Car Company Criminal Lawsuit

Lawsuit

Oh what a web we weave when at first we attempt to deceive. Auto makers continue to attempt to side step safety issues by misleading statements, stalling tactics, delays and concealment. A case in point is the recent criminal lawsuit problem and subsequent deception by Toyota and a double pronged issue concerning a sticking gas pedal on several of its popular models. More than one car company may be warned and take notice of Toyota’s criminal lawsuit and pursue other avenues when it comes to safety.

In March, 2014, the Justice Department of the United States issued criminal charges against the Toyota Motor Corporation in the amount of $1.2 billion dollars, concerning wire fraud charges. The Justice Department announced Toyota deceived consumers in 2009 and early 2010, by issuing untrue statements concerning safety issues in Lexus and Toyota vehicles. Toyota was subject to a delayed prosecution agreement, if it revealed it made false statements in two separate safety issues, both of which caused unintended increase in speed.

The deferred or delayed prosecution agreement basically announced that if Toyota admitted to deceiving consumers with false statements regarding the two separate flaws; “Floor-mat entrapment” and the “sticky pedal” problem and paid the $1.2 billion penalty, the government would suspend its effort of prosecution of the car companies’ criminal  lawsuit and seek to dismiss charges, after three years, if Toyota complies with all the terms of the agreement.

According to Toyota’s legal department changes have been made in all of their operations around the world and their responsibility as a manufacturer of cars has been enhanced. Besides this criminal case the car company also faces almost 400 lawsuits concerning personal-injury and wrongful-death cases. The fine for $1.2 billion against Toyota will find its way into a government treasure chest.

Floor-mat entrapment was a defect concerning a type of floor mat used in several Lexus and Toyota models. Certain types of all-weather floor-mats that do not fit properly around the gas petal may trap a gas pedal that is depressed, causing the vehicle to accelerate at a high rate of speed. Toyota withheld information concerning this defect, didn’t change the floor-mat and deceived the National Highway Traffic and Safety Administration (NHTSA) in claiming it had fixed the problem.

The other problem was with the sticky pedal, in which Toyota knowingly withheld information relating to defectively manufactured gas pedals. A-Pedal Company, a U.S. manufacturer, produced a gas pedal using a plastic material in the pedals that might cause the accelerator pedal to stick once it was depressed and not be able to be released. Toyota withheld information about this situation as it was “re-assuring” the NHTSA it was fixing the floor-mat entrapment problem.Lawsuit

Along those lines, General Motors may be in the same lawsuit fix as Toyota, with its current issue regarding the faulty ignition switch. Although the issues are different, as no intentional fraud has been conducted by General Motors (GM), the withholding of information, and announcing a recall concerning the switches a week after its yearly filing with the Securities and Exchange Commission, is a cause for criminal prosecution. According to federal securities laws, this is a violation of important information not being disclosed in a timely manner.

Another issue the Department of Justice is currently probing in the GM debacle concerns the lack of disclosure about the defects in the 2009 bankruptcy case. If there are known circumstances of defects GM is responsible for and they are not revealed to the bankruptcy court, a case for prosecution of fraud is possible. There are certain options the Justice Department may pursue in this case against GM, and fighting criminal charges does not seem an avenue General Motors will follow. If that is the case, a considerable fine is probably in GM’s future, plus the costs of repair and possible legal issues with persons harmed in the defective vehicles. Defects like these by car companies such as GM and Toyota may raise red flags for other automobile manufacturers and help them avoid criminal lawsuits in the future.

By Andy Towle

Sources:
Forbes
Reuters
Bidness Etc

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