Toyota 2013 Annual Report Download - page 110

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ANNUAL REPORT 2013
certain models of Toyota vehicles related to sticking
accelerator pedals. In February 2010, Toyota
announced a worldwide recall related to the soft-
ware program that controls the antilock braking
system in certain vehicle models including the Prius.
Set forth below is a description of various claims,
lawsuits and government investigations involving
Toyota in the United States relating to these recalls
and other safety measures.
Class Action and Consolidated Litigation
Approximately 200 putative class actions and more
than 500 individual product liability personal injury
cases have been fi led since November 2009 alleg-
ing that certain Toyota, Lexus and Scion vehicles
contain defects that lead to unintended accelera-
tion. In April 2010, the approximately 190 putative
class actions in federal court as well as the federal
product liability personal injury cases and warranty
and lemon law cases were consolidated for pretrial
proceedings into a single multi-district litigation in
the United States District Court for the Central
District of California. Approximately 10 putative
class actions and various product liability personal
injury cases pending in state courts were subse-
quently consolidated into the federal action. The
remaining class actions lawsuits are pending in
a consolidated state action in California.
In December 2012, Toyota and the plaintiffs
announced that they had reached an agreement to
settle the economic loss claims in the consolidated
federal action. The court preliminarily approved the
agreement and held the fi nal approval hearing in
June 2013. The court took the matter under
hybrid vehicles that cause the vehicles to fail to stop
in a timely manner when driving in certain road con-
ditions. The plaintiffs seek an order requiring Toyota
to repair the vehicles and claim that all owners and
lessees of vehicles, including those for which recalls
have been implemented, should be compensated
for the alleged defects related to the antilock brak-
ing system. These cases have been consolidated
into two actions, one in the United States District
Court for the Central District of California and one in
the Los Angeles County Superior Court. In January
2013, the Court in the federal case issued an order
denying the plaintiff’s motion for class certifi cation
and granting summary judgment in favor of Toyota
on the claims of the principal named plaintiff for the
cases relating to recalled vehicles. A class certifi ca-
tion hearing in connection with the claims related to
those vehicles that were not recalled is scheduled in
July 2013.
From February through March 2010, Toyota was
sued in 6 putative shareholder class actions on
behalf of investors in Toyota ADRs and common
stock. The cases alleged violations of the Securities
Exchange Act of 1934 and Japan’s Financial
Instruments and Exchange Act and were consoli-
dated into a single action in the United States
District Court for the Central District of California.
The judge dismissed with prejudice the claims
based on Japan’s Financial Instruments and Exchange
Act, and Toyota reached an agreement to resolve
the claims asserted on behalf of purchasers of
Toyota’s ADRs for an amount not material to Toyota.
The court approved the settlement in March 2013.
submission and scheduled a hearing in July 2013
for the presentation of additional information. In
fi scal 2013, Toyota recorded a $1.1 billion pre-tax
charge against earnings to cover the estimated
costs of this resolution and other potential recall-
related resolutions, including the resolution of the civil
litigation fi led by the Orange County District Attorney
and the state attorneys general’s investigation
discussed below.
The settlement provides a customer support pro-
gram covering certain vehicle parts, the free installa-
tion of a brake override system on the remaining
fl oor mat entrapment safety campaign vehicles and
funds for cash payments to customers who do not
receive the brake override system, cash payments
to individuals who allegedly suffered a loss on the
sale, lease or insuring the residual value of Toyota’s
vehicles and funds for safety-related research and
education programs. The settlement does not cover
product liability personal injury claims in the consoli-
dated federal action or pending in various state
courts in the United States.
In April 2013, Toyota announced that the court
had approved an agreement to resolve the civil
action fi led by the Orange County District Attorney
in California state court seeking, among other
things, statutory penalties alleging that Toyota sold
and marketed defective vehicles in violation of vari-
ous California statutes. The amount of the settle-
ment, which was not material to Toyota, was
included in the charge taken in fi scal 2013.
Beginning in February 2010, Toyota was sued in
approximately 20 putative class actions alleging
defects in the antilock braking system in various
While Toyota has resolved or is attempting to
resolve many of these matters, Toyota believes that
it has meritorious defenses to all of them and will
vigorously defend those matters not resolved.
Government Investigations
In February 2010, Toyota received a subpoena from
the U.S. Attorney for the Southern District of New
York and a voluntary request and subpoena from
the SEC. The subpoenas and the voluntary request
primarily seek documents related to unintended
acceleration and certain fi nancial records. This is
a coordinated investigation and has included inter-
views of Toyota and non-Toyota witnesses, as well
as production of documents. In June 2010, Toyota
received a second voluntary request and subpoena
from the SEC and a subpoena from the U.S. Attorney
for the Southern District of New York seeking pro-
duction of documents related to the recalls of the
steering relay rod. Toyota is cooperating with the
U.S. Attorney’s Offi ce and SEC in their investigations,
which are on-going.
In June 2012, Toyota announced an amendment
to the 2009 fl oor mat entrapment safety campaign
to include model year 2010 RX350 and RX450h.
Toyota submitted additional documents related to
this amendment pursuant to NHTSA’s request. In
October 2012, Toyota fi led an additional amend-
ment to include model year 2008 through 2011
Land Cruiser. In December 2012, Toyota announced
an agreement with NHTSA to resolve timeliness
claims related to the model year 2010 RX350 and
RX450h safety campaign under which Toyota agreed
to make a $17.4 million payment to the U.S. Treasury.
Notes to Consolidated Financial Statements
Selected Financial Summary (U.S. GAAP) Consolidated Segment Information Consolidated Quarterly Financial Summary Management’s Discussion and Analysis of Financial Condition and Results of Operations Consolidated Financial Statements Notes to Consolidated Financial Statements [33 of 44]
Management’s Annual Report on Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm