Toyota faces massive legal liability

Legal expenses and damages could add billions to Toyota's recall costs, with dozens of suits pending over injuries and deaths and at least 30 seeking class-action status over lost use of vehicles.,0,579...
Toyota Motor Corp.'s massive recalls for acceleration and braking problems are creating a huge legal liability for the company -- and Toyota owners may share in the pain.

The Japanese automaker faces dozens of lawsuits over injuries and deaths attributed to safety problems, with many more suits expected. Lawyers and legal experts said the lawsuits could be particularly expensive for the automaker if plaintiffs prove that Toyota was aware of problems but failed to correct them.

On top of that, there are at least 30 lawsuits seeking class-action status to recover damages for the reduced value of the cars and the lost use of vehicles during repairs.

"This has the potential to be the biggest product liability case in the automotive industry," said Richard Cupp, a professor at Pepperdine University School of Law. Toyota drivers also face their own share of woes from the recalls.

They might have to pay a portion of any damages from an accident resulting from a known safety defect that they didn't get fixed promptly, said Marshall Shapo, who teaches product liability law at Northwestern University.

The drop in the resale value of Toyota and Lexus autos could also prompt insurers to reduce what they pay when a Toyota is destroyed in an accident.(MORE)

Your rating: None Average: 3 (2 votes)

Let those sons of Bs' pay for their greedy, profit centered manufacturing techniques just like US automakers had to do in the past. It's high time foreign automakers got a taste of an even playing field. So much for those great, non-union members' fantastic workmanship we always have to hear about, too. Probably all the toyotas' with brakes that don't work were built on either Mondays or Fridays, I'm betting.

Auto pricing experts such as Kelley Blue Book and have started to document declines in the value of Toyota's products. Kelley says prices for used Toyotas caught up in the recalls have dropped 2.5% to 4.5%, depending on the model. estimates that used Toyota models are down about 3% for retail and about 6% on trade-in value.

Howard noted that if a typical vehicle was worth just $10,000 before the recalls and drops 3.5% in value, that's $350 per car. Multiply that by 6 million -- the approximate number of Toyota autos recalled in the U.S. -- and the potential damages reach $2.1 billion. If a trial attorney can prove allegations that Toyota hid its knowledge of the defects, punitive damages could easily double the tab, other product liability law experts said.

Normally, diminished-value lawsuits are difficult to pursue, and the Toyota case presents challenges for class-action attorneys, Cupp said. Each member of the class will have a car with a slightly different age, mileage and condition from every other member of the group, he said.

Statements made are the opinion of the writer who is exercising his first amendment right to freedom of speech. Freedom of speech in the United States is protected by the First Amendment to the United States Constitution and are generally permitted.

The background behind Toyota recall

The massive recall of Toyota Motor Corporation vehicles has shocked the world. Sasaki Shozo, a labor movement researcher, contributed an article to Akahata on February 5 and 6. The excerpt is as follows:

Toyota is recalling more than 10 million units of 21 models, including the Prius, across the world, including the United States, Europe, Canada, and China.

The cause of defects is said to be design flaws and quality problems. Toyota's U.S.-based parts supplier is responsible to some extent. However, it is Toyota itself that must bear the blame for failing to ensure the safety of its products and continuing to produce defective vehicles. When a defect was found in the first place, it should have made appropriate responses to it and strengthened safety management.

The underlying cause, in fact, is the contradiction between "procuring parts of high quality" and stress on "low cost" in pursuit of the position as the world's number-one car maker.

With more than 13 trillion yen in its internal reserves, it has not allowed the wages of its workers to increase and has replaced full-time regular workers with contingent labor under the pretext of international competition. It has exported low-cost vehicles abroad as a result of its all-out cost-cutting efforts in order to increase profits. In contrast, it has ignored the need to contribute to stimulating domestic demand and individual consumption.
High profit first

Even at overseas factories, a top priority was the pursuit of cost-cutting measures. The reason for Toyota's problems is that Toyota disregards the need to ensure product quality and guaranteeing customers' safety.

Toyota states that based on its "customer first" philosophy, it develops and provides safe and outstanding high quality products and services. And as for corporate social responsibility, Toyota states that it highly prioritizes product safety which is a matter of life and death.

However, under its high profit first policy, Toyota ignores its own corporate philosophy and claimed corporate social responsibility. This attitude has led to the present recall of more than a million cars.
Regaining customers' trust

Toyota should strive to regain domestic and foreign Toyota owner trust in its product safety.

To this end, it is needed for Toyota to drastically change its business strategy of cost reduction to make high profits. It should raise workers' wages and improve their working conditions, secure non-regular workers' jobs and treat them equally with regular workers, and guarantee stable unit prices for affiliated firms and subcontractors. In other words, Toyota should fulfill its social responsibilities.

This is the way for Toyota to produce safe and high-quality cars and achieve national and international trust. This will help expand and stabilize domestic demand and recover local and national economies. In order to pursue this course, Toyota needs to return to society a part of its profits and internal reserves.

What government must do is to exercise leadership to require major corporations to fulfill their social responsibilities.

An engineer who has been involved in product design and development at a Toyota-affiliate company pointed out that the period before a new car comes onto the market, the so-called time-to-market, is very short.

He said to an Akahata reporter, "If Toyota had spent enough time to conduct test runs, torture tests, crash tests, and various other tests to evaluate a product's ability to withstand extreme conditions, the company could have discovered defects in newly-developed cars. Because it is difficult to determine, for example, actual safety at the time of the crash and problems regarding the accelerator pedal and the brake system only by computer-simulated tests, developers must check out each item before putting a new product on the market. However, short-term development is the norm at present. They have a time limit and must keep to a development deadline."

- Akahata, February 7, 2010

This article originally appeared at Japan Press Weekly.

Statements made are the opinion of the writer who is exercising his first amendment right to freedom of speech. Freedom of speech in the United States is protected by the First Amendment to the United States Constitution and are generally permitted.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.