Toyota sued over falling car values
Toyota owners in the United States have filed dozens of group lawsuits over falling car values
Tuesday March 09 2010
Toyota owners in the United States have filed dozens of group lawsuits claiming that massive safety recalls have hammered the value of their cars in an action which could cost the company more than £2 billion.
The estimate does not include potential payouts for wrongful death and injury cases, which could reach in the tens of millions each.
The sheer volume of cases involving US Toyota owners claiming lost value - six million or more - could prove far more costly.
Such class-action lawsuits "are more scary for Toyota than the cases where people actually got injured," said Tom Baker, a University of Pennsylvania law professor.
"A super-big injury case would be 20 million dollars. But you could have millions of individual car owners who could (each) be owed 1,000 dollars. If I were Toyota, I'd be more worried about those cases."
As Toyota continues to deal with the recalls and wavering public confidence in its vehicle safety, its biggest financial fight may be in the courtroom. A key decision could come at a March 25 hearing in San Diego, where a panel of federal judges will consider whether to consolidate the mushrooming cases into a single jurisdiction.
After that, a judge will decide whether all claims filed by Toyota owners nationwide can be combined in a single legal action - known as "certifying a class" - and whether the claims have enough merit to move toward either trial or settlement.
Toyota owners suing the company claim their vehicles have dropped in value because of the recalls and that Toyota knew all along about safety problems but concealed them from buyers. The lawsuits began last autumn when Toyota began recalling eight million vehicles worldwide because of persistent complaints about sudden unintended acceleration.
One leading lawyer in the class-action effort, university law professor Tim Howard, said the number of owners claiming economic damages because of the recalls could reach six million. If each were awarded a conservative 500 dollars Toyota would have to fork over 3 billion dollars (£2 billion) in economic loss damages alone.
This does not include possible payouts in wrongful death or injury cases as well as lawsuits filed by shareholders claiming losses from share prices that have tumbled more than 16% since January. Corporations often settle big cases rather than risk an even bigger damage award at a trial.
