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$5 Million Lawsuit Alleges Toyota Ignored Transmission Problems for a Decade

Ignite Your Automotive Passion December 01, 2025

In America, if a consumer doesn't like the product, they have the right to explore legal recourse, and many do. Honda has been taken to court over steering issues, Ford is being sued due to a missing F-150 Lightning feature, and GM has to resort to legal counsel because of allegedly defective V8 engines. Now, Toyota is heading to the courtroom for a class action lawsuit arising because of allegedly defective eight-speed transmissions, according to Car Complaints. The transmissions are produced and supplied by Aisin, which is a member of the Toyota Group and, according to the lawsuit, is 25% owned by Toyota. That's not quite accurate, as Reuters reported last year that Toyota has offloaded some $1 billion in shares, bringing its stake from 24.8% to 20%. Regardless, the lawsuit blames Toyota. So what's the problem, and which cars are affected?

Numerous Toyota Models Named In Class Action

Toyota

The lawsuit, filed in the U.S. District Court for the Central District of California by plaintiff Neil Pallaya, alleges that numerous Toyota and Lexus models equipped with the eight-speed auto "slip, hesitate, lose power, make loud whining sounds, shift erratically, and fail." That's quite a list of concerns, and the lawsuit names the following models:

The abovementioned plaintiff bought a new 2020 Toyota Highlander in December of that year, which features the 2GR-FKS 3.5-liter V6 engine and UA80E transmission, the latter of which also appears in all the abovementioned cars. The car came with a five-year/60,000-mile limited warranty, which would have been all good, but in September 2025, with roughly 67,200 miles on the clock, "the eight-speed transmission began making a persistent high-pitched whining noise when pressing the accelerator." The lawsuit alleges that a dealer inspection revealed that the transmission had failed and needed replacement at an estimated cost of $7,451.33. With the warranty having expired, the customer was on the hook for the bill.

Plaintiff Files For $5 Million, Alleges Toyota Knew About Issues For Years

Toyota

The suit, which is asking for "more than $5 million," reportedly cost Pallaya $405 to file. His transmission still has not been repaired, and he says that the Highlander SUV has a "diminished quality and value than represented and failed to meet ordinary consumer expectations regarding safe and reliable operation." Moreover, he contends that Toyota and Aisin knew about the problems with this transmission (where excessive heat allegedly builds up inside the torque converter, causing the transmission fluid to burn and prematurely degrade, damaging the clutch) all the way back in 2015.

Related: Toyota Sued for $5.7 Billion Over Mirai Hydrogen Cars

Pallaya's class action claims that the two companies should have ordered a redesign of either the torque converters or the transmissions after Toyota's warranty analytics group allegedly flagged the transmission as a "high-priority powertrain concern" by February of 2017. This is said to have prompted a series of Technical Service Bulletins (TSBs) to address a "harsh shift," "hesitation," "abnormal transmission noise," and "improper torque converter operation." The lawsuit also brings attention to the transmission control module software and claims that the transmission should last at least 200,000 miles. The numerous relevant TSBs are listed below:



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Ignite Your Automotive Passion

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