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Toyota reaches $78.5 million settlement over air bag control units

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Toyota has agreed to settle a $78.5 million class action defective air bag lawsuit that the plaintiffs say will “resolve all economic loss claims and any and all economic loss controversies” alleged against the automaker.

The complaint alleges certain Toyota air bag control units (ACUs) and component parts are defective because of their vulnerability to an electrical overstress condition. Plaintiffs state that the alleged defect possibly present in the 2011–2019 Corolla, 2011–2013 Corolla Matrix; 2012–2018 Avalon; 2013–2018 Avalon HV; 2012–2019 Tacoma; 2012–2017 Tundra, and 2012–2017 Sequoia can result in the malfunction of the passenger safety system, including the failure of air bags to deploy during a collision.

Two suppliers that make or sell the ACUs and/or component parts for the vehicles included in the lawsuit as well as automakers Hyundai, Hyundai Mobis, Kia, Honda, Fiat Chrysler, and Mitsubishi are also defendants in the suit.

No mention of settlement agreements or any agreement documents have been filed in court with any of the other defendants.

Plaintiffs allege violations of RICO and consumer protection laws as well as acts of fraud, unjust enrichment, and breach of warranty. They contend that hundreds of consumers have reported air bags in the vehicles involved in the class action failed during serious collisions.

The defendants ceased use of the recalled ASIC in or around 2019, according to the complaint. The ASIC is a component of the alleged defective ACU. Plaintiffs argue the “abandonment” of the ASIC confirms the ACU defect.

Toyota has agreed to pay out $65 million to settle the suit, minus initial notice and settlement administration costs. The OEM also agrees to extend class members’ new parts warranty coverage to 12 years from the date of the court’s approval of the settlement terms. The warranty would cover repairs, replacement, parts, and labor costs related to the recall. Inoperable vehicles and vehicles with a salvaged, rebuilt, or flood-damaged title would be excluded from the extended warranty.

In addition, Toyota will pay up to $3.5 million to fund and operate an outreach program to increase recall remedy completion rates.

Toyota drivers who seek a recall repair or replacement after the effective date of the settlement, if the judge approves it, and aren’t provided a loaner vehicle will be eligible for reimbursement from the settlement fund. Toyota will receive a $10 million credit against the settlement amount to go toward future loaner vehicles and outreach programs, according to the proposed settlement agreement.

Those who need repair or replacement related to the alleged defective air bag module on a vehicle that hasn’t been recalled can request a courtesy loaner vehicle or submit a claim for reimbursement of rental car costs from the settlement fund during the claims period.

Payments of up to $250 per class member will be paid out unless the parties agree to a higher cap and jointly recommend the higher amount to the settlement special administrator for approval, according to the settlement agreement.

The lawsuit was consolidated and filed by 53 plaintiffs from 23 states in May 2022 after a multi-district lawsuit had been originally filed in 2019 and Toyota’s motion to dismiss was granted, in part, by the court in 2021. The vehicles were purchased in California, Florida, Nevada, Texas, South Carolina, and Washington. Toyota initially sought to have the lawsuit dismissed.

While Toyota has agreed to the settlement terms, the agreement still has to be approved by Judge John A. Kronstadt in the U.S. District Court for the Central District of California. A hearing on the settlement agreement is scheduled for Nov. 16. If approved, the lawsuit would be dismissed with prejudice, meaning a suit over the same issues cannot be filed in the future.

Without admitting any liability or wrongdoing the agreement states that Toyota will settle “for the purpose of avoiding the burden, expense, risk, and uncertainty of continuing to litigate the claims.”

By 2015, several people had already been killed or injured as a result of the ACU defect, according to the complaint. The National Highway Traffic Safety Administration (NHTSA) also launched an investigation into the ACUs.

An NHTSA chronology of its research states that many of the defendants requested an analysis of the ACUs after air bags failed to deploy.

In April 2019, NHTSA said it was expanding its investigation to include Tier-one suppliers and manufacturers and 12.3 million vehicles. Shortly before the investigation was expanded NHTSA said it had identified two substantial Toyota frontal crashes that involved one death.

“The crashes involved a MY 2018 and a MY 2019 Corolla equipped with the subject ACU that incorporated higher levels of ASIC protection,” NHTSA wrote. “Additionally, both ACUs were found to be non-communicative (meaning the ACU could not be read with an Event Data Recorder) after the crash, a condition found in other cases where EOS occurred with other OEMs. No other EOS events have been identified for other Toyota products (including Corolla models that used the subject ACU since MY 2011), or for the Honda and Mitsubishi vehicles that use the subject ACU.”

The defendants are accused in the complaint of making misleading statements to NHTSA to “obscure and downplay” the alleged defect.

“…none of the recalls actually fix the ACU Defect, because the purported ‘remedies’ do not involve removal and replacement of the defective DS84 ASIC, which is the root cause of the ACU Defect,” the lawsuit states.

“Each Defendant in this case has known about this ACU Defect for several years from internal testing and numerous crashes with air bag and seatbelt failures. Even so, they pushed and continued to push the defective Class Vehicles, ACUs, and ASICs to market.”

According to the plaintiffs, Toyota, Fiat Chrysler, Hyundai, and Kia USA have admitted that the ACU is defective and installed in more than 5 million of the model vehicles listed in the suit including:

    • Nearly 1,426,000 of the 2010–2014 MY Chrysler 200, Chrysler Sebring, and Dodge Avenger; 2010–2014 MY Jeep Compass and Jeep Patriot, and 2010–2012 MY Dodge Caliber vehicles;
    • Nearly 1.1 million of the 2011-2013 Hyundai Sonatas and 2011-2012 Hyundai Sonata Hybrid vehicles;
    • Nearly 508,000 of the 2010-2013 Kia Forte, 2011-2012 Kia Optima Hybrid, 2010-2013 Kia Forte Koup, 2011-2013 Kia Optima, and 2011-2012 Kia Sedona vehicles; and
    • Nearly 2.9 million of the aforementioned Toyota models.

An estimated 10-15 million vehicles contain the defective ACU and ASIC component but haven’t been recalled, according to the complaint.

Consumers are eligible to be included in the class if they own, lease, or previously owned or leased one of the recalled vehicles as of July 31, 2023. Those who wish to confirm that their vehicle is part of the class action can do so using a Vehicle Identification Number (VIN) lookup tool on the settlement website.


Featured image credit: Goettingen/iStock

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