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Toyota requests dismissal of shareholder suits over unintended acceleration

Toyota Motor Corporation has been hit with a great many lawsuits stemming from their concealing known problems of unintended acceleration and while the automaker’s requests for dismissal have been rejected several times, they have once again requested that a group of lawsuits be throw out – this time focusing on the claims filed by their shareholders over the drop in company stock when the massive wave of recalls hit.

The lawsuit itself pretty straightforward. When Toyota internal documents were leaked, exposing the fact that they knew about a variety of problems with their vehicles (mainly unintended acceleration) and intentionally avoided recalls to protect their perception of being high quality vehicles along with saving the costs of multiple recalls – the value of their vehicles and their stock plummeted. That tends to happen when a publicly traded company is caught hiding information that is costing people their lives so it really came as no big surprise. However, based on the fact that Toyota knew about these problems years in advance and could have seemingly done something to stop the problem before it got so out of hand, investors believe that Toyota is at fault for the 20% drop in the value of their stock and because of that…groups of shareholders are suing Toyota.

While Toyota has unsuccessfully filed requests to have suits dismissed for a variety of reasons, reports indicate that the company may be successful with this request. The issue lies in the fact that the shareholders filed an amendment to their original suit which includes Japanese security laws – laws which presiding U.S. District Judge Dale Fischer stated that she was not included to exercise jurisdiction over. This means that she could dismiss the cases which include these Japanese security laws but she could allow the plaintiffs in question to file new suits with the proper legal applications.

It makes sense for a US District Judge to not want to deal with Japanese laws in an American court but a the shareholders’ lawyer insists that the Japanese laws in question are very similar to the US security laws so they should be taken into account. Toyota’s concern with the inclusion of the Japanese security laws is that they could greatly increase the number of shareholders who could file a similar suit.

Judge Fischer stated that it would take her at least two weeks to make a ruling on this request for dismissal and TorqueNews will continue covering this topic – bringing you more news as it becomes available.

Source: Automotive News

Other Toyota News:
Toyota Camry accelerates through the front of a Detroit area Lotus dealership
Judge rules Toyota must face economic loss lawsuits
Toyota’s first unintended acceleration settlement approved
Toyota recalling Tundra pickups for tire pressure monitor problems, again
Toyota recalls 22000 trucks and SUVs over tire pressure risks
Toyota recalls 51,000 Tundra pickups for driveshaft failure risks

Automotive News
Toyota

Comments

Frank Sherosky    June 8, 2011 - 12:50PM

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It looks to me that Toyota Motor Company (ADR: TM) stock came back quite well after the government announced there was no electronic fault. So, the drop in the stock was temporary. Even today where all stocks are affected by the general market Toyota is holding up well.

The issue as I see it revolves around the alleged internal corporate cover up to protect the image built up over the years. Stock laws do cross borders to some degree, as the basis for equities are the same via the exchanges.

I will follow-up soon on a TM auto sector article after I inspect the chart patterns. The article here benefits those who want to understand the fundamental reasons behind the price moves. Both are needed to be an informed trader.