Toyota Faces Three Shareholder Lawsuits Over RecallsMar 19, 2010 | Parker Waichman LLP
Toyota shareholders have filed several lawsuits over the automaker’s recent recalls of vehicles for speed control issues. According to The Detroit News, the shareholder lawsuits could cost Toyota billions of dollars and take years to resolve.
Over the past several months, Toyota has recalled more than 8 million vehicles around the world because of issues with sudden, unintended acceleration. The problems have been blamed on defective floor mats and sticking accelerator pedals. In addition to seeing its reputation for quality and reliability damaged, Toyota has been criticized for taking too long to respond to and disclose this serious safety issue.
In the U.S., five deaths have occurred in auto accidents involving the unintended acceleration of a Toyota or Lexus vehicle. Last August, a California Highway Patrol trooper and three members of his family were killed in such a crash in San Diego County, just south of Orange. At least 47 other fatalities over the past decade alleged to be the result of Toyota unintended acceleration crashes are currently being investigated by the National Highway Traffic Safety Adminstration.
According to The Detroit News, Toyota has been hit with at least three class-action lawsuits alleging securities violations. One of the lawsuits alleges that Toyota “failed to disclose ongoing safety issues and quality control problems with Toyota’s automobiles, especially the fact that accelerator pedals installed in many of Toyota’s cars were defective and could become stuck in the depressed position, leading to unintended acceleration.”
Such suits aren’t uncommon when a company has a major controversy that leads to a fall in the stock price, The Detroit News said. When Toyota issued a recall of vehicles for sticky accelerator pedals on January 21, its stock stood at $90.42 per share. Last Friday, it closed at $79.56.
In addition to the stockholder lawsuits, Toyota faces several lawsuits filed on behalf of people impacted by the recalls. Some seek compensation for the loss of value vehicles sustained because of the recalls, while others seek a refund of the entire purchase price for owners of recalled Toyotas. Still others seek compensation for deaths and injuries over product liability complaints, while another suit wants to force Toyota to broaden its recalls, The Detroit News said.