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Report Says Toyota Will Pay Record Fine

Apr 19, 2010 | Parker Waichman LLP

A source with the National Highway Traffic Safety Administration (NHTSA) has told the Associated Press that Toyota will agree to pay a record fine for failing to inform the government about faulty gas pedals in a timely manner. The penalty - $16.375 million -  is the largest ever to be assessed against an automaker by the NHTSA.

Automakers are legally obligated to tell U.S. safety regulators within five days if they determine a safety defect exists. However, according to an April 5 letter from the NHTSA to Toyota, documents obtained from Toyota show that the company knew of the sticky pedal defect since at least September 29, 2009.  It wasn't until January 2010 that the automaker recalled more than 2 million vehicles because the pedals could potentially stick, causing sudden, unexpected and dangerous acceleration.

“We now have proof that Toyota failed to live up to its legal obligations,” Transportation Secretary Ray LaHood said in a statement announcing the record fine. “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.”

Toyota has until today to contest the NHTSA fine. However, an anonymous source with the agency told the Associated Press that the automaker is expected to pay the full amount of the assessed fine within 30 days as a means of avoiding going to court against the government. While the source said Toyota is not expected to explicitly accept liability, it would be the government’s viewpoint that an agreement to pay the full fine “constituted acceptance of responsibility for hiding the safety defect in violation of the law.”

Since last fall, Toyota has recalled more than 8 million vehicles worldwide for problems involving sudden acceleration. Toyota has blamed the speed control issues on defective floor mats and faulty gas pedals. In the U.S., five deaths have occurred in auto accidents involving the unintended acceleration of a Toyota or Lexus vehicle. Last August, a California Highway Patrol trooper and three members of his family were killed in such a crash in San Diego County, just south of Orange. Dozens of other fatalities over the past decade alleged to be the result of Toyota unintended acceleration crashes are currently being investigated by the NHTSA.

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