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Toyota faces racketeering claims in consumer suits

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Toyota faces racketeering claims in consumer suits

March 18, 2010 - 12:01 am ET

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LOS ANGELES (Reuters) -- Lawyers seeking civil damages against Toyota Motor Corp. on behalf of U.S. consumers for diminished resale value of recalled vehicles are broadening their cases to add racketeering claims against the automaker.

Using federal racketeering laws to amend the consumer class-action complaints, which have grown in number to more than 80 suits in at least 40 states, exposes Toyota to much greater potential liability.

Under the Racketeer Influenced and Corrupt Organization Act, a commercial enterprise can be found liable for triple the damages for any harm caused by its fraudulent activities.

As a result, litigation that originally stood to reap more than $2 billion in damages for Toyota owners could end up costing the cash-rich Japanese automaker in excess of $10 billion, said Tim Howard, lead counsel for a team of law firms handling about half the cases.

Each of the revised lawsuits is "a much more robust and thorough complaint than the first rounds because of how the evidence has evolved since then," Howard said.

A Toyota spokesman could not be immediately reached for comment on Wednesday. The automaker has declined to comment on pending litigation to date.

New evidence

The updated complaints draw on numerous documents and congressional testimony by Toyota executives to make the case that the company was aware of unintended acceleration problems in its vehicles for several years, even as it continued to promote defective cars as safe and reliable.

One suit in Florida cites a technical service bulletin it says the automaker issued in August 2002 "concerning an engine surge or acceleration problem with the new 2002 Camry, with the solution to recalibrate the Engine Control Module."

Toyota has insisted that electronics have nothing to do with sudden, unintended acceleration in its vehicles, pointing instead to entrapment of the gas pedal by ill-fitting floor mats or sticky gas pedals themselves.

Those two problems were singled out for correction in recalls of more than 8 million Toyota vehicles to date, the largest such action ever taken by the automaker.

The consumer lawsuits assert that Toyota's alleged concealment of defects in its vehicles while advertising them as safe constitutes criminal fraud and thus falls under the definition of "racketeering activity."

Updated complaints

Howard said his consortium of law firms had updated existing consumer cases in eight states as of Tuesday, and filings were planned in at last 12 more by week's end.

All those and others around the country are to be consolidated into a single class action in the next couple of months, following a hearing before a panel of judges set for next Thursday in U.S. District Court in San Diego.

Litigation against Toyota has mounted quickly in the weeks since the recalls began for a problem linked to more than 50 crash deaths in Toyota and Lexus vehicles under investigation over the past decade.

Lawsuits related to injuries and deaths are the most obvious cases being brought against Toyota, and a class-action suit was filed in Los Angeles last month on behalf of U.S. shareholders accusing Toyota of misleading investors.

The consumer class actions are based on the premise that the resale value of Toyotas has dropped substantially as a result of the company's safety crisis.

Major automobile valuation services have downgraded the resale value of Toyotas, Howard said.

Toyota has long boasted one of the industry's highest resale values for its vehicles, one of the major factors in its success in the U.S. market.

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100318/OEM/303179940/1147#ixzz0iZ2i8pFo

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