As if the insurance claims and safety investigations aren’t enough, Reuters is reporting that Toyota is facing legal woes. Specifically, attorneys already seeking civil damages against the automaker because of diminished resale values on recalled models are now expanding their cases to also include racketeering charges. The use of federal racketeering laws to broaden existent consumer class-action complaints, which currently include more than eighty separate suits in at least forty states, exposes Toyota Motor Corp, U.S. to even greater potential liability than it was already facing.
Under the Racketeer Influenced and Corrupt Organization Act, commercial enterprises may be found liable for triple the damages for any harm caused by their fraudulent activities. This means, that litigation originally sticking Toyota for a bit over $2 billion in damages could now end up costing the Japanese-owned company more than $10 billion in payments to consumers, according to Tim Howard, lead counsel for a team of law firms which is handling roughly half of the cases.
When interviewed, Howard said that each of the amended lawsuits is, “…a much more robust and thorough complaint than the first rounds because of how the evidence has evolved since then.”
Reuters could not reach any one at Toyota for comment before going to press today, but this is unsurprising, as the automaker has consistently withheld comment on pending litigation.
Support for the revised complaints is based on a number of documents, and on congressional testimony by Toyota executives, to make the case that the automaker was aware of “unintended acceleration problems” for several years, even as it continued to promote cars demonstrating the issue as reliable and safe. Examples of the documentation include a 2002 technical service bulletin cited in one of the Florida lawsuits. The bulletin, written for the 2007 Toyota Camry, provides the solution for recalibrating the Enginge Control Model. This bulletin would seem to be in contradiction of Toyota’s insistence that electronics have nothing to do with the acceleration issue, and is related only to the gas pedal being trapped by improperly fitting floor mats, or sticky pedals.
Only the pedal issues were ever singled out for correction in recalls of more than eight million Toyota vehicles, to date, the largest such recall ever taken by the company.
The lawsuits assert that because Toyota allegedly concealed vehicle defects while advertising them as safe, the automaker has engaged in criminal fraud, which qualifies as “racketeering activity.”
According to Howard, as of Tuesday his group of law firms had updated existing consumer lawsuits in eight states, with amended filings in twelve more states planned by the end of the week. Those cases will be consolidated into a single class action lawsuit with other cases from around the country, sometime in the next couple of months, after a hearing in the U.S. District Court in San Diego, set for Thursday, March 25th.
Lawsuits against Toyota have become increasingly numerous in the weeks since the recalls began for a problem linked to more than 50 crash deaths in Lexus and Toyota vehicles under investigation over the last ten years. The cases related to injuries and deaths are the most obvious cases, but there was also a class-action suit filed last month in Los Angeles on behalf of U.S. shareholders. That suit accused the automaker of misleading investors.
Reuters says, “The consumer class actions are based on the premise that the resale value of Toyotas has dropped substantially as a result of the company’s safety crisis.”
Toyota has always had one of the industry’s highest resale values for its vehicles, but according to Howard, the major automobile valuation services have downgraded that value because of these acceleration issues.
