Regulators May Pursue More Fines Against Toyota

Regulators May Pursue More Fines Against Toyota
By NICK BUNKLEY
Copyright by The New York Times
Published: April 9, 2010
http://www.nytimes.com/2010/04/10/business/10toyota.html?th&emc=th


DETROIT — Federal safety regulators are considering more fines against Toyota on top of a $16.4 million penalty sought this week for taking too long to notify them of defective accelerator pedals.

The National Highway Traffic Safety Administration, in its letter notifying Toyota of the initial fine, said it might pursue a second penalty based on documents indicating the existence of two separate defects in the pedals, which were recalled in January. Two investigations into a November recall, involving floor mats that could trap the accelerator pedal, also could result in fines.

“The gravity of Toyota’s apparent violations is severe and potentially life-threatening,” the safety agency’s chief counsel, O. Kevin Vincent, wrote in the letter.

Mr. Vincent told Toyota that if not for a law that limits individual fines against a manufacturer, it should have to pay a total of $13.8 billion.

The company’s January recall for accelerator pedals that it says could stick, causing vehicles to accelerate unintentionally, involved 2.3 million vehicles. Mr. Vincent wrote that federal law allowed a $6,000 penalty for each defective vehicle sold by Toyota, which added up to $13.8 billion, but that the maximum it could seek was $16.375 million.

The agency said Toyota “inexplicably” told its American division not to stop installing defective pedals even after it made engineering changes in other countries.

Transportation Secretary Ray LaHood said this week, in announcing the intention to pursue the first fine, that documents showed Toyota had known of the potential pedal defect since at least last Sept. 29, when it issued a bulletin addressing complaints about pedals and sudden acceleration to Toyota distributors in 31 European countries.

Carmakers are required to initiate a recall within five business days of discovering a defect in one of their vehicles.

“The result of these decisions by Toyota was to expose millions of American drivers, passengers and pedestrians to the dangers of driving with a defective accelerator pedal,” Mr. Vincent wrote.

Toyota has not said whether it will challenge the initial fine, the largest the government has ever levied against a carmaker. It has until April 19 to respond.

The company could face far bigger penalties in court, where lawyers say they think Toyota could be forced to pay damages of about $3 billion if they prevail. On Friday, a panel of judges ordered consolidation of about 200 lawsuits against Toyota to be heard in Southern California federal court.

This week, an e-mail message became public in which a Toyota executive in the United States urged company officials in Japan to “come clean” about the accelerator pedal problems. The message, sent five days before Toyota announced the pedal recall Jan. 21, was among 70,000 pages of documents that Toyota turned over to N.H.T.S.A. investigators.

Toyota said in a statement that it would not comment on communications within the company but that it had taken steps to improve communication with regulators and customers. “We have publicly acknowledged on several occasions that the company did a poor job of communicating during the period preceding our recent recalls,” the company said.