$299.5 million Toyota forklift emissions settlement moves forward

(CN) — A federal judge granted preliminary approval to a $299.5 million class action settlement resolving claims that Toyota manipulated emissions testing on more than 272,000 gasoline and diesel-powered forklifts.

U.S. District Judge Jacqueline Scott Corley’s decision opens the door for roughly 272,422 forklift owners and lessees to file claims and potentially receive payments averaging between $1,400 and $2,800 per vehicle. The settlement also includes a service plan valued between $83.7 million and $189.3 million.

The plaintiffs claim that Toyota and its subsidiaries engaged in a pattern of misconduct in the design, development and testing of forklift engines. They say the conduct caused buyers to pay inflated prices for equipment that did not perform as advertised.

Corley, a Joe Biden appointee to the Northern District of California, said that Thursday’s decision was fair after weighing the strength of the plaintiffs’ claims against the risks and costs of continued litigation.

“At the time the settlement was reached, the pending motions to dismiss raised issues regarding preemption under the Clean Air Act and lack of Article III standing,” she wrote in her order. “If plaintiffs prevailed on these motions, plaintiffs still faced significant challenges with class certification, dispositive motions, trial, and possible appeal, all of which could take years to resolve.”

She compared the case to the Volkswagen “clean diesel” scandal, where the automaker paid billions after regulators found it had used software to cheat emissions tests.

“Plaintiffs allege a common course of conduct, including manipulation of emissions and test results, that applies to all class members and is central to their claims,” she said.

On the question of whether a class action was the appropriate vehicle for the dispute, Corley was direct.

“If class members were to bring individual lawsuits against [defendants], each member would be required to prove the same wrongful conduct to establish liability and thus would offer the same evidence,” she wrote. “Given that class members number in the … thousands, there is the potential for just as many lawsuits with the possibility of inconsistent rulings and results. Thus, classwide resolution of their claims is clearly favored over other means of adjudication.”

The settlement was reached after extensive discovery and hard-fought litigation, including motions to dismiss filed by Toyota. The parties ultimately reached an agreement through mediation overseen by retired U.S. District Judge Layn Phillips.

Under the deal, Toyota will pay $299.5 million into a settlement fund. Up to 25% of that amount, about $74.8 million, may go toward attorneys’ fees, along with up to $500,000 in litigation expenses and no more than $895,000 in administration costs. The remaining money will then be distributed among class members on a per-capita basis.

If multiple class members submit valid claims for the same forklift, the original owner will get 60% of the payout for that forklift, and the remaining 40% will be split equally among the other claimants.

Corley appointed David Stellings and Kevin Budner of Lieff Cabraser Heimann & Bernstein LLP and Roland Tellis of Baron & Budd PC as settlement class counsel. The court appointed Verita Global LLC as settlement administrator and Citibank as escrow agent.

Plaintiffs must seek final approval of the settlement by April 30 and file their request for attorneys’ fees with detailed billing records at the same time. Class members have until June 1 to opt out of the settlement or object to it.

The parties will return to court for a final approval hearing on July 9 in San Francisco.

Representatives for Toyota and the plaintiffs did not immediately respond to requests for comment.

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