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Toyota Judge Delays Final Approval of $1.1 Billion Accord

June 13 (Bloomberg) -- Final approval of Toyota Motor Corp.’s $1.1 billion settlement of claims that recalls for unintended acceleration hurt the value of U.S. customers’ vehicles will be delayed, a judge said.

The settlement would resolve the economic-loss portion of the Toyota sudden-acceleration litigation. Class, or group, actions were filed on behalf of Toyota owners who contended the company drove down the value of their vehicles by failing to disclose or fix defects.

U.S. District Judge James V. Selna in Santa Ana, California, who granted preliminary approval of the settlement in December, today issued a tentative ruling that he couldn’t grant a final endorsement. The tentative decision doesn’t become effective until Selna issues a final order.

“The court believes that the proposed settlement is fair, adequate, and reasonable,” Selna said in his order. “Certain difficulties in the plan of allocation of the settlement funds preclude the court’s final approval of the proposed settlement at this time.”

Selna is scheduled to hear arguments over approval at a fairness hearing tomorrow in federal court.

Celeste Migliore, Toyota spokeswoman, said the company doesn’t comment on tentative rulings.

Selna’s tentative ruling won’t scuttle the settlement, plaintiffs’ attorney Steve Berman said in an e-mail.

The judge is “overwhelmingly” in favor of the settlement and “overruled all objections,” Berman said. “We just need to formally present the amended distribution plan so as to get as much to class members as possible.”

Pretax Charge

Toyota, based in Toyota City, Japan, agreed last year to settle, taking a $1.1 billion pretax charge against earnings without specifying the amount going to economic-loss plaintiffs in the cases before Selna.

The value of the settlement is more than $1.6 billion, including non-cash benefits, plaintiffs’ lawyers said in an April 23 filing seeking approval. The agreement includes $757 million in cash and $875 million in “non-monetary benefits,” including installation of brake overrides in eligible vehicles, the lawyers said.

Toyota and plaintiffs’ lawyers urged Selna in court papers to approve the agreement.

“The settlement is fair, reasonable and adequate,” plaintiffs’ lawyers said in their April 23 filing. The total “constitutes a high percentage of recoverable damages,” they told the court.

The plaintiffs took into consideration the risk of continued litigation when settling, Toyota said in urging approval.

‘Powerful Defenses’

“Toyota had powerful defenses with respect to both the merits of the claims and with regard to class certification,” the company said in a June 3 filing.

While Selna agreed that the settlement was fair, he said the final agreement didn’t precisely appear to address the cost of administrating it. He also questioned whether more funds should be allocated to class members and Toyota owners who haven’t filed claims.

“The court needs to ensure that class members are compensated to the maximum degree possible,” Selna said today.

Objections to the settlement filed with the court protested the amounts available to individual plaintiffs and the size of the potential award for attorneys’ fees. Selna said today the objections were without merit and wouldn’t block final approval.

The proposed settlement includes $200 million in attorneys’ fees and $27 million in expenses, according to court papers.

The federal cases are combined as In re Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices and Products Liability Litigation, 8:10-ml-02151, U.S. District Court, Central District of California (Santa Ana).

To contact the reporters on this story: Margaret Cronin Fisk in Detroit at; Bill Callahan in federal court in San Diego at

To contact the editor responsible for this story: Michael Hytha at

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