Toyota to Pay $1.1 Billion to Settle U.S. Acceleration Lawsuit

Toyota Motor Corp. has reached a tentative $1.1 billion settlement to resolve a class-action lawsuit in the U.S. related to claims that its vehicles could accelerate unexpectedly.

Toyota has admitted to no guilt or unlawful activity. The agreement must be approved 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 5.4 million in the U.S. with sticky accelerator pedal linkages and/or loose floor mats. Either mechanical defect could prevent the accelerator from returning to the idle position.

Under terms of the settlement, Toyota will retrofit brake override systems on about 30% of 16 million affected Lexus, Scion and Toyota brand vehicles. A brake override automatically cuts power to the engine if the brake and accelerator pedals are pressed simultaneously.

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.

Toyota says it will book a $1.1 billion pretax charge to its current-quarter earnings to cover the settlement.