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The Wrong Respone to Toyota

By Joe Consumer

Have you heard the latest about Toyota's problems?  It now seems the company?s sudden acceleration? fixes? aren?t working. This comes after evidence that the company tried to cover up problems by withholding discovery documents in litigation.  Could it get any worse? 

Oh yes, thanks not to the company, but to our elected leaders.

There have been some very serious questions raised about the National Highway Traffic Safety Administration?s handling of the Toyota debacle, something we have written about here. 

One of the problems, clearly, is that that agency is dangerously underfunded and understaffed.  Ralph Nader wrote in Sunday?s Los Angeles Times that even in the midst of the Toyota situation, ?President Obama actually recommended cutting NHTSA's motor vehicle safety budget next year by $8 million.?  (By the way, this is at the same time the President wants to spend another $50 million to support creation of completely unnecessary new court systems to handle medical malpractice cases that our courts currently handle just fine at relatively small cost.)  Nader writes:

Former NHTSA Administrator Joan Claybrook has testified to the need for an immediate budget increase of $100 million just to assure that NHTSA has the technical personnel and capability to meet its obligations in the areas of safety standards, defect recall, enforcement and research.

At a time when about 40,000 Americans die in cars each year and hundreds of thousands more are injured, NHTSA's motor vehicle safety budget is a mere $140 million. By comparison, taxpayers will pay more than four times as much -- about $675 million -- to guard the U.S. Embassy in Baghdad.

Meanwhile, the South Carolina House has just passed a bill to severely cap punitive damages to ?$350,000 or three times compensatory damages, whichever is greater.?  In arguing against the bill, opponents cited ?runaway Toyotas? as among reasons why punitive damages should not be capped legislatively.  Punitive damages "send a message to corporations about protecting consumers?. ?Let me tell you what this is truly about; it's corporate greed,? said Rep. Chris Hart, D-Richland, who talked about how one insurance company made $58.1 billion in profits last year.?

Indeed,  although extremely rare, punitive damages have critical social and financial importance lying not in their frequency, but in the ?signals? they send.  As we?ve mentioned before, history shows that companies will sometimes balance safety against profits in determining whether to redesign or recall a defective product, clean up a toxic waste site or end a dangerous practice. Juries know that, to a multibillion-dollar company, even a $1-million punitive damages award is barely a slap on the wrist.

Given the rash of corporate abuse in this country, including the Toyota disaster, a punitive damages ?cap? seems like the worst possible idea at the worst possible time.

Full post as published by ThePopTort on March 04, 2010 (boomark / email).