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The Honolulu Advertiser
Posted on: Wednesday, March 10, 2010

Toyota class-action lawsuits mount

Associated Press

MIAMI Toyota owners claiming that massive safety recalls are causing the value of their vehicles to plummet have filed at least 89 class-action lawsuits that could cost the Japanese auto giant $3 billion or more, according to an Associated Press review of cases, legal precedent and interviews with experts.

Those estimates do not include potential payouts for wrongful death and injury lawsuits, which could reach in the tens of millions each. Still, the sheer volume of cases involving U.S. Toyota owners claiming lost value 6 million or more could prove far more costly, adding up to losses in the billions for the automaker.

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. But you could have millions of individual car owners who could (each) be owed $1,000. 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 contend their vehicles have dropped in value because of the recalls and that Toyota knew all along about safety problems but concealed them from buyers. They point to evidence such as Kelley Blue Book's decision this month to lower the resale value of recalled Toyotas an average of 3.5 percent, ranging from $300 less for a Corolla to $750 less for a Sequoia.

The lawsuits started appearing on state and federal dockets last fall, when Toyota began recalling some 8 million vehicles worldwide because of persistent complaints about sudden unintended acceleration. The National Highway Traffic Safety Administration reports that 52 people have died in accelerator-related crashes.

The AP conducted an extensive review of federal court filings and uncovered a total of 89 class-action lawsuits filed nationwide as of Monday. Toyota attorneys said last week in a court filing that the company is aware of 82 such cases.

One leading attorney in the class-action effort, Northeastern University law professor Tim Howard, said the number of owners claiming economic damages because of the recalls could reach 6 million. If each were awarded $500 likely a conservative estimate Toyota would have to fork over $3 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 percent since January.

Corporations often settle big cases rather than risk an even bigger damage award at a trial.

Automakers in the past have been forced to pay vehicle owners for lost value because of safety problems. Ford, for example, agreed in 2008 to compensate 800,000 Explorer owners who sued because of rollover dangers. That settlement provided owners only with vouchers of between $300 and $500 to buy new Ford products.

In that case, the lawyers received about $25 million in fees and costs, and the Toyota case could result in a similar windfall for attorneys.