Dimitrios Biller's accusations resurfaced as the Japanese auto giant was reeling last year from a rash of defects that have prompted the recall of 10 million vehicles worldwide.
Toyota's executives were raked across the coals by US lawmakers who cited internal documents obtained by Dimitrios Biller as giving "evidence" of improper behavior.
The documents included an internal memo in which Toyota's top US executive boasted of limiting the financial impact of its product recalls through lobbying efforts.
While Toyota president Akio Toyoda apologised personally for the defects and blamed slipping standards on the company's rapid rise, the world's biggest automaker vigorously objected to accusations of ill intent.
Toyota's legal battle with Biller was eventually turned over to an arbitrator, a process which is usually confidential.
Toyota said in a statement Wednesday that the arbitrator gave the automaker permission to disclose and comment on the decision because there had been so many one-sided leaks about the proceedings.
Toyota said the arbitrator found in its favor on all of its claims against Biller and ruled against Biller on his remaining claims.
Biller was found liable for breach of contract and ordered to pay $2.6 million in damage, return all the confidential information he took from Toyota and prohibited from making "future wrongful disclosures," Toyota said.
"Toyota takes its legal obligations very seriously and works hard to uphold the highest professional and ethical standards," said Christopher Reynolds, general counsel for Toyota Motor Sales.
"We believe that the arbitrator's award clearly vindicates Toyota's position and reaffirms the critical importance of attorney-client privilege as a cornerstone of our legal system," Reynolds added.
"Throughout this process, Biller has continuously made misleading and inaccurate allegations about Toyota's conduct, and we feel this award is an appropriate consequence of his actions and completely discredits his meritless attacks on our company and our people."
Toyota agreed last month to pay $32.4 million in fines over its handling of two auto recalls, bringing total penalties levied on the firm to $48.8 million this year.
The assessments were related to the timeliness of Toyota recalls issued in 2005 over potential concerns with steering relay rods, and others from 2007 to early 2010 to address the possibility of pedals getting trapped by floor mats.
They come on top of Toyota's record $16.4-million fine assessed in April to settle claims the automaker hid accelerator pedal defects blamed for dozens of deaths.
The company said it would pay the fines without admitting any violation of its obligations under the US Safety Act.