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individual product liability personal injury cases
relating to unintended acceleration pending
against Toyota have been consolidated into the
federal class action suit. (The remaining individual
product liability personal injury cases relating
to unintended acceleration remain pending in
various state courts in the United States.) This
consolidated federal class action suit is in its very
early stages and currently activity centers around
case organization and scheduling.
Additionally, there are approximately 10
putative class actions in various state courts,
including California. The claims are similar to the
class actions in federal court. One of the putative
California class actions was filed by the Orange
County District Attorney and, among other
things, seeks statutory penalties alleging that
Toyota sold and marketed defective vehicles and
that consumers have been harmed as a result of
diminution in value of their vehicles.
Beginning in February 2010, Toyota has also
been sued in 9 putative class actions in federal
and state courts alleging defects in the braking
systems in various hybrid vehicles that causes
the vehicles to fail to stop in a timely manner
when driving in certain road conditions. The
plaintiffs claim that while a remedy for this
braking issue has been implemented on vehicles
in production since January 2010 and has been
offered to current owners of certain of the
vehicles, that owners and lessees of all of the
vehicles should recover for diminution in the
value of the vehicles. They also seek injunctions
ordering Toyota to repair the vehicles and to take
other actions, punitive damages and other relief.
From February through April 2010, Toyota has
also been sued in the United States District Court
for the Central District of California in 6 putative
shareholder class actions on behalf of investors
in Toyota American Depository Shares and
common stock, and in a putative bondholder
class action. The complaints of these securities
class action lawsuits allege that defendants
made statements that were false or misleading
in that they failed to disclose problems with, or
the causes of, sudden unintended acceleration
in a number of vehicle models. Plaintiffs seek
monetary damages in an amount to be proven
at trial, interest and attorneys’ fees and costs.
On May 21, 2010, a shareholder derivative
action was filed against certain officers and
directors of Toyota in the Superior Court of the
State of California, County of Los Angeles. The
complaint alleges that the defendants breached
their fiduciary duties of care and loyalty as well
as wasted corporate assets and unjustly enriched
themselves, with respect to and as a result
of their handling of design defects in Toyota
vehicles, alleging facts similar to those alleged
in the securities class actions. The plaintiff seeks
to recover on behalf of Toyota amounts spent
by Toyota as a result of the defendants’ alleged
mishandling of the problem of unintended
acceleration and of the alleged failure to make
accurate and timely public disclosure.
investigation and has included interviews of
Toyota and non-Toyota witnesses, as well as
production of documents. On June 23, 2010,
Toyota received a voluntary request and
subpoena from the SEC that primarily requested
production of documents related to the steering
relay rod.
Toyota is cooperating with the government
agencies in their investigations, which generally
are on-going.
The recalls and other safety measures
described above have led to a number of claims,
lawsuits and government investigations against
Toyota in the United States as set forth in the
preceding paragraphs. Amounts accrued as of
March 31, 2010 relate to these legal actions are
not material to Toyota’s financial position, results
of operations, or cash flows. Toyota cannot
currently estimate its potential liability, damages
or range of potential loss, if any, beyond the
amounts accrued; however, the resolution of
these matters could have an adverse effect on
Toyota’s financial position, results of operations
or cash flows.
During the first quarter of calendar year 2010,
Toyota received three formal inquires from the
National Highway Traffic Safety Administration
(“NHTSA”) related to the recalls related to floor
mat entrapment and sticking accelerator pedals.
The first two, TQ10-001 and TQ10-002, address
the timing of the announcement of the recalls
related to floor mat entrapment and sticking
accelerator pedals, respectively. The third,
RQ10-003, addresses the scope of the recalls
and unintended acceleration generally. On
April 19, 2010, Toyota and the Department of
Transportationannouncedasettlementresolving
TQ10-002 pursuant to which Toyota paid $16.4
million to the U.S. Treasury. Toyota denied the
allegations that it violated the Motor Vehicle
Safety Act or its implementing regulations but
agreed to the settlement to avoid a protracted
dispute and possible litigation. TQ10-001 is still
pending, and on June 4, Toyota filed its final
response to RQ10-003.
On May 10, 2010, NHTSA notified Toyota that
it had also opened a Timeliness Query regarding
the 2005 recall of certain pickup trucks and
sport utility vehicles for a possible issue with the
steering relay rod.
Toyota has also received subpoenas and
formal and informal requests from various states’
attorneys general and certain local governmental
agencies regarding various recalls, the facts
underlying its recent recalls and customer
handling related to those recalls.
United States Antitrust Proceedings
In February 2003, Toyota, General Motors
Corporation, Ford, DaimlerChrysler, Honda,
Nissan and BMW and their U.S. and Canadian
sales and marketing subsidiaries, the National
Automobile Dealers Association and the
Canadian Automobile Dealers Association were
named as defendants in purported nationwide
class actions on behalf of all purchasers of
new motor vehicles in the United States since
January 1, 2001. 26 similar actions were filed
in federal district courts in California, Illinois,
New York, Massachusetts, Florida, New Jersey
and Pennsylvania. Additionally, 56 parallel class
actions were filed in state courts in California,
Minnesota, New Mexico, New York, Tennessee,
Wisconsin, Arizona, Florida, Iowa, New Jersey
and Nebraska on behalf of the same purchasers
in these states. As of April 1, 2005, actions filed in
federal district courts were consolidated in Maine
and actions filed in the state courts of California
Toyota believes that it has meritorious defenses
to all of the cases and will vigorously defend
against them.
<Government Investigations>
In February 2010, Toyota received a subpoena
from the U.S. Attorney for the Southern District
of New York and a voluntary request and
subpoena from the U.S. Securities and Exchange
Commission (“SEC”). The subpoenas and the
voluntary request primarily request documents
related to unintended acceleration and
certain financial records. This is a coordinated
TOYOTA ANNUAL REPORT 2010
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