Toshiba Pays U.S. $33.5 Million to Settle Lawsuit

Toshiba Corp. has agreed to pay the United States $33.5 million in cash and merchandise to settle a lawsuit involving potentially defective laptop computers sold to government agencies, the U.S. Department of Justice said Friday.

An unspecified portion of the settlement--$23 million in cash and $10.5 million in merchandise--comes from a $2.1-billion settlement of a similar class-action lawsuit last January, said U.S. Atty. Mike Bradford in Beaumont, Texas.

Toshiba, which has its U.S. headquarters in Irvine, has not admitted liability or acknowledged a defect in its notebook computers.

Bradford said, however, that the company has issued a software patch to prevent possible malfunction by floppy disk controllers in about 60,000 Toshiba laptops the government has purchased since 1998.

“This settlement is an example of the Justice Department’s determination to ensure that goods and services provided to the United States government meet the highest possible standards and are free of defect,” said David W. Ogden, chief of the Justice Department’s civil division.

Toshiba declined to comment Friday.

The lawsuits alleged that a defect periodically caused undetected data corruption when data was transferred to and from floppy disks. The risk of errors increased when multiple programs were running, according to the government.

Bradford acknowledged that his office was unaware of any actual data that was lost or damaged on government computers.

“But the potential was there,” he said. “Some of these agencies involved were in medical activities or defense. The potential for having corrupted data existed.”

A flurry of lawsuits alleging similar problems in laptops by other makers followed the Toshiba settlement. Bradford said his office has not decided if it will join those efforts.

The government will accept coupons good for $10.5 million in merchandise because that is how the other settlement was structured. However, because using such coupons would violate federal purchasing rules, the Justice Department is auctioning the coupons.

The coupons will be sold in a single block.