September 17, 2018 SENT VIA CERTIFIED MAIL RETURN RECEIPT ‘Alec Hagey Toyota Motor Sales, U.S.A, Inc 2 Banting Invine, CA 92618 Dear Mr. Hagey, As you know | own two Toyota dealerships in the Los Angeles region ~ Claremont Toyota and Capistrano Toyota. | write this letter seeking clarification regarding Toyota’s potentially fraudulent, dangerous, and/or misleading actions pertaining to defects in the brake boosters with accumulators in certain generation Ill Prius vehicles, brake master cylinder assemblies in certain generation Ill Prius vehicles, and brake actuator assemblies in certain generation Il Prius vehicles. | am also writing seeking Toyota's recommendation for the handling potential lemons and clarification on Toyota’s inclusion of the 2010 model year Prius Plug In in the Z/B warranty enhancement. THE AOB SAFETY RECALL On February 9, 2010 Toyota filed the Part 573 Defect Information Report for Toyota’s AOB safety recall (NHTSA ID 10V-039) which was signed by former National Highway Traffic Safety Administration Defect Engineer Chris Santucci. The DIR states under the August 2009 heading in the Chronology of Principal Events section, “Toyota received a field technical report from the Japan market concerning the brake performance of a Toyota Prius.” The August 2009 section also states, “Toyota recovered a part, however it was not confirmed that there was any abnormality.” For some reason Toyota uses the indefinite article “a” to describe the recovered part instead of clearly stating exactly what part was recovered and had no abnormality. Was it a brake booster equipped with an accumulator with a large clearance? The October 2009 - January 2010 section continues stating, "Toyota received another field technical report from the U.S. market on a Prius which indicated issues with the VSC/brake performance.” Itis very confusing that Toyota would begin the chronology for the United States market by stating the company received “another” field technical report regarding VSC/brake performance. Shouldn't it have begun with the first report of VSC/brake issues in the United States market? Ihave recently discovered a number of official complaints on NHTSA’s safercar.gov website which detail issues with the “VSC/brake performance” in generation Ill Prius vehicles prior to the October 2009, And, by Toyota’s admission, Prius vehicle(s) in Japan were already encountering “issues with the VSC/brake performance” no later than August 2009. | need clarification on these potential inaccuracies. Furthermore, there is a troubling omission of critical safety related information from the Defect Information Report for Toyota’s AOB safety recall (NHTSA ID 10V-039). Even though Toyota’ssafety recall AOB sought to cure a dangerous safety defect pertaining to “issues with VSC/brake performance,” “inconsistent brake feel after ABS actuation,” and “stopping distances” that “may be increased,” the defect information report makes no mention of a brake accumulator production countermeasure implemented by Toyota on Generation Ill Prius vehicles in September 2009. ‘The brake accumulator is a key component pertaining to the brake performance and VSC performance in the subject Generation III Prius vehicles, yet the September 2009 production ‘countermeasure was completely omitted from the AOB Defect Information Report. It appears it was not disclosed to NHTSA until the Defect Information Report for the DOH safety recall was filed on June 5, 2013 (October 2012 - May 2013 section). ‘As Toyota is aware and as explained in Toyota's Deferred Prosecution Agreement with the United States Department of Justice dated March 19, 2014: “although Toyota is not required to notify NHTSA of any engineering and design changes it made to Toyota and Lexus models sold in the United States, itis required to file a DIR for any safety-related defect addressed by such an engineering and/or design change.” Not only does the defect information report for the AOB safety recall signed by Chris Santucci omit mention of the September 2009 production countermeasure to the brake accumulator but the “Chronology of Principal Events” demonstrates that Toyota engineers and investigators did not even consider the brake accumulator when conducting the investigation into this safety defect. Perhaps that dangerous and potentially negligent oversight - which has led to vehicle crashes and injuries - is why Toyota implemented a “software update” safety recall “remedy” even though former NHTSA defect engineer Chris Santucci stated that the ABS “system was operating as intended” in the defect information report. The software update made to the ABS “system that was operating as intended” could not possibly cure the physical defect addressed by the September 2009 production countermeasure on the brake boosters equipped with accumulators with large clearances in the subject Prius vehicles. Similar to Toyota’s actions pertaining to the inadequate EOE software update remedy, Toyota makes no effort to explain how the software update “remedy” for the AOB safety recall will cure the dangerous safety defect. Nor does it explain any potential side-effects that may result due to the “rewrite of the programming of the ABS control unit” responsible for controlling a braking component manufactured with precise and fixed physical dimensions. THE DOH SAFETY RECALL The safety of customers across the country whose Generation Il Prius vehicles are covered by the DOH safety recall may be in jeopardy,There is a glaring reduction in the number of Generation III Prius vehicles covered by the DOH safety recall addressing “brake pedal stroke(s) to become longer,” “decreased hydraulic pressure,” increases in “stopping distance,” and an increased “risk of a crash” compared to Toyota's prior AOB safety recall which was supposed to cure “issues with the VSC/brake performance” and “inconsistent brake feel after ABS actuation” which could “increase the risk of acrash.” Toyota covered 133,000 Generation Ill Prius vehicles under the AOB safety recall and reduced the amount of Generation Ill Prius covered by the DOH safety recall by 51,000 vehicles to approximately 82,000 (excluding applicable Lexus vehicles). This concerns me because | have recently discovered a 2010 Prius excluded from Toyota’s DOH population suffered a failure of its brake master cylinder. The Defect information Report for the DOH safety recall (NHTSA ID 13V-235) signed by Abbas Saadat and submitted to the National Highway Traffic Safety Administration on June 5, 2013 also omits key safety-related information. The defect information report discloses only a defect, within the brake booster pump assembly. The “Description of the Problem” section of the Defect Information Report states, “..nitrogen gas could leak into the brake fluid and gradually cause the brake pedal stroke to become longer...” but it makes no mention of the potential catastrophic effects to the “brake booster assembly with master cylinder” (also referred to by Toyota as the Brake Booster Assembly) including potential dangerous failures of the component necessitating replacement. The “Description of the Corrective Repair Action” section of the Defect Information Report states, “the dealer will replace the brake booster pump assembly with an improved one.” There is no mention of potential failure or replacement of the Brake Master Cylinder Assembly. However, dealer documents pertaining to the DOH safety recall contain instructions detailing potential failures and replacements of the brake booster assembly. Furthermore, itis troubling that in safety recall DOH Toyota requires the presence of a stored DTC code in order to obtain a part that is critical to preventing the dangerous increases in “stopping distance and increase the risk of a crash” that the DOH safety recall is legally required to prevent. A stored DTC code is indicative of a prior failure. In reality, Toyota is making, customers experience a dangerous failure of the brakes in their Prius vehicle before they are supplied with the safe components. This is not right. At the time Toyota submitted the DOH defect information report to NHTSA and created the corresponding technical instructions for dealers it was well aware, or should have been well aware, that a crack in the “bellow” (also referred to by Toyota as the “plunger”) of the brake pressure accumulators could lead to a future dangerous failure of the Brake Master Cylinder Assembly - even if a DTC code was not present at the time the vehicles was presented to a dealer for DOH completion. Due to the defective “brake boosters equipped with accumulators with large clearances” in certain Prius vehicles, there could be contaminants and debris within the brake master cylinder assembly that could lead to a future life-threatening brake failure. This important fact was omitted from the defect information report. Requiring failures of components - as evidenced by stored DTC codes within a vehicle - to occur while a vehicle is being driven before providing the new, safe components and the omission of important facts pertaining to other potentially dangerous components demonstrates Toyota’sprioritization of profits over customer safety. Sadly, this is certainly not the only safety recall for which Toyota utilized this strategy. | also have serious concerns about the inclusion of certain generation ill Prius vehicles that, according to Toyota’s technical instructions for the DOH safety recall, will only receive an “inspection” under the safety recall. According to the technical instructions Toyota knows. simply from the “orientation of the accumulator caution label” whether or not the Prius vehicle contains a defective brake booster pump assembly (accumulator). This being the case, Toyota should not have included any generation Ill Prius with a vertically oriented caution label in the safety recall because it is misleading. It does not appear to be a coincidence that Toyota omits explanation as to how it knows that Prius vehicles with vertically oriented caution labels on the accumulator do not require a replacement. Is the orientation of the label a signal that the brake booster pump assembly {accumulator) was produced after a potentially undisclosed safety-related part design change (production countermeasure)? ZJB WARRANTY ENHANCEMENT PART NUMBERS ~ TSB 0079-18 Toyota released the JB Warranty Enhancement in August 2018 covering over 250,000 Prius and Prius Plug In vehicles, The dealer letter for the Z/B warranty enhancement directs personnel to 1-SB 0079-18. I find it very troubling that this TSB shows a supersession of the part that was utilized as the “remedy” components for safety recall DOH (part number 47070-47060 to 04006-22147 & 47050-47140/47050-47150 to 04002-33347/04002-33447). How can a part represented by Toyota to cure a life-threatening defect addressed by the DOH safety recall be subject to a supercession? Was there a physical alteration, production countermeasure, or any other change made to the brake booster pump assembly with accumulator (part number 47070-47060) after it was represented as the cure to the safety recall addressed by safety recall DOH necessitating the assignment of a new part number (part number 04006-22147)? Am | to understand that Toyota has seen failures of the DOH remedy components after completion of the DOH safety recall? 2010 PRIUS PLUG IN (PHV) - Z/B MODEL YEAR CLARIFICATION Mr. Hagey, | am seeking clarification regarding the inclusion of 2010 model year Prius Plug In (PHY) vehicles in the ZJB warranty enhancement when Prius Plug In models were not available for sale in the United States until the 2012 model year was introduced. Please explain and clarify as confusion is the last thing needed when dealing with a life-threatening brake failure defect. POTENTIAL LEMONSDue to the ineffective actions taken by Toyota to address the life-threatening, defective brake systems of certain Generation Ill Prius vehicles there may be a significant number of affected vehicles that fit the legal definition of “lemons.” A Generation Ill Prius vehicle subject to Toyota's AOB safety recall, Toyota's DOH safety recall, and then requires a warranty repair of the brake booster pump assembly (accumulator) or the brake booster assembly covered by Toyota's Z1B warranty enhancement would have three attempts to repair/remedy a life- threatening safety defect. GENERATION Il PRIUS VEHICLES ~ POTENTIALLY DEFECTIVE BRAKE SYSTEMS IN 2004-2009 MODEL YEARS The similarities of the conditions addressed by the reactionary, post-failure ZG1 Warranty Enhancement Program covering over 735,000 generation Il Prius and Highlander Hybrid vehicles and Toyota’s DOH safety recall on certain Generation Ill Prius are striking. Yet, the Generation Il Prius only received a post-failure Warranty Enhancement that does not prevent the dangers of caused by “internal malfunctions of the brake actuator assembly.” Despite the fact that many 2004-2009 Generation II Prius vehicles covered by the ZG1 warranty enhancement have been in accidents due to issues with the defective braking system in the vehicles, Toyota has never made a safety defect determination regarding the condition. Toyota has potentially knowingly and needlessly jeopardized lives through the lack of a preventative safety recall curing the defect in Generation II Prius’ brake actuator assemblies before a failure takes place. The condition in the ZG1 customer letter states only, “Toyota has received some reports where various brake system related warning lamps illuminate due to internal malfunctions of the Brake Actuator assembly.” Similar to the ZE3 customer letter, the ZG1 customer letter omits a description of the lost or degraded brake capabilities associated with the failure of the brake actuator assembly, Additionally, itis questionable that DTC code C1256 is referenced in safety recall DOH documentation as an indication of a potentially life-threating brake failure generation Ill Prius vehicles but that very DTC code (C1256) is referenced on Toyota's 261 warranty enhancement (T-$8 0032-16) and Toyota merely references “internal malfunctions” and “warning lamps” in the 261 documentation. Adding to the potential mistreatment of our customers, Toyota waited approximately 12 years = until 2016 - to issue warranty enhancement ZG1 that provides some financial relief to ‘customers who had to pay out-of-pocket to fix Toyota's dangerous manufacturing defect. This disingenuous action by Toyota ensured a low reimbursement rate for past completed repairs of the brake actuator assembly by waiting until many of the Generation II Prius vehicles were over a decade old to issue the 261 warranty enhancement. ‘SAFETY-RELATED QUESTIONS7. 9 Is it accurate that Toyota was not aware of a single warranty repair, customer ‘complaint, accident, crash, or customer pay ticket caused by or pertaining to “issues with VSC/brake performance” in the United States of America until October 2009 as represented in the defect information report for AOB (NHTSA ID 10V-039) signed by former NHTSA defect engineer Chris Santucci?’ Why did Toyota omit mention of the September 2009 production countermeasure altering the design of the brake accumulator from the AOB (NHTSA ID 10V-039) defect information report signed by former NHTSA defect engineer Chris Santucci and submitted to NHTSA on February 9, 2010? Why did Toyota omit mention of potential brake master cylinder assembly failures caused by the crack in the brake booster assembly in the DOH (NHTSA ID 13V-235) defect information report signed by Abbas Sadat and submitted to NHTSA on June 5, 2013? What criteria did Toyota use to determine that approximately 51,000 Generation Itt Prius vehicles that were covered by the AOB safety recall which deployed a software update as the “remedy” would not be covered by the DOH safety recall that actually called for replacement of potentially defective and dangerous hardware (brake booster pump assemblies (accumulator}? How does Toyota know for the Prius vehicles covered by the DOH safety recall that 100% of the time an accumulator with vertically oriented caution label does not need to be replaced? Is the orientation of the caution label indicative of an accumulator built after the September 2009 accumulator production countermeasure (potentially un-disclosed Safety related design change) was excluded from the AOB defect information report? Regarding Lemon Law, please provide instruction on how my dealerships should proceed should a Generation Ill Prius vehicle have the AOB, DOH, and 2B repairs to defect brake components completed. How could Toyota fail to make a safety defect determination necessitating the issuance of a preventative safety recall regarding the dangerous brake failures that potentially lead to many accidents in 2004-2009 Generation It Prius vehicles? Does Toyota consider the presence of DTC code C1256 and the execution of its fail-safe mechanisms to be “safer” in generation II Prius vehicles? Has Toyota reviewed the complaints on NHTSA’s safercar.gov website indicating accidents or crashes caused by potential brake malfunctions? ‘Why did Toyota include 2010 model year Prius Plug In vehicles when Prius Plug In vehicles were not available for sale in the United States until 2012? ‘Was there a physical alteration, production countermeasure, or any other change made to the brake booster pump assembly with accumulator (part number 47070-47060} after it was represented as the cure to the safety defect addressed by safety recall DOH necessitating the assignment of a new part number (part number 04006-22147)? Wasthe 47070-47060 part number effective in curing the safety defect described in safety recall DOH? 10. Was there a physical alteration, production countermeasure, or any other change made to the brake booster assemblies (part numbers 47050-47140 and 47050-47150) after those parts were represented as the cure to the safety defect addressed by safety recall DOH necessitating the assignment of new part numbers (part numbers 04002-33347 and 04002-33447)? 11. Federal law states that the manufacturer is responsible for acknowledging a safety defect in its vehicles and announcing a safety recall. ls Toyota aware of the accidents that have occurred due to brake malfunctions in 2011 and later model year Prius vehicles that have not been subject to a safety recall? Has Toyota reviewed the complaints on the NHTSA safercar.gov website pertaining to malfunctioning brakes on generation Ill Prius vehicles that have not yet been subject to a safety recall repair? Toyota’s actions have greatly damaged the brand. Your actions have also been responsible for vehicle crashes, It has damaged relationships with existing and potential Toyota buyers. | implore Toyota to stop these predatory safety practices and hold the responsible executives accountable. Due to the urgency of the life-threatening matters questioned in this letter | must demand Toyota give these matters the attention they deserve and respond no later than Friday, September 21, 2018 Sincerely, Roger Hogan ———— President Claremont Toyota Capistrano Toyota