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U.S. Toyota Officials Warned Japan Execs to “Come Clean”

New documents further support charges automaker hid defect.

by on Apr.08, 2010

Internal documents show U.S. and Japanese Toyota officials debated whether to reveal a problem with defective accelerator pedals -- as required by law.

Newly-released documents show that Toyota officials in Japan and the United States spent months debating how to handle problems with defective accelerator pedals, even though the company was required to disclose safety-related issues to the U.S. government within five days of discovering such problems.

A senior American executive, worrying about the potential impact on the company’s once-bulletproof image, finally warned his colleagues at Toyota’s Japanese headquarters that if the automaker didn’t “come clean,” it might trigger the collapse of its business.

“WE HAVE a tendency for MECHANICAL failure in accelerator pedals of a certain manufacturer on certain models,” wrote Irv Miller, the outgoing group vie president of communications for Toyota Motor Sales USA, wrote to Katsuhiko Koganei, on January 16, 2010, using capital letters to underscore his concerns.

As has reported, on several occasions, there was an apparent split between U.S. and Japanese Toyota executives over the company’s problems with so-called “sudden acceleration.”  But the letter by Miller, who was scheduled to retire in January of this year, provides clear evidence of the problem, with the U.S. executive’s note insisting, “The time to hide on this one is over.”

In October 2008, the maker had recalled 3.8 million vehicles for what it described as “carpet entrapment,” where loose floor mats would occasionally jam accelerator pedals.  In the weeks that followed, American executives described as “unwarranted speculation” reports of additional problems.

Get Charged Up!

But a cache of tens of thousands of documents recently provided to U.S. officials by Toyota reveal that even before the first American recall — by no later than June 2009 — the automaker had already realized there was an additional problem with the actual accelerator pedal assembly on at least some Toyota models sold in Europe.


Toyota Wants to Consolidate Over 200 Sudden Acceleration Lawsuits

Plaintiffs claiming damages that could top $40 billion.

by on Mar.25, 2010

More than 200 separate lawsuits have been filed against Toyota, many seeking class-action status, in the wake of its recent safety problems.

Facing an avalanche of litigation that could result in as much as $40 billion in payoffs to those claiming injury from problems with runaway vehicles, Toyota wants a panel of federal judges to consolidate more than 200 separate “sudden acceleration” lawsuits before a single California judge.

But lawyers representing a variety of plaintiffs told a U.S. Panel on Multidistrict Litigation that they’d prefer to have their cases heard by courts in New Jersey, Florida, Kentucky, and other parts of the country.

The Panel, operating out of federal court in San Diego, has been empowered to try to reign in the growing number of lawsuits targeting Toyota for its ongoing safety problems, an issue that could tie up the courts – and the automaker – for years to come.

So far, the company’s attorneys said, 138 potential class-action lawsuits have been filed seeking damages because Toyota’s problems have resulted in falling resale values for its products.  Another 97 suits claim damages because of personal injuries and wrongful deaths involving Toyota products.

While Toyota is expected to ask the panel to dismiss the pending litigation as a matter of course, that is considered a long-shot.  It has a better chance, according to legal experts, of getting some or all of the suits heard at a single trial.

“All these cases have common issues,” Toyota attorney Cari Dawson told the panel of judges.  “There will be significant overlap,” she stressed, arguing that it makes more sense to combine the cases and argue them concurrently.

Rely On Us!

While some plaintiffs’ attorneys continue hoping to argue their own cases, observers believe that the panel will eventually approve the consolidation.  With at least 34 cases already filed in California, the state is considered likely to be the venue for the litigation.  It helps that it is near Toyota’s U.S. headquarters, which will make it easy for corporate officials to appear on the witness stand.


Toyota Shareholders Suing

Proposed lawsuits claim misinformation propped up stock price.

by on Mar.22, 2010

Further complicating Toyota’s ongoing problems, the automaker faces the prospect of at least three class action lawsuits filed by angry shareholders claiming the Japanese maker understated the degree of its safety-related problems, improperly propping up its stock price.

Shareholders claim the maker downplayed problems that led to a huge slump in its price.

Toyota’s share price has rebounded somewhat – hitting $79.56 on Friday – from a low of $60.42 – but that’s still down from the 52-week high of $91.97.  Just since the automaker’s January 21 announcement that it would recall 2.3 million vehicles and shut down five plants to deal with a potentialy sticky accelerator, the stock price has tumbled about 13%, wiping out $25 billion in market capitalization.

The proposed class actions claim that Toyota misguided investors when, last October, it staged an earlier recall to deal with sudden acceleration problems, insisting that the matter would be resolved by dealing with so-called “carpet entrapment,” in which loose floor mats could jam accelerator pedals.

In an October news conference, Bob Carter, general manager of the Toyota division, labeled talk of other problems, “unwarranted speculation.”

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The various legal actions have all been filed in federal court in California, where Toyota Motor Sales USA is headquartered.  They all seek to be certified as class actions, which would allow them to represent all Toyota shareholders in the U.S. who held the company’s stock on specific dates.  Damages, if the claims are upheld, could potentially reach into the billions of dollars.