Toyota Agrees to Pay $1.1 Billion to End Acceleration Lawsuit

Toyota Motor Corp. agreed on Wednesday to pay about $1.1 billion to settle a class-action lawsuit about claims that its vehicles could accelerate unexpectedly. Plaintiffs' attorneys say the settlement could cost $1.3 billion.

Toyota admits no guilt or unlawful activity. But it says it will retrofit brake override systems on about 30% of 16 million affected Lexus, Scion and Toyota brand vehicles. Such systems automatically cut power to the engine if the brake and accelerator pedals are pressed simultaneously.

The company says it will book a $1.1 billion pretax charge to its current-quarter earnings to cover the settlement, which awaits approval by a U.S. District Court judge in California.

The lawsuit stems from multiple Toyota recalls in 2009-2010 involving 10 million vehicles worldwide including more than 5.5 million in the U.S. that were afflicted with sticky accelerator pedal linkages and/or loose floor mats. Either mechanical defect could prevent the accelerator from returning to the idle position.

Investigations failed to find any fault with Toyota's electronic accelerator and cruise control systems. They attributed most cases of unintended acceleration to driver error.

Plaintiffs' attorneys tell The Wall Street Journal that Toyota will pay about $250 million to former owners who claim loss of resale value for vehicles they sold between September 2009 and the end of 2010. The company also will pay about $400 million to extend warrant coverage on certain components, including electronic engine control modules.

The Journal says additional costs will include as much as $400 million to retrofit brake overrides on 3.3 million vehicles. Toyota has agreed to pay $250 million, or about $125 per customer, to owners whose vehicles cannot be modified, according to the attorneys.

The judge also will set legal fees and charges that the plaintiffs' attorney say could total $227 million.