Toyota — and Car Owners — May Face Whopping Liability Issues
Feb 15th, 2010 • Posted in: NewsThe troubled automaker also is under scrutiny for hiring ex-regulators to deal with federal authorities; meanwhile, Congress wants to know who knew what and when and may issue subpoenas to find out
WASHINGTON
Toyota’s ethical, legal, and financial problems resulting from quality-control problems continued to roar head on toward the troubled automaker last week. Among the developments:
- An analysis by the Los Angeles Times indicates that the massive recalls for acceleration and braking problems may be devastating not only for the company but for owners as well. An avalanche of lawsuits could prove extraordinarily expensive for the firm if plaintiffs prove that Toyota was aware of problems but failed to fix them. For their part, drivers could have to pay portions of any damages from an accident resulting from a known safety defect that they failed to fix promptly, according to a product-liability lawyer interviewed by the Times. To add to their problems, the drop in Toyota resale values could prompt insurers to lower what they pay for Toyotas damaged in a crash.
- Former government regulators hired by Toyota helped halt investigations into incidents involving unintended acceleration in recent years, Bloomberg reports. According to court and government records obtained by Bloomberg, Christopher Tinto and Christopher Santucci joined Toyota directly from the National Highway Traffic Safety Administration (NHTSA) and later convinced that agency to end probes involving Camrys and Solaras. While all automakers have employees to handle NHTSA issues, Bloomberg reports, Toyota appears to be unique among car companies in hiring former agency staffers to perform those duties. Spokesmen for Chrysler, Ford, GM, and Honda told Bloomberg that they had no former NHTSA staffers who deal directly with the agency on potential defect problems. Toyota said in an emailed statement that it followed all proper disclosure procedures, and that the actions of the two “have been consistent with our efforts to maintain the highest professional and ethical standards in all of our legal and regulatory practices. Their paramount concern was for the safety of every single owner of one of our vehicles.”
- Toyota head Akio Toyoda is planning a trip to Washington in March, but company officials have not yet confirmed if he will attend congressional hearings into the safety recalls, according to USA Today. Reuters reports that some in Congress are saying they will support a subpoena if Toyoda does not appear voluntarily. Darrell Issa, the ranking Republican on the House Oversight and Government Committee, wrote in a letter to the committee chair: “Whether it is for a microprocessor engineer or the top executive, we have a duty to determine what Toyota knew, when they knew it and if they met their full obligation of disclosure to U.S. regulators and the American people.”
Sources: , Feb. 11 — , Feb. 11 — , Feb. 11 — , Feb. 11.
For more information, see: Related Newsline Commentary, Feb. 8 — Related Newsline story, Feb. 8 — Related Newsline story, Feb. 1 — Related Newsline story, Jan. 4 — Related Newsline story, Aug. 31, 2009.
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The ethical question of most importance here is not whether Toyota knew there was a problem with accelerators in their automobiles or not. (I suspect there is not now nor has there ever been a real, technical problem.) But it does raise ethical issues for many consumers and lawyers. If you had an accident in a Toyota (and the overwhelming odds are that the accident was caused by driver error, not a sticky accelerator; see this at NPR.org: , are you going to bring suite against the company hoping for a sizeable damage settlement? If you are a trial lawyer, are you going to go to court and ask for money from Toyota because you believe you can probably win in the current climate, even if you know in your heart that the case is unjustified? My guess is that most individuals and their lawyers will be working overtime to convince themselves that these ethical questions don’t apply to them, and proceed to chase the money.
The Toyota situation is an excellent example of emerging globalized issues (ie, conflicts of expectations). One the one hand, we all want to know the answer to the core question: Who knew what when? However this is complicated in dealing with very different markets throughout the globe. It is possible that there are different answers to this question in Japan, US, Europe, China, etc. From a business ethics point of view, the question of interest is how did Toyota executives in different markets decide when to act and what to do.