Toyota Motor Corp. will face a Maryland public pension fund as the lead plaintiff in a consolidated shareholder lawsuit in which it’s accused of failing to disclose defects related to sudden acceleration.
The decision appointing the Maryland State Retirement and Pension System and its law firm to lead the case came as lawyers in another lawsuit filed by car owners said a Toyota technician called sudden acceleration an “extremely dangerous problem” in 2003. That was six years before the first of several recalls of the company’s vehicles.
The pension fund’s law firm, Bernstein Litowitz Berger & Grossmann LLP, will serve as lead counsel in the shareholder case under yesterday’s decision by U.S. District Judge Dale Fischer in Los Angeles.
Investors in Toyota’s common stock may be excluded from the lawsuit, Fischer said in a July 16 ruling. A recent U.S. Supreme Court decision may only allow investors in the carmaker’s American depositary receipts to sue, he said.
Among the funds vying for lead plaintiff status, the Maryland fund alleged the largest losses, $257,580, on its investments in Toyota’s American depositary receipts.
The July 16 ruling doesn’t necessarily preclude investors from trying to seek damages based on losses from Toyota’s common stock, Gerald Silk, a lawyer for the Maryland fund, said after yesterday’s hearing. Whether these claims will be allowed to proceed may be decided with a motion to seek class certification or a motion to dismiss the complaint, Silk said.
Patrick Robbins, a lawyer for Toyota, declined to comment after the hearing on the investor suit.
2.3 Million Vehicles
The Toyota investors claim the carmaker misled them by not disclosing flaws in the acceleration system that prompted a recall of 2.3 million vehicles in North America in January. Toyota’s American depositary receipts have fallen 22 percent from a 52-week high of $91.97 on Jan. 19.
Toyota, the world’s largest automaker, and U.S. auto-safety regulators are looking into causes of unintended acceleration in the company’s cars and trucks. The Toyota City, Japan-based automaker has recalled more than 8 million vehicles worldwide in the past year for defects including pedals that stuck or snagged on floor mats.
The claim that Toyota knew of the problem in 2003 was included in multiple documents cited in a consolidated complaint filed yesterday by consumers claiming economic losses related to sudden acceleration by Toyota vehicles.
The unidentified Toyota employee “requested immediate action,” after investigating an allegation of unintended acceleration, lawyers for consumers suing the company said in that filing. “We are also much afraid of frequency of this problem in near future,” the technician wrote in a May 2003 field report cited in the suit.
The consumer lawsuits, which have been combined for pretrial filings and rulings in federal court in Santa Ana, California, claim that Toyota drove down the value of vehicles by failing to fix or disclose defects leading to unintended acceleration.
“Toyota has consistently marketed its vehicles as safe and proclaimed that safety is one of its highest corporate priorities,” consumer lawyers said in an amended complaint, citing documents provided to U.S. regulators and Congress. “The defects causing unintended acceleration have caused defective vehicles’ values to plummet.”
Toyota rejects claims the plaintiffs suffered economic damages because of the recent recalls, spokeswoman Celeste Migliore said in an e-mail.
“Reliable scientific evidence will demonstrate the safety of our vehicles in the investigations currently under way and, ultimately, to the court,” she said.
Toyota faces more than 300 federal and state lawsuits including proposed class actions over economic losses and claims of personal injuries or deaths caused by sudden-acceleration incidents.
All the class actions and most of the individual lawsuits were filed after September.
Fischer urged the lawyers for the Maryland fund to communicate and to coordinate their efforts with the lawyers for the consolidated consumer cases in Santa Ana to avoid duplication in collecting evidence.
The shareholder case is Stackhouse v. Toyota Motor Corp., 10-00922, U.S. District Court, Central District of California (Los Angeles). The consumer cases are combined as In re Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices and Products Liability Litigation, 8:10-ml-02151, U.S. District Court, Central District of California (Santa Ana).