Toyota Judge Says Automaker Will Have to Face Claims Over Economic Losses

A federal judge overseeing lawsuits against Toyota Motor Corp. (7203) said the automaker will have to face economic loss claims over unintended acceleration allegations.

Toyota owners claimed the company failed to disclose or fix defects related to sudden acceleration, driving down the value of their vehicles. U.S. District Judge James V. Selna in Santa Ana, California, said the claims could go forward because vehicle owners met court standards on pleading loss or injury.

“Taking these allegations as true, as the court must at the pleading stage, they establish an economic loss,” Selna wrote in his tentative decision yesterday. “A vehicle with a defect is worth less than one without a defect.”

In court today, Selna told lawyers he wanted to review some aspects of his tentative ruling before making it final. He added, “The tentative, in essence, will be the ruling of the court.”

Toyota, the world’s largest automaker, recalled millions of U.S. vehicles, starting in 2009, after claims of defects and incidents involving sudden unintended acceleration. The recalls set off a wave of litigation, including hundreds of economic loss suits and claims by individuals or their families for injuries and deaths caused by such incidents.

Most of the federal lawsuits were combined before Selna, who is overseeing pre-trial evidence-gathering, or discovery. Selna issued a similar ruling in November rejecting Toyota’s motion to dismiss an earlier complaint by the vehicle owners.

Appeal Suggested

Yesterday’s tentative finding followed an amended complaint by the plaintiffs and a subsequent renewed motion to dismiss. Selna told lawyers at today’s hearing to consider asking the U.S. Court of Appeals for the Ninth Circuit to review his ruling on whether the plaintiffs have presented enough evidence to allow their cases to go forward.

“Toyota is pleased that Judge Selna today invited the parties to seek consideration from the ninth circuit on key rulings that could have a significant impact on the case,” Celeste Migliore, a spokeswoman for the Toyota City, Japan-based company, said in an e-mailed statement. “The rulings at issue relate to which plaintiffs have properly presented claims under the U.S. Constitution and California statutes.”

Selna also said in the tentative ruling he wouldn’t dismiss claims that Toyota violated consumer laws by not disclosing sudden acceleration problems to the National Highway Traffic Safety Administration or to car buyers.

‘Litany of Failures’

“Toyota failed consumers through a litany of failures and missteps, including choosing not to warn the National Highway Traffic Safety Administration of sudden acceleration issues they knew existed,” Steve Berman, an attorney for the plaintiffs, said in an e-mailed statement before today’s hearing. “We believe this specific failure was a violation of consumer protection laws and are pleased that Judge Selna’s preliminary ruling will allow us to address that in our case.”

Toyota’s series of recalls began in September 2009 with an announcement that 3.8 million vehicles were being recalled because of a defect that may cause floor mats to jam down the accelerator pedal. In January 2010, the company recalled 2.3 million vehicles to fix sticking gas pedals.

The carmaker said in February that it was recalling another 2.17 million vehicles in the U.S. for carpet and floor-mat flaws that could jam gas pedals.

Throttle Control

Many of the lawsuits claim that loose floor mats and sticky pedals don’t explain all episodes of sudden acceleration and that the electronic throttle system in Toyota vehicles is to blame. Toyota has disputed any flaws in its electronic throttle control system.

“Plaintiffs’ counsel is still chasing a phantom theory of a defect in Toyota’s electronic throttle control system that they remain wholly unable to identify,” Migliore said in the company’s statement. “We look forward to the time when the science and engineering behind Toyota’s electronic throttle control system are given a full and fair evaluation by the court.”

The 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).

To contact the reporters on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net; Bill Callahan in San Diego at callahan@san.rr.com

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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