Toyota moves to settle 2 high-profile sudden acceleration cases
Toyota Motor Corp. has quietly moved to settle two high-profile sudden acceleration lawsuits in recent weeks in what appears to be a strategy to keep potentially damaging cases away from juries.
The confidential negotiations, which include a case involving two deaths in a horrific 2010 crash in Utah, come on the heels of a $1.1 billion settlement late last month. That deal involved hundreds of plaintiffs who contended Toyota diminished the value of their vehicles by hiding defects. And in November, Toyota paid $25.5 million to settle shareholder claims that failure to disclose vehicle problems led to a drop in the company’s stock price.
Even after these settlements, the world’s largest automaker still faces more than 300 sudden acceleration lawsuits in state and federal courts. Many of the plaintiffs assert that faulty electronics were to blame, allegations that Toyota has consistently denied. The company has steadfastly maintained that the only defects that could have caused the problem were improperly installed floor mats and sticky gas pedals for which the automaker instituted recalls. Several government investigations found no flaws in the automaker’s electronics and pointed to driver error as a more likely cause.
Still, legal experts said juries hearing emotional cases involving serious injuries or deaths could come to a different conclusion, potentially exposing Toyota to massive, headline-grabbing verdicts that could sully its reputation. The automaker, they said, appears to be following a well-worn playbook used by big companies in mass litigation: Settle cases in which the risk of losing is deemed too great, and aggressively defend those that would play favorably in court.
“The strategy is to settle and move on rather than risk a huge loss,” said Byron Stier, an expert on major products litigation at Southwestern Law School in Los Angeles who has extensively studied the Toyota cases. “The wrong case could stir up a lot of bad publicity, so just move on.”
For Toyota, paying off plaintiffs in catastrophic injury or death suits might cost tens of millions of dollars. But these private settlements would keep potentially sensitive evidence out of the courtroom that could aid plaintiffs in other lawsuits. For example, some plaintiffs’ attorneys have been examining the source code for Toyota’s throttle management system in preparation for trial, reviewing millions of pages of company engineering documents, and consulting with electronics and software experts.
Perhaps more important, settling the toughest cases outside of a courtroom would help Toyota put the sudden acceleration issue in the rearview mirror. The Japanese automaker has been dogged by the issue since it began recalling millions of cars for the problem in late 2009, a move that led to multiple federal investigations, record fines, hundreds of lawsuits and a rare apology from Toyota’s president to Congress.
The latest cases to settle had been selected by judges as the first among a large group of federal and state cases to go to trial. So-called bellwether cases, they were chosen as representative cases that help predict the outcome of numerous suits that make similar claims.
One of the settled bellwether lawsuits, a lemon law claim case brought by retired police officer Michael Houlf in Los Angeles Superior Court, had been set for trial this month but was formally dismissed Dec. 28, court filings show. Settlement terms were not revealed.
The other, called Van Alfen vs. Toyota, was filed in U.S. District Court in Santa Ana, Calif., and was to begin trial in mid-February. Although both sides have agreed on terms, the deal is still awaiting final approval, according to individuals familiar with the matter who requested anonymity because the settlement is confidential.
That case, considered one of the strongest acceleration claims filed against Toyota, involved a 2008 Camry that accelerated out of control in western Utah. The vehicle crashed into a rock wall, killing the driver, Paul Van Alfen, as well as a passenger and injuring two others in the car. In the course of trial preparation, the court sanctioned Toyota for inspecting the Camry and its black box data recorder without the consent or presence of the Van Alfen family, casting what the judge called a “cloud of suspicion” over the automaker’s conduct in the case.
But late last month that sanction was lifted with the consent of Mark Robinson, a Newport Beach, Calif., attorney representing the plaintiffs _ a strong indication the suit would be settled out of court. Robinson, a veteran trial lawyer who has several other cases against Toyota, declined to discuss the settlement. Attorneys for Houlf did not return multiple calls seeking comment.
Toyota spokesman Mike Michels said he was “not going to be able to comment on either case,” and added that the remaining lawsuits against Toyota “will be approached and defended on a case-by-case basis.” The automaker contends that there are no electronic defects in its vehicles that could cause sudden acceleration, an allegation in many of the pending lawsuits.
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During the process of discovery, plaintiffs’ lawyers have spent considerable time studying Toyota electronics. But because much of the evidence gathered in the settled cases was sealed under a protective order it cannot be used in other suits, effectively eliminating potentially negative facts from the record. Indeed, experts say, one of the key benefits to Toyota in settling is permanently setting aside facts that it finds inconvenient or embarrassing.
Toyota still faces roughly 200 sudden acceleration suits in federal court, 100 in California, 20 in Texas and a smattering of individual suits around the country; attorneys in those cases have been sharing some evidence common to all cases. The automaker also is contending with suits filed by the Orange County, Calif., district attorney and a coalition of state attorneys general, both of which Toyota has said are close to settlement.
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The next trial date is April 15, when Toyota is scheduled to face a wrongful death claim in Los Angeles Superior Court.
Attorney Garo Mardirossian said he plans to argue that the 2006 Camry’s lack of a brake override system contributed to the death of Upland, Calif., woman Noriko Uno in August 2009 after her sedan took off at high speed, hit a telephone pole, flipped in the air and crashed into a tree.
Mardirossian said he’s conducted dozens of depositions and has witnesses who will testify that the car’s brake lights were on _ an indication that the problem may not have been caused by driver error. He’s open to settlement offers, he said, but for now “I’m getting ready for trial.”
A more appealing case, from Toyota’s perspective, may come in federal court in late October. It involves an 84-year-old Georgia woman who fractured three vertebrae in a Camry in 2009 after it accelerated through a playground and crashed into a gymnasium. As part of the bellwether selection process, that suit was proposed by Toyota as one of three it would prefer to face first in federal court.
While awaiting trial last summer, the plaintiff, Ida Starr St. John, died. Cale Conley, one of St. John’s attorneys, said he would continue the suit on behalf of her estate and hoped to assert a wrongful death claim. But that could help Toyota make the case that St. John’s age, rather than a vehicle defect, led to the crash, while denying the jury the chance to see a potentially sympathetic plaintiff.
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The timing of settlements can vary wildly. Robert Hilliard, a Corpus Christi, Texas, attorney handling several lawsuits against Toyota, said that by making plaintiffs go through the expensive motions of preparing for trial, many cases will simply drop out for lack of funding.
“Time is not on the plaintiffs’ side in these cases,” Hilliard said.
Toyota paid $10 million to settle one of the first, and most notorious, sudden acceleration lawsuits _ involving a Lexus ES that crashed outside San Diego in 2009, killing off-duty California Highway Patrol officer Mark Saylor and his family _ in late 2010, years before a potential trial. That crash was recorded in a harrowing 911 call, making it very risky for Toyota to try before a jury.
But faced with another serious accident captured on a 911 call, this time in Michigan, Toyota took its time. That case involved a Lexus ES driven by a young woman that crashed into a minivan in 2008, fracturing the driver’s femur and leaving the driver of the minivan with a broken pelvis, eight broken ribs and a punctured lung. The case wasn’t settled until shortly before trial was set to begin in July 2011.
“They made us jump through all the hoops before making an offer,” said Peter Smit, attorney for the Lexus driver, Mary Jordan.
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Toyota already has one court victory under its belt, in a case involving a 2005 crash of a Scion TC. Within hours of the April 2011 verdict in federal court in New York, Toyota issued a news release saying that “this case sets an important benchmark for unintended acceleration litigation against Toyota across this country.”
Elizabeth Burch, a law professor at the University of Georgia, predicts that if Toyota can accrue a few more favorable verdicts, it may offer a mass settlement to the remaining plaintiffs that would wrap up the matter all at once.
That wouldn’t be dissimilar to its decision to settle more than 200 economic damages claims in one fell swoop. Although the $1.1 billion price tag was a record for an auto settlement, it seemed to pay off on Wall Street. Since the deal was announced in late December, Toyota’s market capitalization has increased by more than $8 billion.
“I think Toyota is making a business decision to reassure stockholders,” Burch said.
Tom Palmer has his fingers crossed. The San Diego financial planner sued Toyota after his Corolla crashed in late 2009, and has chosen to represent himself in the case. He said he hasn’t begun the expensive process of preparing for trial.
“My hope is to get a deal rather than dragging this on for another few years,” Palmer said. “If they settled the bellwether cases, I’m betting they’ll settle everything.”
(Ralph Vartabedian of the Los Angeles Times contributed to this report.)
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