Who Are the Victims of Takata’s Fraud?

For more than a decade, airbag supplier Takata manufactured what turned out to be ticking time bombs – airbag inflators with a volatile propellant called Phased-Stabilized Ammonium Nitrate (PSAN) – that were placed in vehicles worldwide by the hundreds of millions.

NHTSA Consent Orders and Civil Justice

NHTSA started the week with a bang – wresting from a formerly defiant Fiat Chrysler its signature on a detailed Consent Order, admitting that it violated the Safety Act in myriad ways, agreeing to pay a $105 million fine, buy back some unremedied recalled vehicles and allow a Special Monitor to look over its shoulder.    

NHTSA Fines Bus Maker Forest River

Today, the National Highway Traffic Safety Administration levied the maximum penalty against Indiana-based heavy vehicle manufacturer Forest River – $35 million for failing to launch timely recalls and for failing to fulfill a host of reporting obligations to NHTSA.  (Spartan Motors, another manufacturer of heavy vehicles, also got dinged for $9 million yesterday for failing to file Technical Service Bulletins with the agency, and in six cases, failed to launch recalls on safety defects ranging from Tag Axle Wheel Bearing failures to engine cooling fans to sway bar end links.)

Behind the Honda $70 Million Fine

Honda had its turn on the ducking stool yesterday. The Japanese automaker, which had previously disclosed that a data entry glitch led to a failure to report some 1,729 death and injury claims to the National Highway Traffic Safety Administration’s Early Warning Reporting system, got held underwater until it agreed to pay $70 million in fines.  

What Good Can Come of Reporting Toyota UA?

Last week, two young clean-cut and preternaturally earnest lawyers travelled from the D.C. and New York offices of Cahill Gordon & Reindel LLP to meet with Bob and Kathy Ruginis, the Bristol, RI couple who reported their Unintended Acceleration incident while parking to the Toyota Special Monitor and to NHTSA.  

Toyota’s Billion Dollar Web

Back in 2010, after Toyota announced that a federal grand jury in New York had subpoenaed the company on June 29 for documents regarding relay rod failures in Toyota truck models, we asked if the automaker would be the first to be prosecuted under the Transportation Recall Enhanced Accountability and Documentation Act (TREAD).

Well, right question, wrong defect.

Under the settlement with the Department of Justice announced today, Toyota is banged for $1.2 billion, and prosecution for committing one count of wire fraud is deferred for three years, for the lies it told about the floor mat entrapment and sticky pedal recalls. According to Toyota’s Statement of Facts, the automaker sought to limit its floor mat recalls, even though the entrapment hazard affected other models, and resisted the sticky pedal recall, even though Toyota had addressed the problem in Europe.

“This sends a mixed message,” says Sean Kane, president of Safety Research & Strategies. “On the one hand, a $1.2 billion fine is a very significant hit. But the government’s focus is only on the narrow areas of the floor mats and sticky pedals. The bulk of Toyota vehicles experiencing Unintended Acceleration problems were never recalled.  That billion dollars doesn’t do a thing for Toyota owners stuck with defective vehicles.”

The skeleton of this particular set of lies have been in the public domain for several years. In April 2010, when former Secretary of Transportation Ray LaHood announced that the agency had imposed a $16.4 million fine on Toyota for failing to recall 2.3 million vehicles with defective accelerator pedals – then the largest civil penalty NHTSA had levied against an automaker – the Secretary failed to make public the documents laying out his rationale. In May 2011, NHTSA quietly posted the sternly worded demand letter that explained why Toyota got slapped.

To remind our readers, Toyota recalled the CTS supplied pedal in Europe in September 2009, but waited until January 2010 to recall the pedals in the U.S. However, on October 7, 2009, “a staff member of the Toyota Motor Corporation Product Planning and Management Division sent a copy of an Engineering Design Instruction describing the pedal remedy that was already implemented in Europe to someone at Toyota Motor Engineering and Manufacturing North America, Inc. for the accelerator pedal of a RAV 4 manufactured in Canada. Two weeks later “a member of the TMC PPM inexplicably instructed a member of the TEMA PPM not to implement this Engineering Change Instruction. Furthermore, in November 2009, Toyota provided NHTSA with FTRs regarding sticking accelerator pedals on vehicles in the United States but not with information regarding Toyota’s extensive testing and determinations regarding the cause of the sticking accelerator pedals or an explanation of the significance of the FTRs, the demand letter said.

The Toyota Owners Left Holding the Bag

John Biello was not ready for the cruise control malfunction that sent his 2009 Tacoma careening down an exit ramp, then skidding into a rollover last June. But Tuesday, when he and his wife Diane appeared before the Commonwealth of Massachusetts Division of Insurance Board of Appeals to fight an automatic rate increase mandated by state law, Biello was fully prepared to educate the hearing officer about Unintended Acceleration problems in Toyotas.

As the great tide of cash washes from Toyota into the pockets of the U.S. government, attorneys, research institutions and some death and injury victims to settle fines and claims without an admission that the automaker’s electronic throttle control system is defective, owners like John and Diane Biello represent those left to deal with Toyota’s mistakes on their own. The Rehoboth, Massachusetts couple had no counsel, just a compelling account and a binder of public documents showing that Toyota Unintended Acceleration problems continue today and that juries and technical experts recognize what the National Highway Traffic Safety Administration has not: Toyota’s badly designed electronic architecture can cause UA.

“I knew that there had been this unintended acceleration problem. I had read about it a couple of years ago,” John Biello says. “But I thought it pretty much done. I thought the problem was fixed and I didn’t really think my vehicle was involved because I got no Unintended Acceleration recall notices.”

Betsy Spills Toyota’s Beans

To steal a line from Bogie: “Of all the publications in all the websites in all the world, she walks into Corporate Counsel.” She – being Betsy Benjaminson, a freelance translator from Israel who was tasked with translating from Japanese into English documents regarding Toyota Unintended Acceleration. Corporate Counsel -- being the self-described “leading digital destination for in-house counsel to find breaking news and practical information.” And this bit of breaking news? When you lie to the world about an automotive electronics problem that has the potential to result in fatal crashes, don’t expect every underling to keep your secrets.

The story, entitled Is Toyota Telling the Truth About Sudden Acceleration? (Spoiler alert: the answer is: No.) is a fascinating behind-the-scenes look at a company in disarray with a technically challenging problem that its technicians weren’t looking too hard to solve, while its legal and public relations gears clicked into place to drive the denial machine forward. Our favorite:

“Hagiwara and Chris Tinto, a V.P. for technical and regulatory affairs and safety, had been talking about the U.S. investigation and an earlier one in Europe that also involved unintended acceleration (UA).

‘Tinto is extremely pessimistic,’ Hagiwara wrote, ‘and is saying (public hearings, someone will go to jail, I can't completely take care of the pedal problem, etc.).’ Tinto's primary concerns (according to Hagiwara): ‘For NHTSA, we said that our investigations in Europe found that the pedal return is a little slow at a slightly open position, and that there were no accidents, but this is not true. Last year's situation in Europe (many reports of sticking pedals and accidents, and a TI TS9-161 was filed on October 1, 2009) was not reported to NHTSA.’ That failure, Tinto said, ‘may be a violation of the TREAD Act’—the federal law that requires car manufacturers that conduct recalls in foreign countries to report these to U.S. regulators.”

Top Ten Reasons We’ll Miss Ray LaHood

We knew as far back as October 2011 that Ray LaHood was only going to be a one-term Secretary of Department of Transportation. And yesterday, he announced his imminent departure. Ray LaHood is a brilliant politician – all confidence and certainty, a loud combination of consumer-tough-guy-bluster-and-chamber-of-commerce-boosterism. He wasn’t afraid to take public stands no matter how misguided – we’ll give him that.

Admittedly, we are not close observers of the totality of LaHood’s activities. But we have traced LaHood’s fingerprints on technologically-rooted safety problems, and they have been a source of grim amusement. Without further introduction, we give you: SRS’s Top Ten Reasons We’ll Miss Ray LaHood

1. Top Illeist in the Obama Administration

An illeist is someone who refers to him or herself in the third person.

Like Ray telling PBS interviewer Gwen Ifill: “I think that Mr. Toyoda wouldn't be here today if it weren't for Ray LaHood calling him and our people going to Japan and telling them this is serious.” Or, Ray telling NPR talk show host Diane Rehm “Diane, you and I have had discussions about airline safety before on your show and you know that nobody cares as much about safety as Ray LaHood.”

Why does a person talk about himself that way? If you are under three years old, pediatricians considered a linguistic quirk of toddlerhood. If you are over thirty, psychologists consider it a narcissistic personality trait.

Move over, famous illeists, Richard Nixon, Herman Cain, Jimmy in Seinfeld and every professional athlete – and make room on the bench for Mister Ray LaHood. 

2. Outstanding Projectionist

When Ray LaHood is annoyed – hoo-boy, don’t you know it. In February 2011, the National Highway Traffic Safety Administration released two reports purporting to resolve the question of whether electronics could be the source of Toyota Unintended Acceleration complaints. The agency kept a very tight lid on their release, handing them out to select journalists only an hour before the press conference. Both reports were lengthy, dense and highly redacted. But, writers gotta write and deadlines don’t move. Then Ray made the news show rounds complaining that the media hadn’t read the report. We read the reports, and re-read them, and we know, after listening to Ray’s characterization of its contents, that Ray did not read the reports, either.

Maybe in retirement, he’ll get around to it.

3. Undeterred by Facts

“The jury is back,” he announced. “The verdict is in. There is no electronic-based cause for unintended high-speed acceleration in Toyotas. Period.”

This pronouncement, more than any Ray LaHood made in his four-year tenure, really fried our butts.

The twin reports, Technical Assessment of Toyota Electronic Throttle Control (ETC) Systems and Technical Support to the National Highway Traffic Safety Administration on the Reported Toyota Motor Corporation Unintended Acceleration Investigation, actually said:

“Due to system complexity which will be described and the many possible electronic hardware and software systems interactions, it is not realistic to attempt to ‘prove’ that the ETCS-i cannot cause UAs. Today’s vehicles are sufficiently complex that no reasonable amount of analysis or testing can prove electronics and software have no errors. Therefore, absence of proof that the ETCS-i has caused a UA does not vindicate the system.”

The latter report, by the NASA Engineering Safety Center showed that there were several scenarios in which engine speed can be increased, RPMs can surge, and the throttle can be opened to various degrees in contradiction to the driver’s command, and not set a Diagnostic Trouble Code (DTC). Among those causes of electronic malfunction in some Toyota vehicles the investigators found were tin whiskers in the Accelerator Pedal Position Sensor (APPS) of potentiometer-type pedals. The NESC and NHTSA teams did not engage independent engineers with expertise in vehicle engine management design, validation and testing to assist them, they allowed Toyota and Exponent to guide this research. To boot, the lauded space agency never examined components from any vehicles that experienced high-speed UA events – the very focus of the lengthy technical tome. 

LaHood’s willingness to elide the facts in favor of a sound-bite that puts the matter to rest hurt every Toyota owner.

 4. Effective Policymaker

A Defect Remedy Delayed?

Well, we guess that the Christmas bonuses at Toyota are going to be a wee bit smaller this year, since the National Highway Traffic Safety Administration pocketed about 12 hours of profit from the automotive giant for failing to launch a timely recall for flying floor mats in the 2010 Lexus RX 350.

Yesterday, Toyota agreed to settle the government’s claim that it failed to file a Part 573 report to the government within the mandatory five days after discovering a defect requiring a recall for $17.35 million. According to the settlement agreement, Toyota admitted to NHTSA that it knew of 63 alleged incidents of possible floor mat pedal entrapment in Model Year 2010 Lexus RX models since 2009.

That brings the Total Timeliness Simoleans (TTS) Toyota has paid to NHTSA in two years to more than $66 million. Now, Toyota may be setting all kinds of NHTSA civil penalty records, but when one considers that the company reportedly posted a $3.2 billion profit in just the third quarter, one realizes, that by any-pain-in-the-pocketbook standard, this fine ain’t nothing.

In a statement dripping with gravitas, NHTSA Administrator David Strickland said: “Every moment of delay has the potential to lead to deaths or injuries on our nation's highways.”

This fine stems from a NHTSA-influenced floor mat interference recall last summer involving 2010 Lexus RX350 vehicles. In May 2012, the agency’s Office of Defects Investigation asked Toyota to review nine Vehicle Owner Questionnaires that indicated a floor mat entrapment problem for the 2010 RX. Toyota then reviewed its records for “additional reports that could indicate circumstances that may be consistent with potential floor mat entrapment.” On June 22, the automaker presented to ODI cases in which “potential floor mat entrapment was possible or alleged to have occurred in the subject,” including a timeline when each of the reports was received,” according to Toyota. On June 29, Toyota announced its 11th recall related to unintended acceleration, for alleged pedal entrapment by the All-Weather Floor Mat, involving the 2010 Lexus RX350 2010 and RX450 H vehicles.

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