Small Defect = Big Loss for Toshiba
October 30, 1999
Toshiba Corporation has agreed to spent about $1 billion to settle a class action lawsuit that charges the company sold five million defective laptop computers in the U.S. since 1987.
The defect in the floppy-disc drive controller could result in loss of data under certain circumstances. There were reports that Toshiba had known of the defect for years but had done nothing to fix it. Toshiba denied that.
The suit was brought by two Beaumont, Texas, consumers last March. Although Toshiba said no one had ever complained about the defect, it agreed to settle the suit because it feared that a jury might have awarded consumers as much as $9 billion.
Customers who bought Toshiba laptops after March 5, 1988 will be entitled to cash rebates ranging from $210 to $443. In addition, owners of machines covered by a warrantyu as of last March will be entitled to coupons worth $200 or more towards the purchase of other Toshiba products. Owners of laptops no longer covered by a warranty will get $100.
Toshiba said unclaimed awards will be given to a charity that will provide Toshiba laptops to schools and libraries. A judge must still accept the settlement.
The case against Toshiba was prosecuted by Orgain, Bell & Tucker of Beaumont.
