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Attorney General Announces Settlement of False Claims Lawsuit Against Toshiba Corporation

Computer Company Agrees to Pay State and Local Government Agencies More Than $30 Million
Tuesday, December 12, 2000
Contact: (415) 703-5837

(SACRAMENTO) – Attorney General Bill Lockyer announced today that the Toshiba Corporation and three of its subsidiaries have agreed to pay more than $30 million to California public agencies in settlement of a lawsuit alleging violation of the state False Claims Act. The False Claims Act provides damages and penalties for the knowing sale of defective products to the government.

The cash settlement, in which Toshiba will pay $30.13 million with interest, was negotiated by the Attorney General's Office on behalf of the State of California and local governments. The case involves Toshiba computers sold to California public agencies that contained an alleged defect in the micro-code that controls the transfer of data to and from the floppy disk. The defect caused varying amounts of data to be lost or altered under certain operating conditions without the user's knowledge.

While settling the case, Toshiba has denied liability. The company has said it would correct the micro-code in its newly manufactured computers beginning in November of 1999 and has begun offering a free software patch for notebook computers already sold.

Under terms of the settlement, Toshiba will receive an offset against the $30.13 million judgment or the amount of cash and coupons provided to California state and local government agencies as a result of a separate class-action lawsuit settled in federal court in Texas. The class-action lawsuit resulted in a separate settlement fund to compensate purchasers of Toshiba computers who submit a valid claim. A claim was filed by the Attorney General in the federal court class action on behalf of state agencies at the request of Governor Davis.

The settlement with Toshiba is subject to approval by the San Francisco Superior Court. The case remains under seal pending further court proceedings. If approved by the court, proceeds from the judgment will be distributed among eligible state and local government agencies, including school districts, special districts, the California State University system and the University of California.

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