Bloomberg News

Toyota Can’t Require Arbitration in Acceleration Lawsuits

March 12, 2012

Toyota Motor Corp. (7203) can’t force named plaintiffs seeking group status for a lawsuit over alleged losses from unintended sudden acceleration to arbitrate their claims rather than proceed to trial next year.

“Toyota waived any right it may have had to compel arbitration of 15 of the 20 class representatives’ claims,” U.S. District Judge James Selna in Santa Ana, California, said today. For the other five, “Toyota, as a non-signatory, may not enforce the arbitration agreements found in the plaintiffs’ purchase and lease agreements with Toyota dealers.”

Selna on Feb. 24 had tentatively denied the carmaker’s request to force the plaintiffs to arbitrate their claims. The judge today reiterated his decision that by failing to assert its right to compel arbitration until now, the carmaker encouraged the plaintiffs to pursue their current costly and time consuming litigation strategy.

“Toyota acted in a manner inconsistent with any right to compel arbitration,” the judge said. “The resulting prejudice to the class representatives leads the court to find that Toyota waived any right to compel arbitration of the claims asserted by the 15 plaintiffs.”

Selna has been presiding over the consolidated litigation since 2010. He has scheduled three trials for next year that will serve as bellwether cases to be used by the court and lawyers for both sides to test evidence and liability theories before moving on to other trials and a decision by Selna as to whether to approve a class-action status for the plaintiffs.

‘It’s Fair’

“We are quite pleased and we think it’s fair,” Steve Berman, a lead lawyer for the car owners, said in an e-mail. “Our clients were not party to any arbitration agreement with Toyota and in fact Toyota’s promise to consumers was any arbitration was non-binding.”

Celeste Migliore, a spokeswoman for Torrance, California- based Toyota Motor Sales USA, said by e-mail that the company is reviewing its options after the ruling.

The cases are combined as In re Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices and Products Liability Litigation, 8:10-ml-02151, U.S. District Court, Central District of California (Santa Ana).

To contact the reporters on this story: Bill Callahan in San Diego at Callahan@san.rr.com; Edvard Pettersson in Los Angeles at epettersson@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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