Toyota Recall Starts Flood of Compensation Claims

In a ruling that will have important implications worldwide for compensation cases, the US government has proposed a civil penalty of $16.4 million on Toyota because the company  “knowingly hid a dangerous defect” that caused its vehicles to accelerate unexpectedly. Toyota was initially praised by US authorities for the way it handled recalls to repair faulty accelerator pedals on more than 8 million cars globally (including 2.3 million cars and trucks in the USA).

However, it later emerged that Toyota waited at least four months before reporting the faulty accelerator pedals to US regulators, in contravention to safety regulations that require safety defects to be reported in five business days.

Toyota is facing at least 177 consumer and shareholder lawsuits seeking class-action status and at least 56 suits claiming personal injuries or deaths caused by sudden acceleration incidents.  The United States National Highway Traffic Safety Administration has estimated that 52 people have died in Toyota accelerator-related crashes. A much higher number of people have escaped death but been injured. On April 9th, 2010, the United States Judicial Panel on Multidistrict Litigation ordered all federal lawsuits related to the Toyota recall should be heard together at the Central District of California before Judge James Selna.

There is also an unusual case of a Toyota Camry driver who claimed he tried to stop his car but crashed into the back of another car, killing three people.  The driver in the read end car accident was sentenced to eight years in prison.  The conviction was unusual because the car was clearly out of control having dodged cars at an intersection prior to finally crashing, and the driver had family members in the car. The investigation at the time focussed on the brakes, which were found to be working correctly, rather than investigating the accelerator.

Toyota car owners in the USA are also suing for the reduced resale value of the cards due to the recalls.  The claim is supported by various industry guides to the resale value of cars, such as Kelley Blue Book, which lowered the resale value of recalled Toyota cars by an average of 3.5 percent.  The price reduction was up to $750 for a Toyota Sequoia.  The lawsuits related to lost resale value are considered a much greater financial liability than the lawsuits related to crashes because there are millions of Toyota car owners that may be entitled to compensation.  In a previous recall in the USA, Ford Explorer owners were given vouchers worth between $300 and $500 towards the cost of a new Ford car.

Toyota Recalls in Ireland

Toyota Ireland announced in February that it was recalling 26,000 cars in Ireland, although this number was later reduced to just over 18,000. There was immediate speculation that drivers whose car was subject to the recall but ignored the recall and any potential problems with their vehicles could be potentially liable in the case of an accident and even face charges related to negligence. Toyota Ireland issued a statement on the issue of legal liability: “A driver of a potentially affected vehicle could only be the subject of a charge under the Road Traffic Act if involved in an accident if he or she is aware that their vehicle is the subject of this recall campaign and that he or she is aware of the signs of wear and tear, symptomatic of the defect in the accelerator mechanism and they have become apparent, namely the accelerator sticking or becoming slow to return to idle, and they continue to drive the vehicle in this condition.”
Toyota is clearly exposed to product liability claims due to its faulty accelerators, and will no doubt be involved in many road traffic accident claims, as well as pedestrian accident claims, claims from passengers in car accidents, and most of all, claims for rear-end car accidents where the rear driver is driving a Toyota car.