Legal News

Toyota Announces More on the Recall Front as Its Exposure Rises

By Ashby Jones

The lousy news just keeps on pouring in for Toyota, its shareholders, and its chief executive, Akio Toyoda (pictured) as the company continues to get bombarded with bad news about accelerators and brakes and recalls and lawsuits.

The latest: Toyota is now considering a recall of a popular subcompact model Corolla because of alleged steering-column problems. Click here for the LAT article; here for the Boston Globe article.

According to the Globe, some Corolla drivers have complained that they may feel as though they were losing control over the steering. The Toyota executive in charge of quality controls, Shinichi Sasaki, said he wasn’t sure what accounted for the problem. Sasaki reportedly mentioned problems with the braking system or tires as possible underlying reasons for the steering problem.

In the meantime, the legal woes continue to mount for Toyota. The Financial Times reports that the company is facing dozens of class-action lawsuits in the US that could cost it billions.

Tim Howard, a law professor at Northeastern who is coordinating much of the litigation against Toyota, estimated that 44 class-action lawsuits had been filed under state and federal law by the end of last week. He estimated that the claims could reach $3.6 billion, based on an average loss of $600 per vehicle.

A court hearing is scheduled in San Diego on March 25 to determine the location of a single national case.

Some claims relate to deaths, injuries and property damage allegedly caused by defective parts, while others are based on a drop in Toyota vehicles' trade-in values.

"The only way business understands is when you hurt their profits," Howard told the FT. "If they're going to spend a little bit to clean this up, that's not going to hurt their business model."

Photo: AP

Full post as published by Law Blog - WSJ.com on February 17, 2010 (boomark / email).