Toyota Hit with Federal Stockholder,
Consumer Claims; Additional State Claim

By: Amanda Bronstad
February 9, 2010

The attack by plaintiffs' attorneys against Toyota Motor Sales USA Inc. keeps moving forward.

On Monday, San Diego's Coughlin Stoia Geller Rudman & Robbins and the Law Offices of Bernard M. Gross in Philadelphia filed suit in U.S. District Court in Los Angeles on behalf of shareholders who bought stock between Aug. 4, 2009, and Feb. 2, 2010.

"Defendants misled investors by failing to disclose that there was a major design defect in Toyota's acceleration system, which could cause unintended acceleration," the suit alleges. "For over a decade, Toyota has received numerous incident reports where Toyota and Lexus owners in the United States have reported that their vehicles suddenly accelerated on their own, in many cases resulting in accidents, including several fatalities."

Also on Monday in U.S. District Court in Los Angeles, a lawsuit was brought on behalf of a nationwide class of consumers of several models of Toyota hybrids, including the Prius, Highlander and Lexus. Although Toyota has acknowledged a design defect in its 2010 Prius, the automaker has known about complaints involving other Toyota hybrids since 2006, the suit alleges.

"It's not limited to 2010 Prius models," said Michael Schwartz, a partner at New York's Horwitz, Horwitz & Paradis, who filed the suit along with Beverly Hills, Calif.-based Kiesel Boucher & Larson. "We're seeking to hold them accountable, and that they include these other models in the recall."

Another lawsuit, filed on Friday, was brought in Los Angeles County, Calif., Superior Court on behalf of California purchasers of the 2010 Prius and the 2010 Lexus HS250h.

"We do feel there is a large majority of Prius owners [in California] compared to the other states," said Daniel Warshaw, a partner at Los Angeles-based Pearson Simon Warshaw & Penny, who filed the suit. "It has a celebrity cachet with it."

That suit seeks damages for breach of implied warranty, breach of express warranty, products liability, negligence, negligent misrepresentation and violations of California's Consumer Legal Remedies Act and unfair business practices law.

A Toyota spokesman declined comment on the litigation.

Toyota has recalled more than 8 million vehicles worldwide because of gas pedals that get stuck in the depressed position, forcing vehicles to suddenly accelerate out of control. That figure includes vehicles that Toyota recalled last year, blaming a problem with floor mats. Congress was set to question Toyota executives during hearings later this week.
On Tuesday, Toyota announced the recall of 437,000 hybrid models, including the 2010 Prius, due to problems with their braking systems. The National Highway Transportation Safety Administration has launched an investigation of the hybrid problems.

Tuesday's recall addressed the injunctive relief sought in the Los Angeles Superior Court suit, but consumers face damages associated with the depreciation of their vehicles, Warshaw said. On Tuesday, Kelley Blue Book announced that it would lower its transaction price for the 2010 Prius by $1,000 or $1,500.

The stockholder class action claims that Toyota's shares have declined 20% during the class period. The suit names Toyota Motor Sales, which is based in Los Angeles; its parent corporation, Toyota Motor Corp.; subsidiary Toyota Motor North America Inc.; Toyota President Akio Toyoda; Toyota Chairman Fujio Cho; Robert S. Carter, group vice president and division general manager of Toyota USA; Irving A. Miller, another group vice president and division general manager of Toyota USA; Yoshimi Inaba, president and chief operating officer of Toyota Motor North America and chairman and CEO of Toyota Motor Sales USA; James E. Lentz, president and chief operating officer of Toyota Motor Sales USA; and Robert C. Daly, senior vice president of Toyota Motor Sales USA.

The suit relies on their allegedly false statements to the news media and the public. On Aug. 4, for example, Toyota's executives announced first quarter 2009 financial results but said nothing about the sudden acceleration problem. In the weeks that followed, Toyoda did not acknowledge any vehicle problems during his appearance at the Japan National Press Club, according to the complaint.

In a November press release about the floor mat issue, Daly said: "The question of unintended acceleration involving Toyota and Lexus vehicles has been repeatedly and thoroughly investigated by NHTSA, without any finding of defect other than the risk from an unsecured or incompatible driver's floor mat."

The suit notes that NHTSA publicly reprimanded Toyota for making false statements in a release indicating that the government had completed its investigation.

In conference calls in November, Carter and Miller said that there were no problems beyond the floor mats that could account for the unintended acceleration problems, the complaint says. And on Feb. 1, Lentz told NBC Today show host Matt Lauer that Toyota had known about the accelerator pedal problems since at least October 2009.

The federal consumer class action names as lead plaintiffs Miriam Ramirez of Oakland, Calif., whose 2007 Prius failed to stop when she slammed the brakes, causing her to hit the car in front of her; and Lisa Creighton, a Salt Lake City resident who says that her 2008 Prius consistently has difficulty braking.

The suit seeks damages for unjust enrichment and violations of the California Consumer Legal Remedies Act.

While the suits are the first to be filed in connection with the braking problems subject to the recall, litigation is pending involving other defects with the Prius. At least four suits have been filed against Toyota on behalf of consumers whose "high-intensity discharge" headlights on their Prius automobiles have sporadically turned off, said Melissa Harnett, a partner at Los Angeles-based Wasserman, Comden & Casselman, co-counsel in three of the cases, which have been consolidated in Los Angeles Superior Court. The fourth case is in the U.S. District Court for the Southern District of New York.

"Toyota has responded to it in the same general fashion we saw in the accelerator problem: This is not a safety issue, and nothing more than burned headlights," she said.

 

Law Firms Rev Up Against Toyota Over Defect Reports

Amanda Bronstad
The National Law Journal
February 04, 2010

Legal attacks against Toyota Motor Sales USA Inc. escalated this week following fresh reports of product safety defects afflicting some of the most popular vehicles in the automaker's fleet.

And more suits are coming.

"We're not done yet. We're just building," said Tim Howard, a professor at Northeastern University in Boston who as a plaintiffs attorney specializes in consumer and products liability litigation. "But it's going to be a formidable legal armada that Toyota is going to have to deal with."

Toyota announced on Jan. 26 that it would stop selling eight models because of accelerator pedals that can stick in the depressed position, causing the cars to speed up out of control. The company has recalled 2.3 million vehicles with that problem. Earlier, Toyota recalled another 4.2 million vehicles, blaming a problem with floor mats.

Toyota announced a plan on Monday to fix the accelerators. Since then, Congress has announced plans for hearings into the problems and the National Highway Transportation Safety Administration (NHTSA) has begun considering fines against Toyota for delaying the recalls.

As of Wednesday, there was no word whether litigation lay in store over Toyota's latest headache: reports of brake problems in its Prius hybrid vehicle.

Most of the suits filed in recent days have been class actions on behalf of consumers whose Toyota vehicles have lost economic value because of the recalls. In most cases, the lead plaintiffs have experienced some type of unintended acceleration with their cars but no actual injuries.

Brian Lyons, a spokesman for Toyota Motor Sales USA Inc., declined to comment on the litigation.

One suit, filed on Friday in U.S. District Court for the Northern District of Florida, seeks $1 billion in damages on behalf of a nationwide class of consumers. Some 15 law firms have been working as a team in that case and they plan to file another three dozen suits within the next week or two in at least 25 states, said Howard, one of the lawyers on the case. Eventually, he said, the suits will be coordinated as multidistrict litigation.

"There are damages among consumers because no matter what happens here, the cars that people bought will be worth less, whether there's a quick fix or a long fix," Howard said.

"The more severe thing is they could have resolved this problem six months ago or a year ago, and instead required the NHTSA to fly to Japan to get their attention. They were not taking this seriously."

Another member of the team, Stephen A. Sheller of Sheller PC in Philadelphia, said that he plans to file consumer class actions in Pennsylvania and New Jersey in the coming days.

Since Friday, at least eight additional consumer class actions have been filed in federal courts in Texas, California, Louisiana, South Carolina, Ohio and Canada.

Personal injury claims also mounted. On Monday, a Houston man filed a $200 million action on behalf of his wife, Trina Harris, 34, who died on Dec. 18 after her 2009 Toyota Corolla "suddenly accelerated uncontrollably at a high rate of speed" and crashed into the cement embankment of a toll road, according to a complaint filed in state court in Harris County, Texas.

"Our position is that it's a malpractice case based on a defective product and that Toyota has unconscionably breached its duty to Ms. Harris and provided her an unreasonably dangerous product," said Ken Mingledorff of the Mingledorff Law Firm in Houston, who represents the plaintiff, Michael Harris, and his two children.

Also named as defendants are CTS Corp., which manufactured the electronic components of the gas pedals, and the Toyota dealership that leased the car to Trina Harris. The suit claims wrongful death, product liability and negligence.

Mingledorff said that at least two other wrongful death suits have been filed against Toyota.

On Wednesday, one lawyer at his firm was doing nothing but answering a flood of telephone calls from people who were having problems with their Toyotas, Mingledorff said. He plans to file another suit within a few days on behalf of Trina Harris' mother.

Additional firms are looking into whether to file shareholder class actions as Toyota's share price plummeted.

"If our investigation proves fruitful, or the investigations of other firms prove fruitful, you may see litigation," said Lewis Kahn, founding partner of Kahn Swick & Foti in New Orleans, a plaintiffs firm investigating a potential shareholder suit. "The stock did drop precipitously, and billions of dollars in shareholder value were wiped out as a result of this news."

[Index to  Articles]