Legal News

The Toyota Fine: The $16M Might Not Be Toyota?s Biggest Problem

By Ashby Jones

When we saw the news on Monday that the National Highway Traffic Safety Administration planned to levy a $16.4 million civil penalty against Toyota, we thought, in the words of D’Andre Cole: What Up With That?

A mere $16.4 million? It’s nothing to sneeze at, of course, but for Toyota, well, wait a second, yes it is. It’s a sum they can point their noses toward and sneeze at.

But the larger finding that accompanies the fine could prove far more troubling for the already rather troubled automaker.

The fine, announced by Transportation Secretary Ray LaHood, attached a statement that Toyota “knowingly hid” safety problems from regulators. “We now have proof that Toyota failed to live up to its legal obligations,” said LaHood on Monday. “Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families.”

According to an NLJ story out Wednesday, the findings “could bolster legal claims that the automaker committed consumer fraud and racketeering.” That could mean good news for plaintiffs lawyers, like Northeastern professor Tim Howard, who is leading a bunch of suits against Toyota.

“Factually, it validates the legitimacy of our allegations that Toyota has been misleading the federal government and consumers, as far as the severity of the problems with their sticky pedals and their whole electronic throttle control system,” said Howard to the NLJ.

Howard also said the fines also may assist suits alleging that Toyota violated the Racketeer Influenced and Corrupt Organizations Act (RICO) by conspiring to mislead consumers and the federal government about the extent of its safety problems, he said.

Toyota issued a statement on Tuesday saying that it was considering its response to the fines. “Toyota has and will continue to practice its philosophy of satisfying consumers with high quality vehicles that are safe and reliable, and responding to consumer feedback with honesty and integrity,” the company said in the statement.

Full post as published by Law Blog - WSJ.com on April 07, 2010 (boomark / email).