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26.3 More recent high-profile product liability litigation

As noted in the previous section, appellate courts provided some relief to Ford and overturned the verdict in the Vioxx case. Nonetheless, manufacturers should look to two more recent sets of cases in order to analyze the potential human and financial impact of product liability issues. Section 26.3.1 covers the so-called “sudden acceleration” phenomenon involving Toyota cars. Section 26.3.2 describes the fallout from the General Motors ignition switch defects. These two cases show how manufacturers may need to pay huge sums to resolve product liability legal proceedings, which are in addition to the human toll of deaths and injuries.

26.3.1 “Sudden acceleration” litigation

Several years ago, news stories emerged concerning a phenomenon in which Toyota drivers reported that their cars accelerated without warning and were difficult to stop, resulting in accidents. One typical news report stated, “Nancy Bernstein feels lucky to be alive after her Toyota Prius kept accelerating, no matter how hard she hit the brakes. 'The car's going about 70 miles an hour, and I'm beginning to get scared because it's not slowing down,' Bernstein described.” [26]. Lawsuits followed these accidents, and federal cases were transferred to the U.S. District Court for the Central District of California for coordinated or consolidated pretrial proceedings [27].

Some reports contend that the 89 people may have died from accidents involving the sudden acceleration of Toyota vehicles [10]. Governmental investigations, however, showed no evidence that design or implementation flaws in Toyotas caused unintended acceleration [25]. Accordingly, there was some controversy about whether Toyota or drivers were at fault in these accidents.

Later in the litigation, however, a report by expert witness Michael Barr following additional research opined that a software malfunction occurred in one of the cars and that the malfunction resulted in unintended acceleration [4]. Barr identified numerous alleged problems with the software, which according to Barr, Toyota's own engineers had trouble understanding and characterized as “spaghetti like” [4]. Barr testified about his findings in an Oklahoma state court case and, apparently based in part on these findings, the jury in the case awarded compensatory damages of $1.5 million to the driver and $1.5 million to the family of a passenger who died in the crash [35]. The parties in the case, Bookout v. Toyota Motor Corp. [7], settled the case right before a second phase of the trial to consider punitive damages against Toyota [18].

Despite the uncertainty about what really caused these accidents, Toyota started to settle the various legal actions against the company. The Oklahoma case may have been a motivating factor [28].[1] Toyota's settlement payments so far include:

• $1.6 billion to settle financial loss claims in the multidistrict litigation [28].

• $1.2 billion to settle potential criminal charges against Toyota [29].

• $25.5 million to settle shareholder claims arising the failure to report safety issues [29].

• $65 million in fines for violations of federal vehicle safety laws [29].

These settlement payouts are in addition to the numerous product liability lawsuits that remain pending, the settlement of which presumably will cost a huge sum. If product liability settlement amounts exceed $1 billion, then the total settlements may exceed $4 billion. The cost of legal fees and other internal expenses related to investigation and remedial measures will add even more to the final cost for Toyota.

  • [1] “Legal analysts said that the verdict most likely spurred Toyota to pursue a broad settlement of its remaining cases.” [28]
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