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Shareholders sue Toyota over acceleration problems

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Shareholders sue Toyota over acceleration problems

Latest lawsuit claims carmaker gave false information on safety

David Shepardson / Detroit News Washington Bureau

Washington -- Angry shareholders are the latest group to sue Toyota Motor Corp. in the wake of its recall of 8.5 million vehicles worldwide over sudden acceleration concerns.

The suits could cost Toyota billions of dollars and are likely to drag on for years, experts say.

At least three class-action lawsuits alleging securities violations have been filed against the Japanese automaker in recent weeks. One suit, filed by the law firm Murray, Frank & Sailer in U.S. District Court in California-- is on behalf of shareholders who purchased stock between Dec. 22, 2009 and Feb. 2, 2010.

The suit charges that Toyota issued "materially false and misleading statements" regarding Toyota's operations, business, and outlook.

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," says the suit.

Toyota won't comment on any of the suits because they are pending. Toyota's market capitalization has fallen by 12 percent-- or $15 billion-- since the company's stock hit $90.42 on Jan. 21-- the day Toyota announced it was recalling 2.3 million vehicles over sticky pedal concerns. Toyota's stock closed Friday at $79.56.

The National Highway Traffic Safety Administration has received more than 3,300 complaints, and 51 deaths are alleged to be linked to acceleration complaints.

Peter Henning, a Wayne State University law professor, said Sunday securities cases are difficult to prove.

"You are going to have to prove knowledge among the corporate management," he said. "Unless something else emerges, it seems that Toyota didn't think that it would be the kind of problem that it turned out to be."

These suits aren't uncommon when a company has a major controversy that leads to a fall in the stock price.

Toyota also faces a separate investigation by the Securities and Exchange Commission over whether it properly disclosed to investors information about its recalls and safety issues.

Other lawsuits want Toyota to refund owners what they paid for vehicles-- or compensate them for the loss in value.

The largest group of suits seeks compensation for deaths and injuries over product liability complaints, while another suit wants to force Toyota to broaden its recalls.

Another California suit wants a federal judge to impose a preliminary injunction that would require Toyota to expand its recall of Toyota vehicles to include all model years of 16 models that have claims of sudden acceleration and have not been subject to recalls. The request seeks to force Toyota to include the installation of a fail-safe "brake override" mechanism for all models and model years.

Toyota has said it is installing the brake override system on all vehicles that have computer chips that can be upgraded.

Richard D. McCune, lawyer for the plaintiffs seeking the injunction, said in a court filing it is "necessary to prevent imminent harm" to "the public from the Toyota cars and trucks that are at risk" of sudden acceleration.

Toyota lawyer Lisa Gilford said in a court filing the request for a court-ordered recall violates federal law that gives NHTSA the power to "address the recall of automobiles for safety concerns."

Issuing an injunction would "frustrate governmental objectives, (and) usurp the role of the NHTSA."

Federal Judge A. Howard Matz in California delayed hearing the injunction request until a three-judge panel decides where all of these suits should be heard. The panel will meet on Thursday to consider the Toyota cases.

Last week, law firm Hagens Berman filed class-action lawsuits in five states -- Washington, Arizona, Colorado, Florida and Maryland -- demanding refunds for Toyota vehicles purchased.

The law firm wants owners of recalled Toyota vehicles to be able to get a refund. The law firm plans to file suits in several other states as early as this week -- including in Indiana, Massachusetts, Minnesota and Oregon.

One of the owners in the suits, Donald Graham, of Centennial, Colo., said his 2007 Toyota Prius is now worth 20 percent less because of the controversy.

"From the moment Toyota learned about safety flaws, they lurched from misstep to misstep ... all the while leaving consumers confused," said Steve Berman, a lawyer for the owners.

From The Detroit News: http://www.detnews.com/article/20100322/AUTO01/3220324/1148/Shareholders-sue-Toyota-over-acceleration-problems#ixzz0iuMqIqGD

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