Toyota Motor Corp. investors alleging the company failed to disclose design flaws that might cause its cars to suddenly accelerate vied to become lead plaintiffs in a group of securities class-action lawsuits.
Lawyers for investors including the Commonwealth of Massachusetts Pension Reserves Investment Management Board tried to persuade U.S. District Judge Dale S. Fischer at a hearing today in Los Angeles to appoint their client as lead plaintiff. Lawyers named as lead counsel in a class-action case are entitled to a larger share of any recovery.
Fischer said she will hold off making a decision until the U.S. Supreme Court issues its ruling in a lawsuit against National Australia Bank Ltd. which may limit the ability of foreign investors to use American courts to sue companies based abroad. The Supreme Court heard arguments in that case in March.
The Toyota investor with the largest loss among the plaintiffs before Fischer is Skandia Life Insurance Co., a Swedish company, which claims it lost $34.9 million. Investors who have the most at stake financially are given preference to be appointed lead plaintiff in securities class-action cases.
Fischer asked lawyers in an April 23 order to explain why they were representing groups of investors, rather than individual ones, if not for the sole purpose to create a larger loss figure and have their group be appointed lead plaintiff.
Gerald Silk, a lawyer for a group of five institutional investors including the Maryland State Retirement and Pension System who together claim $91.8 million in losses, said his clients had come together on their own.
“This group was formed organically,” Silk told the judge. “They are not the types of people we could control.”
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 24 percent from a 52-week high of $91.97 on Jan. 19.
Toyota faces more than 300 lawsuits in state and federal court, including proposed class actions over economic losses and claims of personal injuries or deaths caused by sudden-acceleration incidents.
The case is Stackhouse v. Toyota Motor Corp., 10-922, U.S. District Court, Central District of California (Los Angeles).