Consumer Law

The Transportation Department's $16.4 Million Fine Against Toyota and the Need for a Vibrant Civil Justice System

By Brian Wolfman

by Brian Wolfman

Today's news reports bring word that, after mulling its options for weeks, Toyota is expected to agree to pay a $16.4 million fine levied by the U.S. Department of Transportation (DOT), which charged Toyota with hiding information related to the company's recall of cars with sticking gas pedals. As the the New York Times explains, the amount of the fine is an all-time record and "the maximum amount allowed by law." That tells you something unsettling about the law. The record fine is just a bit over 7 bucks for each of the 2.3 million cars recalled because of the accelerator problem, and, in total, that's not even pocket change for a behemoth like Toyota.

In short, the fine is not remotely enough, on its own, to have any deterrent effect. Sure, the recall and the fine may have some negative effect on consumers' attitudes toward Toyota, and, sure, the SEC and the Department of Justice are still contemplating their own prosecutions. But why do you think Toyota took its time deciding whether to pay up or fight the fine in court? I'm guessing, at least in part, because of the effect paying the fine might have in pending civil litigation, which holds out the promise of deterring future bad behavior far more than the puny $16.4 million fine.

This post has assumed that Toyota engaged in wrong doing. I know only what I've read in the papers, and, certainly, Toyota is entitled to its day in court. But assuming that Toyota broke the law, as the government obviously thinks it did, putting lives at stake in the process, at least until DOT sanctions have some real bite, we need a vibrant civil justice system to punish wrong doers and deter future illegal behavior.

Full post as published by CL&P Blog on April 19, 2010 (boomark / email).