Toyota Stumbles Into a Dark Legal Alley…

…and the U.S. Department of Justice emerges whistling with $1.2 billion. I explain how it happened in a Wall Street Journal opinion piece today (more: Overlawyered). Toyota’s cars are very safe indeed, and “sudden acceleration” was a concoction of media-fueled panic, as the government’s own safety engineers have confirmed. But now the company is being punished not just for alleged data-reporting and compliance infractions unlikely to have caused any genuine material risk to the public, but also for defending itself and its products at Congressional hearings and in the arena of public opinion. DoJ’s demagogic press release cites, among the instances of supposed fraud for which Toyota is now being punished by the gigantic forfeiture, such standard exercises in bland crisis communication as, “The safety of our owners and the public is our utmost concern and Toyota has and will continue to thoroughly investigate and take appropriate measures to address any defect trends that are identified.” 

A couple of other points I didn’t have room for in the WSJ piece: Toyota is settling the government’s trumped-up single charge of mail fraud by way of a so-called Deferred Prosecution Agreement, or DPA, and its terms really must be seen to be believed. “Toyota understands and agrees that the exercise of the Office’s discretion under this Agreement is unreviewable by any court,” appears on clause 14 on page 6, with “Office” referring to the office of the U.S. Attorney for the Southern District of New York, currently Preet Bharara. And if you are expecting even the tiniest squeak from anyone at Toyota in contradiction to the government line, even around the coffee machine at the local dealership, consider clause 13, which states: that Toyota “agrees that it shall not, through its attorneys, agents, or employees, make any statement, in litigation or otherwise, contradicting the Statement of Facts or its representations in this Agreement.” If DoJ catches wind of any such statement it can revoke the agreement not to prosecute, without of course having to give back the billion dollars. “The decision as to whether any such contradictory statement shall be imputed to Toyota for the purpose of determining whether Toyota has violated this agreement shall be within the sole discretion of the Office.” 

When people talk about federal prosecutors having become a law unto themselves, this is the sort of thing they mean.