Toyota vehicle owner lawsuits for loss of value may cost $3B
3/10/2010MIAMI - Toyota owners claiming that safety recalls are causing the value of their vehicles to plummet have filed at least 89 class-action lawsuits that could cost the Japanese auto giant $3 billion or more, according to a review of cases, legal precedent, and interviews with experts.
Those estimates do not include potential payouts for wrongful death and injury lawsuits, which could be in the tens of millions.
Still, the sheer volume of cases involving U.S. Toyota owners claiming lost value - 6 million or more - could prove far more costly, adding up to losses in the billions for the automaker.
Such class-action lawsuits "are more scary for Toyota than the cases where people actually got injured," said Tom Baker, a University of Pennsylvania law professor. "A super-big injury case would be $20 million. But you could have millions of individual car owners who could [each] be owed $1,000. If I were Toyota, I'd be more worried about those cases."
As Toyota continues to deal with the recalls and wavering public confidence in its vehicles' safety, the company's biggest financial fight may be in the courtroom. A key decision could come at a March 25 hearing in San Diego, where a panel of federal judges will consider whether to consolidate the mushrooming cases into a single jurisdiction.
After that a judge will decide whether all claims filed by Toyota owners nationwide can be combined in a single legal action - known as "certifying a class" - and whether the claims have enough merit to move toward either trial or settlement.
Toyota owners suing the company contend their vehicles have dropped in value because of the recalls and that Toyota knew all along about safety problems but concealed them from buyers. They point to evidence such as Kelley Blue Book's decision this month to lower the resale value of recalled Toyotas an average of 3.5 percent.
The lawsuits started appearing on state and federal dockets last fall, when Toyota began recalling 8 million vehicles worldwide because of complaints about sudden unintended acceleration.