Last year, Toyota decided to pay $1.6 billion to settle a class-action lawsuit claiming the value of vehicles owned by its customers dropped after widespread reports of sudden, unintended acceleration in 2009 and 2010.
Owners were eligible to receive $125 to $10,000, depending on the level of depreciation. Meanwhile, the plaintiff attorneys received $200 million for their role in the settlement, plus another $27 million for their fees, sometimes exceeding $700 per hour.
The giant payday is ironic because personal-injury lawyers were the ones who stirred up the bad publicity that led to the vehicles’ decline in value. They hired public relations firms to generate media reports of Toyotas speeding out of control due to an alleged defect in electronic-throttle controls.
In 2011, a 10-month study by NASA scientists confirmed what every non-lawyer funded study has determined: There was no electronic defect causing sudden acceleration in the cars, only accelerator pedals getting trapped under floor mats and drivers mistakenly stepping on the gas instead of the brake.
Toyota already has paid tens of millions in settlements and fines related to ill-fitting floor mats. Now it has paid $1.2 billion to settle dire-sounding federal criminal charges for not alerting NHTSA and the public quickly enough about possible problems with the mats and potentially sticky accelerator pedals that were part of a massive recall.
And Toyota still faces hundreds of personal injury lawsuits alleging defects in electronic throttle controls even though the allegation has been debunked. It likely will pay out millions, perhaps billions, more to settle these suits because automakers do not want to go to war with their customers. Juries, the media and the car-buying public are more sympathetic to crash victims than big corporations, even if the victims put themselves in peril by not wearing seatbelts, texting while driving or by stepping on the wrong pedal.
Now General Motors’ ignition-switch fiasco likely will play out the same way. The automaker will be demonized by critics and safety groups with close ties to plaintiff lawyers, and attacked with dubious memos and data aimed at scaring the public and setting up the automaker down the road for huge settlements and scary criminal penalties.
The Center for Auto Safety recently captured headlines in the The New York Times and other major news outlets with a deeply flawed study that alleges more than 300 deaths could be linked to the faulty GM ignition switches. A few savvy media outlets such as the Detroit News saw through the gambit. Most did not. http://www.detroitnews.com/article/20140314/AUTO0103/303140102/1148/rss25
This is the automotive-safety circus. When it comes to town it provides drama, good television ratings and millions of page views for media websites as automakers are excoriated for real and imagined safety violations.
The safety circus however has yielded actual safety improvements. The fake Audi sudden-acceleration scare led to the development of a shift interlock system that forced drivers to put their foot on the brake before shifting into gear. The Ford/Firestone tire blowout panic yielded new mandates for tire-pressure monitoring systems and electronic stability control systems that have saved thousands of lives.
The Toyota sudden-acceleration issue has led to universal implementation of brake override systems that will prevent acceleration from pedal entrapment. And GM’s ignition switch problems likely will lead most automakers to scrutinize their parts-tracking and quality-control systems for older vehicles even though key-ignition systems are becoming obsolete.
But the trend toward billion-dollar settlements and criminal charges for almost any automotive safety failure is disturbing. What kind of a country will the U.S. become if trial lawyers can easily win billion-dollar settlements for make-believe defects and in the process become even more influential politically than they are already?
What auto CEOs will sign off on an autonomous car if they know there is a good chance they could be hauled from retirement and thrown in jail if one accidentally kills someone 10 years after it is introduced, due to defects real or imagined? Yes, autonomous cars and many other automotive innovations are coming, but if current trends continue, they might not be coming to the U.S.