization, and we are committed to continued improvements."

Automotive safety advocates welcomed news of a potentially huge fine in the criminal inquiry.

It is "enough to make even Toyota flinch," said Clarence Ditlow, executive director of the Center for Auto Safety.

"Even today, no one knows what Toyota withheld from the National Highway Traffic Safety Administration that could have proven beyond a reasonable doubt that sudden acceleration is due to vehicle design, not driver error," Ditlow said. "Only billion-dollar fines and criminal prosecutions can stop auto industry coverups of deadly vehicle defects."

Ditlow said the threat of criminal penalties gave the U.S. attorney more leverage than NHTSA, which regulates auto safety, to make Toyota pay such a large fine.

Toyota has faced sudden-acceleration complaints since 2009, after a California Highway Patrol officer and his family were killed when a Lexus ES crashed outside San Diego. That crash is thought to have been caused by a floor mat jamming the gas pedal in the open position, but the car was too badly damaged to be sure.

Toyota may pay $1 billion fine to settle criminal investigation 02/11/14 [Last modified: Tuesday, February 11, 2014 8:28pm]
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