U.S. to Seek $16.4 Million Fine Against Toyota

U.S. to Seek $16.4 Million Fine Against Toyota
By MICHELINE MAYNARD
Copyright by The New York Times
Published: April 5, 2010
http://www.nytimes.com/2010/04/06/business/06toyota.html?hp


DETROIT — The Transportation secretary, Ray LaHood, said Monday that the federal government would seek a $16.375 million civil fine, the largest allowed, against Toyota Motor over a recall of sticking accelerator pedals on 2.3 million vehicles.

Mr. LaHood, in a statement, said the company had failed to promptly notify the government when it learned of problems with vehicles elsewhere in the world.

If the fine were levied, it would be the largest civil penalty assessed by the government against a car company, although fines against other companies, like airlines, have been far higher.

Under the law, Toyota has two weeks to accept or contest the fine. It has not replied to the department, a Transportation spokeswoman said. If the company decided to fight the penalty, the government could seek to have it imposed in court.

A Toyota spokeswoman, Cindy Knight, said in a statement that the company had not yet received a letter from the agency. “We have already taken a number of important steps to improve our communications with regulators and customers on safety-related matters as part of our strengthened overall commitment to quality assurance,” Ms. Knight said.

Since fall, Toyota has recalled eight million vehicles worldwide, including about six million in the United States, for floor mats that could become entangled in accelerator pedals or problems with the pedals themselves.

The recalls were the subject of a series of high-profile hearings in Congress that featured the company’s president, Akio Toyoda, as well as family members of those killed in crashes and owners who said they experienced unintended acceleration.

In a statement, Mr. LaHood said Monday that documents obtained by the department showed Toyota knew of the potential defect since at least last Sept. 29, when it issued repair procedures in 31 European countries and Canada to address complaints that accelerator pedals could become stuck and cause sudden unintended acceleration.

The documents also showed that the company received complaints at that time from American owners who were experiencing the same problems. But the company did not recall vehicles in the United States until late January.

Executives at Toyota’s American operations said during Congressional testimony in February that they did not know about the sticking accelerator problem until this winter, even though Toyota had received complaints in Ireland and Britain in late 2008, and began changing production methods in Europe last August.

Auto companies are obligated to notify the National Highway Traffic Safety Administration within five business days if they determine that a safety defect exists.

“We now have proof that Toyota failed to live up to its legal obligations,” Mr. LaHood said in a statement. “Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families. For those reasons, we are seeking the maximum penalty possible under current laws.”

The $16.375 million penalty is the largest allowed per recall under the Tread Act, which was enacted after accidents involving Firestone tires on Ford Explorers.

The N.H.T.S.A. is still investigating two other Toyota recalls to see if more fines should be imposed. That investigation began on Feb. 16. It can impose a similar fine in each recall.

“We will continue to hold Toyota accountable for any additional violations we find in our ongoing investigation,” David Strickland, the N.H.T.S.A. administrator, said in a statement.

The agency decided to impose the fine based a preliminary investigation of more than 70,000 pages of documents, received as part of its investigation.

During Congressional testimony, Toyota executives said information about recalls and defects in other countries was not routinely shared, although it could be obtained by visiting a company database. They said the authority to make recall decisions rested with company executives in Japan.

Since then, Toyota has started a global quality committee, with 70 representatives from around the world, which will be responsible for assuring that problems are shared among the company’s global regions.

It also plans to set up quality training centers around the world. But executives in Japan will still have the final say about recalls, Toyota said.