Business Law

Toyota Being Driven Straight to Court and the Bank

 
  • Lawyers in class action lawsuits against Toyota are now claiming the auto maker violated the Racketeer Influenced and Corrupt Organization Act (RICO)
  • Toyota's shareholders are filing lawsuits over the dwindling value of their stock in the company
  • There are reports Toyota knew about some gas pedal or throttle problems back in 2002
  • In mid-April 2010, Toyota announced new recalls of an SUV and a sedan
  • Know how to stay safe and protect your wallet, too

 

You know the saying, "When it rains it pours," right? Since Toyota's problems began, it's been a steady downpour of troubles for the company. And it doesn't look as though the skies will be clearing any time soon.

RICO

As you may remember, lawyers all over the country filed class action lawsuits against Toyota. Basically, in these lawsuits Toyota owners want the company to pay for the loss of value in their vehicles, as well as for the loss of using them. These losses, they claim, were caused by the many recalls Toyota has made over the past year or so.

Recently, lawyers for many of these cases added claims that Toyota violated the Racketeer Influenced and Corrupt Organization Act (RICO). RICO is a federal law best known for its use against crimes, and particularly organized crime. However, there's a non-criminal or "civil" part of RICO.

Under civil RICO, Toyota could be liable for lying to or "defrauding" consumers who bought its vehicles. The real kicker for RICO is the amount of money Toyota may have to pay. RICO allows for triple damages, which could mean Toyota will have to pay consumers hundreds of billions more than it would otherwise have to pay.

Shareholders

People who invested in Toyota and bought stock have filed lawsuits, too. In these lawsuits, called "shareholder suits" or "shareholder actions," investors claim, in a nutshell, Toyota executives lied about various vehicle problems and defects, and particularly the accelerator problems. They lied, the suits claim, to protect the company's stock price.

And the lies aren't recent, but rather took place over a period of years. There are recent reports Toyota officials warned US car dealers in 2002 about owner complaints about "throttle surges," or sudden, unexplained accelerations. If true, this information supports shareholder claims of a widespread cover-up.

Investors claim the lies caused an artificial increase in the price of stock and investors were tricked into buying, or at least not selling their stock, all of which cost them millions of dollars. The stock reached $91.78 in early January 2010 and declined steadily during the recalls over gas pedals and floor mats. In mid-April, the stock was $78.57.

More Recalls!?

If lawsuits aren't enough, Toyota recently announced a recall of thousands of its Lexus brand luxury SUV, GX 460, and Lexus sedan, HS 250h. The sedan has a breaking problem. The SUV rolled over during a safety test. The SUV recall came shortly after Consumer Reports issued a "Don't Buy" warning about the SUV because of the rollover issue.

Toyota responded by assuring owners its working on the problem and offering them loaner cars until a solution is found.

What You Can Do

If you own one of the Toyota vehicles under recall, you should have the vehicle looked at by a dealer as soon as possible, if you haven't already done so. You and your family should also know what to do if your Toyota accelerates suddenly or how to avoid a rollover.

If you own a Toyota vehicle or stock in the company and you want to file a lawsuit, you should talk to an attorney in your area as soon as possible.

Questions for Your Attorney

  • How can I join a class action lawsuit that's already in court? Is it too late?
  • I no longer own Toyota stock; I sold it as soon as I heard the news of the recall and I lost a lot of money. Can I still file suit against Toyota or can I join a shareholder class action?
  • I own a Toyota dealership, and since the recalls I haven't been able to sell any vehicles. I may have to close the business. Can I sue Toyota over the lost business?
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