Barring a last-minute hiccup, the Japanese automaker Toyota (TM) has cleared an important hurdle to its growth plans in the sharply competitive area of cleaner vehicles.
Toyota and one of its suppliers, Denso (DNZOF) , have reached a preliminary agreement in the U.S. to end a class-action lawsuit regarding the recall of 3.36 million Toyota and Lexus brand vehicles equipped with defective fuel pumps that Denso had produced.
The defect could cause the vehicles' engines to stall, according to the plaintiffs.
The companies said they settled the case to avoid the cost and uncertainty of continuing the litigation, according to court documents reviewed by TheStreet. Toyota and Denso said that in the preliminary agreement, which must still be approved by a judge, they admitted no wrongdoing.
"Toyota and Denso have denied and continue to deny each and all of the claims and contentions alleged in the action, and have denied and continue to deny that they have committed any violation of law or engaged in any wrongful act that was alleged, or that could have been alleged, in the action," the settlement accord, filed in U.S. District Court for the Eastern District of New York, says.
6 Million Vehicles Recalled Worldwide
The agreement concerns owners of Toyota and Lexus vehicles manufactured between 2013 and 2019 and equipped with Denso low-pressure fuel pumps produced between 2013 and 2019.
The automaker carried out a series of recalls of these vehicles in 2020, while Denso two years ago had also recalled nearly 2 million faulty fuel pumps.
"These fuel pumps contain an impeller that could deform due to excessive fuel absorption," according to the complaint.
"Although the cause is unknown, if impeller deformation occurs, the impeller may interfere with the fuel pump body, and this could result in illumination of check engine and master warning indicators, rough engine running, engine no start and/or vehicle stall while driving at low speed."
"However, in rare instances, vehicle stall could occur while driving at higher speeds, increasing the risk of crash," the court documents said.
A total of nearly 6 million Toyota and Lexus vehicles, including 3.36 million in the U.S., have been recalled worldwide due to this problem.
As part of the settlement, Toyota will extend fuel pump warranties to 15 years measured from July 15, 2021, or 150,000 miles, whichever comes first, and provide drivers with free loaner vehicles and towing options for repairs.
Drivers can also claim reimbursement for past repairs, including loaner vehicles and towing.
The deal is valued at a total of $150 million, Dee Miles, a lawyer at Beasley Allenun, who represents some of the plaintiffs, told Reuters.
"We are pleased to have resolved this litigation in a way that demonstrates our commitment to providing customers with a great ownership experience," Toyota said in an emailed statement. "Pending final approval of the proposed settlement, Toyota will provide prospective coverage for repairs of the fuel pump for owners and lessees of involved vehicles, subject to the terms and conditions of the settlement agreement.”
