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Toyota Can Appeal Part of Speed-Up Suit Ruling, Judge Says

Toyota Motor Corp. (7203) won the right to appeal a federal judge’s ruling that car owners who hadn’t experienced unintended acceleration could sue the company over economic losses related to the alleged defect.

U.S. District Judge James V. Selna in Santa Ana, California, said today Toyota could immediately challenge part of his May decision rejecting the company’s bid to dismiss the suits. Toyota can seek to appeal his ruling granting “standing,” or the right to sue, to certain vehicle owners, Selna said.

The appeal would focus on the issue “of whether each plaintiff must allege that he or she has experienced a manifestation of the product’s alleged defect in order to allege that he or she suffered an injury,” Selna said today. “An immediate appeal” of the standing ruling “will materially advance the ultimate termination of this litigation,” he said.

Toyota’s appeal to the U.S. Court of Appeals in San Francisco would slow down the litigation and may narrow the number of economic-loss claims against the automaker, said Carl Tobias, a law professor at the University of Richmond in Virginia.

“It may take the momentum away from the case,” Tobias said in a phone interview today.

U.S. Recalls

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.

An appellate court decision “could significantly reduce the time, burden, and expense of litigating this case and, by potentially decreasing substantially the number of claims pending against Toyota, may help move the remaining cases forward more quickly,” Brian Lyons, a spokesman for the Toyota City, Japan-based company, said in an e-mailed statement.

“The vast majority of plaintiffs in this litigation do not claim to have experienced an unintended acceleration event or to have incurred an economic loss,” Lyons said. “We do not believe plaintiffs who continue to drive their vehicles each day without issue belong in this case.”

‘Defective Vehicles’

The Toyota owners contend the company drove down the value of their vehicles by failing to disclose or fix defects related to sudden acceleration. Selna said in May that car owners who hadn’t experienced incidents had met pleading standards to claim losses.

The plaintiffs claimed they “bargained for safe, defect- free vehicles, but instead received unsafe, defective vehicles,” Selna said in May. “The overpayment for the defective, unsafe vehicles constitutes an economic-loss injury that is sufficient to confer standing.”

The judge’s initial ruling is likely to stand, Tobias, the law professor, said. “I don’t think you have to have experienced it to suffer the loss,” he said.

Steve Berman, a lawyer for vehicle owners, didn’t immediately return a call for comment.

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.

Floor Mats

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 reporter on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net.

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

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