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Toyota Faces Record $16.4 Million Fine

The government said Tuesday it has proof that Toyota knew about a safety problem involving sticking gas pedals for four months before it recalled vehicles and said it will penalize the automaker the maximum $16.4 million for the delay.

That would be a record penalty for foot-dragging. The highest so far: $1 million against General Motors in 2004 for taking too long to fix potentially faulty windshield wipers.

The law says an automaker must tell the government about a safety defect and begin a recall within five business days after discovering the problem.

"We now have proof that Toyota failed to live up to its legal obligations," Transportation Secretary Ray LaHood said Monday. "Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families. For those reasons, we are seeking the maximum penalty possible under current laws."

The automaker has 14 days to appeal to the Justice Department, agree to pay or offer more information that it hopes would change the decision of the National Highway Traffic Safety Administration, a unit of the Transportation Department. Toyota said Monday it hadn't decided what to do.

LaHood said that after poring through 70,000 pages of documents Toyota furnished at government request, NHTSA decided that the automaker knew no later than Sept. 29, 2009, that it had a potential safety defect because gas pedals on certain models could stick open.

Toyota had also had sticky-pedal complaints in Europe, and the company issued repair instructions on that day to dealers in 31 European countries and Canada -- but not in the U.S. It fixed pedal assemblies on some overseas-market vehicles last August but did not issue a U.S. recall for the sticking pedals, involving 2.3 million vehicles, until Jan. 21.

Even if Toyota decides to challenge NHTSA, "The governmental agency with authority over the automaker is saying, 'You didn't tell us the truth when you knew it,' " says Carl Tobias, professor at the University of Richmond law school. "That gives the plaintiffs' lawyers some leverage and encourages them to persist and pursue" lawsuits against Toyota for endangering their customers.

Dozens of deaths are alleged to result from runaway Toyotas, but the government has confirmed only five fatalities as being directly linked to Toyota unintended acceleration, all involving a different safety recall issue. Those incidents are linked to floor mats possibly jamming the gas pedal. Toyota has recalled 5.4 million vehicles in the U.S. for that potential cause of unintended acceleration.

The government also has asked Toyota to prove that its recalls cover any other potential causes of its unintended-acceleration complaints, beyond the floor mats and sticking pedals.


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