Toyota faces class-action suits

Toyota owners claiming that massive safety recalls are causing the value of their vehicles to plummet have filed at least 89 class-action lawsuits that could cost the Japanese auto giant $3 billion or more, according to an Associated Press review of cases, legal precedent and interviews with experts.

Those estimates do not include potential payouts for wrongful death and injury lawsuits, which could reach in the tens of millions of dollars each. Still, the sheer volume of cases involving U.S. Toyota owners claiming lost value — 6 million or more — could prove far more costly, adding up to losses in the billions for the automaker.

News of the potential lawsuits came as a surprise to Bill Shumake, owner of Town and County Motors in Sedalia which deals in Toyota, Lincoln and Mercury automobiles.

“I haven’t been informed of it,” Shumake said. “But, if that’s what people are worried about I haven’t seen any evidence of it from an auction standpoint. I just don’t see that as an issue from what I am seeing.”

Shumake, who has sold Toyotas at the lot for 28 years, said the brand has remained popular with customers and is still sought after by dealers at auction — and that he is still actively looking for Camry, Avalon and Tundra models to sale at Town and Country.

 “I sold six Toyotas yesterday and four today,” Shumake said. “If people are losing interest in the brand, I haven’t seen it.”

He added that response to the recalls have been slow in Sedalia.

“We are doing the recalls, but as a matter of fact we are having a hard time getting customers in. The customers say they aren’t having problems and aren’t worried about it,” Shumake said.

He was critical of the exposure of the Toyota recall, pointing out that “everybody right now — Honda, Ford, Chevrolet — they all have recalls going on right now. Honda has a recall on 600,000 cars because they are blowing their air bags going down the highway,” he said.

“Toyota is working on the deal and has a recall fix. We get daily updates. That is all I have heard about it,” Shumake said.

Such class-action lawsuits “are more scary for Toyota than the cases where people actually got injured,” said Tom Baker, a University of Pennsylvania law professor. “A super-big injury case would be $20 million. But you could have millions of individual car owners who could (each) be owed $1,000. If I were Toyota, I’d be more worried about those cases.”

As Toyota continues to deal with the recalls and wavering public confidence in its vehicle safety, its biggest financial fight may be in the courtroom. A key decision could come at a March 25 hearing in San Diego, where a panel of federal judges will consider whether to consolidate the mushrooming cases into a single jurisdiction.

After that, a judge will decide whether all claims filed by Toyota owners nationwide can be combined in a single legal action — known as “certifying a class” — and whether the claims have enough merit to move toward either trial or settlement.

Toyota owners suing the company contend their vehicles have dropped in value because of the recalls and that Toyota knew all along about safety problems but concealed them from buyers. They point to evidence such as Kelley Blue Book’s decision this month to lower the resale value of recalled Toyotas an average of 3.5 percent, ranging from $300 less for a Corolla to $750 less for a Sequoia.

The lawsuits started appearing on state and federal dockets last fall, when Toyota began recalling some 8 million vehicles worldwide because of persistent complaints about sudden unintended acceleration. The National Highway Traffic Safety Administration reports that 52 people have died in accelerator-related crashes.

The AP conducted an extensive review of federal court filings and uncovered a total of 89 class-action lawsuits filed nationwide as of Monday. Toyota attorneys said last week in a court filing that the company is aware of 82 such cases.

One leading attorney in the class-action effort, Northeastern University law professor Tim Howard, said the number of owners claiming economic damages because of the recalls could reach 6 million. If each were awarded $500 — likely a conservative estimate — Toyota would have to fork over $3 billion in economic loss damages alone.

This does not include possible payouts in wrongful death or injury cases as well as lawsuits filed by shareholders claiming losses from share prices that have tumbled more than 16 percent since January.

Corporations often settle big cases rather than risk an even bigger damage award at a trial.

Automakers in the past have been forced to pay vehicle owners for lost value because of safety problems. Ford, for example, agreed in 2008 to compensate 800,000 Explorer owners who sued because of rollover dangers. That settlement provided owners only with vouchers of between $300 and $500 to buy new Ford products.

In that case, the lawyers received about $25 million in fees and costs, and the Toyota case could result in a similar windfall for attorneys. A study by the Federal Judicial Center concluded attorneys in class-action lawsuits typically get fees between 27 percent and 30 percent of what they recover in damages — which could reach $1 billion in a $3 billion settlement.

The Associated Press contributed to this story