Several Lawsuits Filed over Toyota Recalls
Toyota Motor Corp. has estimated that the cost of recalls linked to the sudden acceleration problem will be $2 billion for warranty payments and lost sales. But BusinessWeek reports that lawsuits against Toyota will raise the cost well beyond $2 billion.
As of today, at least 41 class action lawsuits have been filed against Toyota. At least 13 individual lawsuits allege personal injury or death due to sudden acceleration of Toyota vehicles. I expect dozens more lawsuits to be filed against Toyota. After all, we’re talking about the world’s largest automaker and an unprecedented recall.
Attorney Michael Louis Kelly of California has filed two suits against Toyota, and he says that his clients will demand cash. In the past, some class action lawsuits against auto manufacturers have been settled with coupons for use with future purchases. Kelly says that such coupons will not suffice in this case.
“The damages could be in the billions of dollars in the loss of value alone,” Kelly said in an interview. “I don’t think we’re talking about coupons under any circumstances.”
The value of Toyota vehicles has lost approximately 3 percent in resale value because of the recalls. Toyota’s market value dropped 19 percent from January 20 through February 5.
Class actions rarely go to trial and many are settled with coupons. For example, Ford settled a 2007 class action with $500 discounts to owners of Explorers with recalled tires. However, less than 1 percent of the eligible customers actually used the coupons to buy a new Ford.
“Toyota will do what they think they should do to fix these automobiles,” Kelly said, “but I don’t expect them to reimburse for the lost value of these cars.”
Toyota Brake Recall
The newest recall involves 437,000 hybrid cars to repair faulty brake systems. At least four consumer class action lawsuits seek damages related to faulty hybrid brake systems. More lawsuits are expected. Sales of SAI and Lexus HS250H sedans and Prius plug-in hybrids have been stopped.
On February 4, Toyota announced that it will have to pay an estimated $1.12 billion on warranty expenses and will lose $895 million in sales due to the recall. Fortunately for Toyota, they also have about $23 billion in cash. They probably won’t be filing for bankruptcy any time soon. But things are not looking good for the auto giant.
Toyota investors have filed their own class action lawsuit, claiming that Toyota made “materially false and misleading statements” about the sudden acceleration problem, which caused stocks to trade at inflated levels before the big recall announcement on January 21, 2010.
Law professor Carl Tobias of the University of Richmond points out the personal injury and wrongful death lawsuits will cost Toyota much more than the defective product cases.
“It’s important to distinguish the personal injury cases from the product disappointment or lemon cases,” said Tobis. “The latter are worth a lot less, in terms of payment.”
Have you or a loved one been injured by a defective automobile? If so, call an experienced Georgia personal injury lawyer immediately. Call MLN Law at 404-531-9700 to schedule a free consultation.