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.

Then, Toyota waited another three months before meeting with NHTSA, at the agency’s request, to discuss the sticky pedal situation in Europe and the U.S. – all the while selling vehicles with the defect in the U.S.

Now, Section 30170(a)(1) of the TREAD Act establishes criminal liability for anyone who violates the law “with the specific intention of misleading the Secretary with respect to motor vehicle or motor vehicle equipment safety related defects that have caused death or serious bodily injury to an individual. . . .,”  using a high bar  -- the guilty party has to have “knowingly and willfully” concealed facts or made false statements.

But, again, we all know that Toyota had jumped that hurdle. There was the January 16, 2010 famous “time to come clean” e-mail from former Toyota North America Vice President Irv Miller to one of his Japanese colleagues about dissembling on the sticky pedal defect. And there were all the bragging internal memos and presentations about persuading NHTSA not to consider certain complaints as unintended acceleration and limiting the scope of floor mat recalls unearthed during the Congressional hearings. So, while the section in the Statement of Facts referring to a “January 2010 report of a discussion following a meeting between Toyota and its regulator” in which “one Toyota employee was said to exclaim, ‘Idiots! Someone will go to jail if lies are repeatedly told. I can’t support this.’” is a lot of fun, and will surely be in heavy media rotation, what have we really learned?

Here we are, four years later, no wiser about Toyota’s dissembling on the defect that affects most of the vehicles. We are still talking about floor mats and sticky pedals (where are those complaints, by the way?), when vehicle safety systems are wholly migrating over to electronic safety-critical systems, with no functional safety requirements. And we still haven’t figured out exactly why Toyota vehicles were – and still are – accelerating in contradiction to the driver’s commands.

So in some ways, this is still a good deal for Toyota – they get to sidle past the electronic defect questions. The government looks like it means business. It’s just the little people who don’t get much out of it.

The Safety Record does see a glimmer of hope – an opportunity for bootstrapping. The deferred prosecution agreement puts Toyota under the eyes of an “independent monitor,” which it has a hand in selecting (Hello, hello? Get Vince Galvin and Exponent on the phone!) to oversee practices, policies and processes and makes sure Toyota doesn’t tell anymore lies to everybody. But even better is a requirement that Toyota conduct itself with more probity than Caesar’s wife until 2017: “It is understood that Toyota shall (a) truthfully and completely disclose all information with respect to the activities of itself and its subsidiaries… concerning all matters about which the Office inquires of it, which information can be used for any purpose; (b) cooperate fully with the Office, FBI, DOT, NHTSA, and any other law enforcement agency designated by the Office..” etcetera, etcetera, etcetera.

The lengthy and all-inclusive agreement language compels Toyota to give over everything and anything to any investigative body, anywhere and at any time. We at The Safety Record are no experts on DOJ deferred prosecution agreements. Perhaps this is boiler plate, intended to make the point that the automaker is under double-secret probation. But could future revelations about relays rods be in the offing? Could NHTSA if it were so inclined, re-visit the electronic causes of Toyota Unintended Acceleration? Given what was revealed in Bookout v. Toyota, in which the plaintiff’s experts went through Toyota’s source code with a fine-tooth comb, and found it to an unholy mess – badly designed, untestable and riddled with bugs and ineffective fail-safes, it seems as though there’s an established route laid out for the taking. (See Toyota Unintended Acceleration and the Big Bowl of “Spaghetti” Code – One of our best-read blogs – ever.)

We certainly hope so. The government can still redeem its inadequate technical investigations – not just to nail Toyota, but to ensure that all vehicles are equipped with robust electronic systems and don’t expose the driving public to deadly and unnecessary hazards.

Department of Justice - Statement of Facts

 

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