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Business

Sticky accelerator pedals land Toyota in court for first time

©

Text by News Wires

Latest update : 2010-03-25

The world's leading carmaker, Toyota, was facing its first court appearance in the US on Thursday; judges will decide if thousands of car owners have the right to sue the Japanese giant in a multi-billion-dollar trial over faulty accelerator pedals.

AFP - Toyota Thursday faced its first US courtroom challenge as lawyers pressed for angry car owners to be able to bring a multi-billion-dollar suit against the Japanese automaker.

A special federal panel of five district judges heard arguments from two dozen attorneys from around the United States asking for hundreds of lawsuits arising out of the recalls of sticky accelerator pedals to be consolidated.

In recent months the world's leading carmaker has had to recall more than eight million vehicles worldwide due to problems with sudden acceleration, blamed for 58 deaths.

A group of law firms from 20 US states, dubbed the Toyota Action Consortium, is suing to recoup losses in the resale value of Toyota vehicles in the wake of the recalls.

But the judges also voiced concern over whether personal injury cases should be combined with the consumer lawsuits and asked attorneys if a single judge should be assigned to the litigation.

To date, 138 class action cases over depreciation have been filed nationwide, along with 97 injury and death cases.

It could cost Toyota upwards of 40 billion dollars, said attorney Tim Howard, who led a consortium of plaintiff attorneys.

"This is the worst malfeasance in the car industry since its inception in the 1890s," Howard told AFP earlier. "This is like Tiger Woods destroying his reputation."

About half of the attorneys argued that the case be assigned to a Los Angeles judge who already has numerous Toyota cases. But others called for it to go to judges along the East Coast, in Minnesota or New Orleans.

Toyota attorney Cari Dawson asked for Los Angeles, which is near Toyota headquarters. Judges are expected to rule in about a week.

"This is a problem everywhere for Toyota," Howard said. "People have lost thousands in value for doing nothing that was their fault."

In addition to a myriad of class-action lawsuits over plummeting car values, the consortium of lawyers has added new charges of racketeering under a federal law that was enacted in 1970 to bring down the mafia.

In civil litigation, the law can be used against an organization that knowingly conspired to commit fraud, and the consortium is alleging that Toyota knew their cars were faulty, but sold them anyway.

"Since 2002, Toyota has made more than 600 billion dollars in revenues and 25 billion dollars in operating profits from North American operations," the lawsuit states.

"Unlike any other automobile manufacturers operating in the United States, these sales and profits were built on a reputation for quality, reliability and resale value.

"But this reputation was an illusion: in reality, Toyota sales in recent years were actually based on a willful pattern of deceptive trade practices, fraud, breach of express and implied warranty, and racketeering."

The attorneys claim the faulty pedal design was initiated in 2002 and to date, Toyota has done nothing to fix the problem.

Toyota first blamed the problems on faulty floor mats, adding shims to the accelerator pedal as a solution. But attorneys argue the problem still persists.

Toyota, meanwhile, Thursday announced the creation of a North American "quality task force" as it struggles to repair its reputation in the wake of the mass recalls.

The task force will answer to Toyota chief executive office Akio Toyoda, the grandson of the company's founder.

"We are making fundamental changes in the way our company operates in order to ensure that Toyota sets an even higher standard for vehicle safety and reliability," said top executive Steve St. Angelo.

Toyota has fought claims that electronics problems are to blame for unintended acceleration problems and says that mechanical fixes it has developed are sufficient to make its vehicles safe.

Date created : 2010-03-25

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