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Toyota debacle could be largest consumer-fraud case ever, expert says

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Toyota debacle could be largest consumer-fraud case ever, expert says

By Janet Patton and Bill Estep - jpatton1@herald-leader.com

Legal troubles for Toyota continue to mushroom, with dozens of potential class-action lawsuits filed around the country, including in Northern Kentucky.

University of Kentucky law professor Mary Davis said the Toyota litigation, in the wake of the Japanese automaker's recall of more than 8.5 million vehicles worldwide, has the potential to be the biggest consumer-fraud case ever.

"This is unlike anything I've ever seen," said Davis, who was involved in multistate asbestos litigation as a trial attorney.

In a suit filed Tuesday in Covington, several Toyota owners in Kentucky, Ohio, Indiana and Florida accused the company of knowingly concealing defective, dangerous accelerator systems on its vehicles for years to protect sales so it could become the world's largest automaker.

The Covington suit might be the first to allege racketeering, mail fraud and wire fraud, based on Toyota's representation that its cars were safe when they were not.

The suit names Toyota's giant assembly plant in Georgetown, the automaker's largest in North America, as a defendant because it builds engines and powertrain components that are allegedly subject to acceleration problems.

Other defendants listed in the lawsuit are Toyota Motor Engineering and Manufacturing North America Inc., which is headquartered in Erlanger, in Northern Kentucky; Toyota Motor Sales U.S.A.; and the Toyota Motor Credit Corp.

A spokesperson for Toyota said Wednesday that the company does not comment on pending litigation.

A hearing on consolidating the national cases — at least 40 more have been filed on the acceleration problems — is scheduled for March 25 in U.S. District Court in San Diego, according to a consortium of more than 22 law firms in 16 states involved in various suits.

The group, the Attorneys Toyota Action Consortium, alleges that Toyota owners have seen the value of their vehicles plummet as a result of avoidable problems that the company has known about for years.

On Friday, Toyota asked a California court to dismiss cases originally filed in November. The automaker said the plaintiffs have suffered no damages from the defects.

Robert A. Steinberg, an attorney for the Covington plaintiffs, said Wednesday that he thinks Kentucky stands a good chance of getting the multidistrict litigation because of the Erlanger headquarters and the Georgetown plant.

Steinberg said about 120 cases have been filed nationwide against Toyota, many in state courts.

"There will be more by the end of the day," he said.

He said many clients have parked their cars rather than drive a potentially dangerous vehicle: "They're scared to death."

Several models of Toyota and its high-end make, Lexus, have been recalled, so potentially millions of Toyota owners could seek economic damages.

According to a study by Safety Research and Strategies, a consumer advocacy group, at least 19 deaths have been traced to sudden acceleration in Toyota or Lexus models. In a report released Friday, SRS said it found 2,262 incidents, which resulted in 815 crashes and 314 injuries.

In addition to personal-injury claims, which are likely to be handled separately from consolidated consumer fraud cases, a suit has been filed in California alleging securities fraud.

According to the complaint, Toyota misled investors by failing to disclose that there was a major design defect in the acceleration system. The suit covers stock bought from Aug. 4 to Feb. 2, when Toyota announced that January 2010 sales had dropped 16 percent due to the massive recall and suspension of sales.

UK's Davis, who teaches product liability law, said the scope and speed of the Toyota suits "swamps" other high-profile cases.

"This is bigger than anything I've ever seen, even in comparison to the Ford Explorer," Davis said, referring to the U.S. automaker's high-profile recall about a decade ago. "This is bigger by far in its complexity, in the nature and number of claims, in the public involvement."

The Covington lawsuit, the second filed in Kentucky, seeks unspecified compensatory and punitive damages. It also asks that Toyota provide replacement vehicles for drivers until their Toyota vehicles are fixed, and that the company pay for counseling for those who "suffered emotional distress as a result of being forced to drive defective, dangerous vehicles after defendants' numerous announcements of defects but failure to provide replacement vehicles."

The Cincinnati law firm of Waite, Schneider, Bayless and Chesley filed the lawsuit. Stan Chesley has been involved in other high-profile class-action cases.



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The group, the Attorneys Toyota Action Consortium, alleges that Toyota owners have seen the value of their vehicles plummet as a result of avoidable problems that the company has known about for years.

I sure hope owners aren't crazy enough to name 'depreciation' as one of their damages. Even if, though unlikely, Toyota is found to have concealed information that led to this whole mess, the problem was still there. It would have simply been a recall that could have been dealt with earlier with no secrecy or concealment and still affect resale value. I see it as though it could have been any other manufacturer, but in this case, "You bought a Toyota. Buckin' fummer for you!"

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