Toyota Tentatively Denied Arbitration for Acceleration Cases

A judge ruled tentatively that Toyota Motor Corp. (7203) can’t force named plaintiffs in a purported class-action lawsuit over alleged losses from unintended sudden acceleration to arbitrate their claims rather than proceed to trial.

U.S. District Judge James Selna in Santa Ana, California, said in a tentative ruling yesterday that Toyota waived its right to compel arbitration for 15 of the 20 plaintiffs and that, for the remaining five, the carmaker wasn’t a party to the arbitration agreements between the plaintiffs and the Toyota dealers.

A hearing is scheduled Feb. 27 in federal court in Santa Ana, where Toyota’s lawyers may try to persuade the judge to change his decision.

“By failing to assert a right to compel arbitration until now, Toyota has encouraged plaintiffs to pursue their current litigation strategy, including pursuing their claims on a class- wide basis in a federal forum,” Selna said in his tentative order. “They would be prejudiced if their claims were required to be submitted to arbitration now.”

Selna has been presiding over the consolidated litigation since 2010. He has scheduled three trials for next year that will serve as bellwether cases to be used by the court and lawyers for both sides to test evidence and liability theories before moving on to other trials and a decision by Selna as to whether to approve a class-action status for the plaintiffs.

Arbitration Agreements

Toyota’s request that most of the economic loss cases be sent to arbitration was based on the automaker’s argument that customers who bought or leased Toyota vehicles involved in the litigation signed arbitration agreements that waive their rights to participate in a class-action case.

Celeste Migliore, a spokeswoman for Torrance, California- based Toyota Motor Sales USA, declined to comment on the tentative order.

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: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net

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

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