As we fumble towards a more complete understanding of Toyota’s stunning fall from grace, we’ve only uncovered a single class of people who truly stand to benefit from the last several weeks of hysteria: the lawyers, of course. Thanks to Toyota’s deep reserves of cash, every single possible damage incurred in the last several weeks will be picked over for an opportunity to sue the world’s largest automaker, and already the suits have crossed over into the realm of the absurd. Automotive News [sub] reports on latest class-action suit charge against Toyota, which seeks damages from the automaker for diminished resale value and lost use of recalled vehicles. These charges have been filed as class-action suits in “at least 30 states,” and lawyers suggest that the damages could run as high as $2b. Ford paid Explorer owners $500 a piece when it settled similar class-action suits in the wake of its Firestone safety scandal.
In addition to similar suits filed by owners of recalled models, a whole category of suits alleges that Toyota’s defects have not been properly addressed, opening class action suits to nearly every Toyota owner, including earlier non-recalled models. These range from braking issues (because who doesn’t want to believe that a rear-ender wasn’t their fault) to blaming electronic throttle control units for unintended acceleration. Suits have even been filed alleging that Prius headlights burn out to quickly. In the rush to pile onto Toyota, no shortcoming is going untouched.
Toyota, certain affiliates and certain officers and directors misled investors when they failed a major design defect in the acceleration system in several models of their vehicles. Due to the allegedly false and misleading statements, Toyota stock traded at artificially inflated prices during the relevant period.
Because stock investment (like driving a car) should be a risk-free endeavor? Apparently so, as 25 firms with securities suits have already formed a legal consortium.
And before you write these suits off as nothing more than another symptom of America’s litigious society, consider that recall-related suits are being filed against Toyota around the world, including South Africa, where one plaintiff is complaining that his unintended acceleration complaints were ignored by Toyota for years.
All of which adds further uncertainty to the situation, as the Toyota recall scandal moves past being a safety scare (and a relatively minor one, as auto safety scares go) to being a legal bonanza. Unintended acceleration is a tough case to blame on the manufacturer, as safeguards exist that could have allowed drivers of runaway vehicles to stop acceleration (it’s called shifting into neutral). The hybrid brake issue is similarly difficult to prove, as plaintiffs are likely to be asked to prove that driver distraction or malfeasance weren’t factors in their individual cases.
For now though, a media frenzy has clearly shifted interest in the Toyota case from keeping people safe to making an easy buck off of a deep-pocketed and deeply-embarrassed company. After all, the lawyers know that the more Toyota fights these cases, the worse it is for their PR. How ironic it would be if Toyota had to match the $2b it’s spending on vehicle repairs with settlements to make the legal gadflies go away.