A federal judge has granted final approval of a $25.5 million settlement that resolves shareholder claims against Toyota over alleged misstatements regarding its 2010 recalls because of sudden acceleration defects.

At a March 11 hearing, U.S. District Judge Dale Fischer in Los Angeles indicated that she planned to approve the deal, which includes nearly $4.25 million in attorney fees and expenses. But did not issue a final written order.

In court filings, lead plaintiff counsel Blair Nicholas, of Bernstein Litowitz Berger & Grossman in San Diego wrote that the settlement’s benefits—more than 20 percent of an estimated $124 million in potentially recoverable damages—significantly outweighed the risks.

That became especially true, Nicholas wrote, after Fischer wiped out much of the potential class when she dismissed all holders of Toyota’s common stock, which is traded primarily on the Tokyo Stock Exchange, on July 7, 2011. In doing so, she cited the U.S. Supreme Court’s Morrison v. National Australia Bank ruling, which concluded that investors who purchase a foreign company’s stock on a foreign exchange lackstanding to sue in U.S. courts. Toyota also had challenged class certification of the remaining members, who are holders of its American Depositary Shares, which are traded on the New York Stock Exchange, Nicholas wrote.

"From the outset, Lead Counsel and Lead Plaintiff appreciated the unique and significant risks inherent in the litigation," Nicholas wrote. "For example, Morrison—which was pending and then issued by the Supreme Court early in this case—narrowed the claims to those on behalf of a much smaller class of purchasers of the ADS’s, and, Defendants would argue, precluded claims brought on behalf of purchasers of Toyota common stock. As a result of Morrison, the amount of potentially recoverable damages in the Litigation was substantially reduced while the burdens of prosecuting the claims remained substantially the same."

Celeste Migliore, a spokeswoman for Toyota, which was represented by Gareth Evans, a partner at Gibson, Dunn & Crutcher in Los Angeles, issued an emailed statement: "We are pleased the Court indicated that it would approve the settlement, which we believe represents a reasonable outcome for all parties."

Nicholas referred calls to his client, the Maryland State Retirement and Pension System.

Assistant Attorney General John Kuchno, of the Maryland Attorney General’s Office, which represents the institutional fund, declined to comment.

The litigation originally was brought on behalf of investors following Toyota’s recall of more than 10 million vehicles. The complaint named Toyota Motor Corp., two of its U.S. subsidiaries and seven directors and officers, including Toyota Motor Corp. Vice Chairman Katsuaki Watanabe and its outgoing chairman, Fujio Cho. The others are Toyota Motor Sales USA Inc.’s chairman, Yoshimi Inaba; its former president and CEO, James Lentz, now senior managing officer of Toyota Motor Corp.; former group vice president Irving Miller; and senior vice presidents Robert Carter and Robert Daly. The complaint originally had brought claims under the U.S. Securities Exchange Act of 1934 and Japan’s Financial Instruments and Exchange Act.

Following dismissal of the Japanese claims, the amended action included a class of people who held American Depositary Shares from April 7, 2008, to February 2, 2010. Both sides were about to argue class certification issues when they began settlement discussions. Fischer granted preliminary approval of the deal on January 3.

As of February 17, about 537,000 notices had been sent to potential class members.

The settlement, plus interest, was deposited into an escrow account on January 15. Nicholas estimated that his firm obtained 6 million pages of documents, took 10 depositions and expended more than 17,000 hours on the case—a total cost of more than $6.5 million in fees and $1.35 million in expenses.

The nearly $2.9 million in requested fees constitutes 12 percent of the settlement fund, Nicholas wrote. His firm also is asking for $1.35 million in expenses, plus interest, and $85,900 in reimbursement costs for his client.

Fairbank & Vincent in Los Angeles also served as liaison counsel for the class.

Contact Amanda Bronstad at abronstad@alm.com.