Breaking News

Tweet TWEET

Toyota Must Face Claims Over Unintended Acceleration, Judge in U.S. Rules

Toyota Motor Corp. (7203) lost a bid to dismiss lawsuits by car owners alleging economic loss related to unintended acceleration when a federal judge overseeing the suits made final an order allowing the claims to go forward.

The Toyota owners contend the company drove down the value of their vehicles by failing to disclose or fix defects related to sudden acceleration. U.S. District Judge James V. Selna in Santa Ana, California, issued a final order May 13 following last month’s tentative order allowing the lawsuits to move ahead because the vehicle owners had properly pleaded loss or injury.

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

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 alleging injuries and deaths.

Most of the federal lawsuits were combined before Selna, who is overseeing pretrial evidence-gathering.

Selna issued a similar ruling in November that rejected Toyota’s motion to dismiss an earlier complaint by the vehicle owners.

‘Toyota Is Confident’

“At this early stage of the litigation the court is required to accept as true all of the factual allegations made by plaintiffs’ counsel in ruling on Toyota’s motion to dismiss,” Celeste Migliore, Toyota spokeswoman said in an e-mailed statement. “The burden is now squarely on plaintiffs’ counsel to prove their allegations and Toyota is confident that no such proof exists.”

Steve Berman, a lawyer for vehicle owners, said, “We believe -- and intend to prove -- that Toyota was aware of a defect and chose not to take action to protect consumers.”

“Judge Selna agreed with many of our underlying arguments in the case, including our contention that Toyota owners who did not attempt to sell their vehicle could still bring a claim because they overpaid for their vehicles, buying cars that were not worth as much as a car free of these defects,” Berman said in an e-mailed statement.

California Law

Selna today held a hearing on a request by lawyers for vehicle owners to pursue economic claims under California law, which may give plaintiffs a better chance of recovering damages. Toyota has asked the judge to find that car owners can’t use California law on suits brought in other states.

The judge took the request under submission at today’s hearing without issuing a decision. Selna said last week that he was likely to rule in the vehicle owners’ favor. Selna said he didn’t believe Toyota’s rights to due process would be denied by applying California’s consumer laws.

“Applying California law to plaintiffs who purchased, drove, and maintained their vehicles outside of the state would fly in the face of Supreme Court precedent and trample on each state’s right to create and enforce its own laws,” Migliore said today in a separate statement. “California simply was not the epicenter of the events in these lawsuits.”

Marc Seltzer, a lawyer for the plaintiffs, said at today’s hearing that it’s contrary to the law that a state can say that only its law should apply to its residents.

Recalls

“The plaintiffs get to assert what claims they want to assert, what way to prosecute them and their choice of California law to pursue those claims,” Seltzer said.

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.

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 that system.

In February, NASA, the U.S. space agency, and the National Highway Traffic Safety Administration said their probe of possible electronic defects found no causes for unintended acceleration other than sticking accelerator pedals and floor mats that jammed the pedals.

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.