Judge denies Toyota plea on shielding trade secrets in product lawsuit

6/24/2010

SANTA ANA, Calif. - Toyota Motor Corp. lost a key courtroom skirmish with product-liability lawyers Wednesday over rules for safeguarding its trade secrets during litigation that stems from complaints about its cars racing out of control.

The judge presiding over the cases rejected Toyota's request to bar any confidential information it produces in pretrial proceedings from disclosure to outside experts or consultants on the plaintiffs' legal team if those experts have worked for a rival car company in the past year.

Toyota sought the exclusion as part of a protective order the judge will issue sealing from the public record any proprietary information brought out during the so-called discovery process that could compromise Toyota's competitive position.

Plaintiff's lawyers argued Toyota's request would go too far, hampering their ability to hire top-rate automobile industry engineers and other experts as they pursue scores of personal-injury and consumer class-action claims against the Japanese carmaker.

U.S. District Judge James Selna said he saw no reason why former employees of other car companies could not be made privy to confidential material as experts for the plaintiffs without exposing Toyota's trade secrets.

But the judge granted Toyota's request to generally exclude current employees of Toyota's competitors, whom he said "by definition have divided loyalties."

He also agreed to establish a separate, more restrictive order safeguarding Toyota's computer source code, which the company called the "crown jewel" of its intellectual property.

The next hearing was tentatively set for July 20.

Toyota faces a potential civil liability estimated at more than $10 billion from lawsuits sparked by complaints of runaway automobiles. The complaints have led to recalls of more than 8 million vehicles worldwide. The National Highway Traffic Safety Administration is investigating reports that as many as 89 crash deaths since 2000 may be linked to unintended acceleration in Toyota cars.

Technical issues are at the heart of those inquiries, as well as the litigation being waged in U.S. courts. The legal outcome hinges on the ability of experts hired by plaintiff's lawyers to sift through and interpret the mountain of documents discovery is expected to generate.