Federal Lawsuit Alleges Toyota Concealed Safety Information and that the Current Recall Needs to Cover More Vehicles
By Rachel E. Montes posted in Defective Products: Product Recalls on Sunday, January 31, 2010
Federal class action lawsuit has been filed in Charleston, West Virginia claiming Toyota’s massive recall is not large enough in scope to cover all of the affected vehicles. The lawsuit claims that other models have faulty electronic throttle systems that might cause unwanted acceleration.
The Charleston lawsuit, filed in November, names 13 models dating back to 2002 for the Toyota Camry and 1998 for Lexus vehicles that have an electronic throttle-control system, or ETCS, which allegedly has “a dangerous propensity to suddenly accelerate without driver input and against the intentions of the driver.”
Moreover, when reports of incidents caused by unwanted acceleration led to an investigation by the NHTSA in 2004, the information provided by Toyota officials was limited in scope so as to exclude incidents that lasted longer than one second or where the driver couldn’t stop the unwanted surge by applying the brake, according to the lawsuit.
The lawsuit alleges “Toyota, through [Toyota Motor North America], deceptively concealed from NHTSA as well as from the news media and consumer safety groups that monitor NHTSA safety defect investigations, an entire universe of potentially relevant customer complaints,” the lawsuit states.
In addition to those, the lawsuit alleges, several other models and years are at risk:
- 2007-08 FJ Cruisers,
- 2003-08 Tacoma pickups,
- 2002-09 Camrys,
- 2000-09 Tundra pickups,
- 2001-09 4Runner SUVs,
- 2001-09 Land Cruisers,
- 2005-09 RAV4s,
- 2001-09 Sequoias,
- 2004-09 Siennas,
- 2005-09 Corollas, and
- 2004-09 Highlanders.
- “Lexus models” from 1998 to 2009 also are listed.
Starbucks Recalls Glass Water Bottles That Have Been Shattering
By Rachel E. Montes posted in Defective Products: Product Recalls on Sunday, January 31, 2010
Coffee giant Starbuck is recalling its 20 ounce clear water bottles that have the words “Glass Water Bottle” printed on the bottle. There have been reports of injuries when the glass stoppers and the bottles themselves have shattering. As a result, there is a safety risk of lacerations to consumers. The bottles sold for about $9.00 at Starbucks and Target.
The specific product has an SKU number 11003503.
To view a picture of the water bottle go to www.cpsc.gov/cpscpub/prerel/prhtml10/10125.html
TOYOTA FINALLY ADMITS TO DEFECT, BUT RECALL IS LIKELY TO HAVE LONG TERM IMPLICATIONS
By Rachel E. Montes posted in Defective Products: Product Recalls on Sunday, January 31, 2010
For months, Toyota denied its vehicles were defective. Even after an October, 2009 statement from the National Highway Traffic Safety Administration (NHTSA) forced a recall of Toyota and Lexus vehicles because it found that the vehicles have an “underlying defect” that involves the design of the accelerator pedal and the driver’s foot well, Toyota continued to deny the existence of a defect. Toyota Motor Corp. was challenging NHTSA’s claims of a defect as being “inaccurate and misleading” statements. In fact, as late as October, Toyota was asserting that no defect existed in the 3.8 million vehicles it recalled.
Now, Toyota is telling a different story, but its initial response and denials of defects is leading to criticism of Toyota. Toyota has recalled more than 7 million vehicles in the United States in recent months to address what it acknowledges are two acceleration-related issues:
- Reports of uncontrolled acceleration in its cars, and
- Gas pedals that can stick or fail to spring back properly.
Jim Lentz, CEO of Toyota, denies that Toyota dragged its feet on the gas pedal issues, but has acknowledged that Toyota had a technical report in October 2009 regarding the issue, around the same time that Toyota was claiming NHTSA’s claims of defects were inaccurate and misleading. The first recall was announced in late September and the second on January 21, 2010 and admitted that, “We’ve been investigating this for a long time.”
Toyota Denies Other Causes for Uncontrolled Accelleration
Considering Toyota’s original denial of any defect, it is no wonder why many people are skeptical about Toyota’s new claims that it is completely confident it has solved this problem.
Lentz denied that the uncontrolled acceleration issues are linked to problems with electronic sensors. Toyota vehicles utilize a drive-by-wire acceleration system in which pressure on the gas pedal sends an electronic signal to the throttle. Lentz talked on the Today Show and said we [Toyota] have tested the electronics and are convinced that the electronic are not the problem, that the problem is with the accellerator. Lentz claims Toyota is completely confident that we have a fix for that. Between those two things (the sticking accellerator and the floor mats), this will be under control.
Congressional Hearings Scheduled
Two Congressional panels will hold hearings this month on how Toyota and the National Highway Traffic Safety Administration handled hundreds of reports in recent years of unintended acceleration in Toyota vehicles — more than any other automaker, according to U.S. government records.
Current List of Affected Vehicles
The recall affects the following vehicles:
- 2007-2010 model year Toyota Camry,
- 2004-2009 Toyota Prius,
- 2005-2010 Toyota Avalon,
- 2005-2010 Tacoma,
- 2007-2010 Toyota Tundra,
- 2007-2010 Lexus ES 350 and
- 2006-2010 Lexus IS 250 and IS 350.
Working On A Fix
Toyota announced that parts are being shipped to dealers to repair the sticking accellerators, and that customers will be mailed notices later this week. However, Lentz did not have a good answer for what customers should do while they wait for the company to mail out recall notices and for the dealerships to train their employees on how to handle the millions of vehicles that will be the subject of the recall. Previously, Toyota told customers to pull the floor mat out. This morning, Lentz said the problem with the sticky pedal “comes on over time.” He urged people whose “gas pedals either don’t feel smooth when they’re pressed or are slow to return to contact their dealer.” However, the dealerships have not yet been trained on how to fix the problem and they do not have the parts needed to fix the problem.
Toyota Is Not Agreeing to Put Its Customers In a Rental Car Until the Problems Are Fixed.
Hopefully, Toyota is correct about the source of the problem. However, for customers who own and drive an affected vehicle, there is little short term comfort in the news of a forthcoming recall as those customers will still be forced to make a decision about whether it is safe to drive their vehicle while they wait for their fix. Based upon statements from Jim Lentz during his interview on the Today Show, Toyota is not willing to agree, or to at least announce publicly, that it will reimburse its customers for rental car expenses while they wait for their vehicle to be “fixed.”
Used Car Values
Even if this problem is addressed, the consumer is likely to lose in the end. For years, Toyota vehicles enjoyed a reputation as being a good investment because the vehicles retained a high value in the used car industry. However, with the damage to the Toyota brand, and the risk of a possibly recurring safety issue, customers are not likely to be able to sell their vehicles for anything close to what they could have just a few months ago. In addition, the news is bad even for those owners of a Toyota or Lexis vehicles affected by the recall that do not plan to sell their vehicle in the short term. Those owners have to hope that their vehicle is not involved in an accident that renders the vehicle a total loss as insurance companies are likely to reduce the value they are willing to pay for the damage to the vehicle as a result of this recall and the loss of the reputation for Toyota and Lexis vehicles much the same way that insurers have done for owners of Saturn and Saab vehicles over the past few months. Moreover, the long term damage to the reputation of Toyota vehicles may impact the value of used Toyota and Lexis vehicles for years to come.
Long Term Implications for Toyota
If Toyota’s confidence turns out to be misplace, there is no telling how devastating the effects will be for Toyota. Toyota Motor Corp.’s recalls and sales stoppages is estimated to have cost the company around $1 billion. However, it is the long-term damage to its brand and reputation that is at stake, not to mention the safety of its customers. If evidence reveals that the uncontrolled accelleration issues are linked to the electronics in the vehicle as some are saying, one would expect that additional incidents will continue to occur and that more people will be injured or killed because those issues are not being addressed.
In the meantime, analysts believe Toyota will be forced to spend a small fortune on advertising, sales incentives and possible legal bills. In the previous fiscal year ended March 31, 2009, it spent 389.2 billion yen, a 20% decline year-to-year as the company scaled back spending amid the global economic downturn.
Automotive Lease Guide, a Santa Barbara, California-based company tracking the residual value of cars and brand values, believes Toyota’s perceived quality score could fall 20%, leading to a 4% drop in the residual value of its cars, if it doesn’t resolve the situation quickly and without further recalls. Toyota may have to put aside more reserves if the value of autos coming off leases declines. A fall in residual value also decreases the amount of money consumers get at trade-in or when they try to resell a used car.
While Toyota hasn’t disclosed the impactfrom the production and sales halt, along with related recalls in Europe and China, the company’s market value has dropped 18%, or 2.55 trillion yen, ($28.2 billion) since it issued a second recall for the sudden acceleration problems on January 21, 2010. Kurt Sanger, car analyst at Deutsche Bank in Tokyo, says Toyota has halted production on about 60% of its North American manufacturing capacity and the sales stoppage of eight models could cost the company up to 18,600 units of sales per week. Mr. Sanger estimates that the direct costs to Toyota from the recall and factory stoppage are in the 50 billion yen to 60 billion yen range. With indirect costs factored in, including paying for rent-a-car costs and subsidizing dealers for inventory they can no longer sell, the total cost for Toyota could be 100 billion yen. However, those estimates don’t even include less tangible factors like a weaker brand image, litigation risk and possible increase in advertising expenses.
Koji Endo, analyst at Tokyo-based research firm Advanced Research Japan, says he thinks the sales suspension could last for a month, resulting in a sales loss of about 100,000 vehicles. Since the average gross profit margin on the affected models are around 700,000 yen per vehicle, Mr. Endo estimates that it will cost Toyota about 70 billion yen.
As of the end of March 31, 2009, Toyota has set aside 429.2 billion yen for warranties on vehicles that it has sold, although the company says that reserve is different from cash set aside to pay for the cost of recalls.
With more than $29 billion in cash on its balance sheet and very low levels of borrowing, Toyota doesn’t stand out as a credit risk, but ratings agency Fitch last week placed the company’s “A+” rating on negative watch. Fitch said the recall and sales suspension casts a negative light on Toyota’s reputation for quality. Meanwhile credit services Moody’s and Standard & Poor’s have said there is no impact from the current freeze, but S&P warned last week that its rating could be lowered “if Toyota’s brand image is weakened.” A reduction in a company’s credit rating can make it more expensive to raise money in the debt market.
If you or a loved one have been injured by one of the issues related to these defects, you need to contact an attorney immediately, particularly before the damage is repaired so that evidence of the defect can be preserved. Contact Rachel Montes or Tom Herald at the Montes Herald Law Group, LLP at (214) 522-9401 for a free, no obligation case consultation. Visit our website at www.MontesHerald.com for more information about our law firm and our attorneys. Our office is located in the Las Colinas portion of Irving, Texas in between Dallas and Fort Worth. However, we handle cases across the State of Texas and across the United States.
THE 5TH CIRCUIT COURT REJECTS DRUG MAKER’S (REGLAN) ARGUMENTS OF PRE-EMPTION
By Rachel E. Montes posted in Medical Claims: Dangerous Drugs on Thursday, January 14, 2010
The Fifth Circuit Court of Appeals announced in its recent decision, Demahy v. Actavis, Inc.(5th Cir. 2010), that the federal regulatory regime governing pharmaceuticals is without preemptive effect over state-law failure-to-warn claims against manufacturers of generic drugs. Translated, this means that simply because a manufacturer of generic drugs obtains FDA approval for the manufacturing and marketing of its drugs, the manufacturer can still be held liable for its failure to warn consumers of dangerous side effects that it knew or should have known about. This opinion follows the trend of last year’s landmark decision by the Supreme Court in Wyeth v. Levine, that such claims are not preempted against name brand drug manufacturers.
Actavis, Inc., the manufacturer of Reglan, a drug widely prescribed for gastroesophageal reflux, was sued by Julie Demahy because after taking Reglan for 4 years she alleges she developed tardive dyskinesia, a neurological movement disorder that causes the body to shake and tremor violently and uncontrollably.
At the time her doctor prescribed the medication, the Food and Drug Administration (FDA) had approved Actavis’ manufacture of Reglan. In 1985, the FDA required that Reglan’s label be updated to include a warning regarding the risk of developing tardive dyskinesia. Actavis revised its labeling to comport with these changes to the Reglan label. In February 2009, the FDA issued another labeling revision for metoclopramide meant to warn of the risk of prolonged use, defined as use for more than 12 weeks
Demahy asserted a failure to warn claim under the Louisiana Products Liability Act because Actavis did not warn of the risks of neurological disorder after long-term use of metoclopramide. Specifically, Demahy alleges that Actavis ignored scientific and medical literature establishing a higher risk of developing tardive dyskinesia, failed to request a labeling revision from the FDA, failed to change the label itself even though no prior FDA approval was required, and failed to report safety information directly to the medical community.
Actavis moved to dismiss Demahy’s claims, arguing the claims were “pre-empted” – that since the FDA did not originally require this disclosure, state laws could not impose such an obligation. The Fifth Circuit disagreed.
The issue of adequate warnings on labels of generic drugs is an important issue because so many people are purchasing generic forms of drugs either because their health insurance plans require it, or simply because of the cost savings. However, the labeling requirements of the FDA are significantly less stringent for generic drugs than they are for the original drug.
The FDA Process for Approval of Marketing New Drugs
All prescription drugs marketed in this country must first receive FDA approval. Manufacturers of new drugs must submit a new drug application (NDA) to the FDA that demonstrates the drug’s effectiveness and safety for its intended use. The 1962 Food, Drug and Cosmetics Act (FDCA) established this avenue for pioneer drugs, with the core objective of ensuring that drugs are both safe and effective; the FDA has codified the NDA regulations at 21 C.F.R. Part 314. New drug approval requires, among other deliverables, the results of successful clinical trials and labeling that accurately portrays the benefits and risks of the drug, as indicated by those trials and other data. “Before approving an NDA . . . [the] FDA undertakes a detailed review of the proposed labeling, allowing only information for which there is a scientific basis to be included in the FDA-approved labeling.” The FDA will reject the proposed labeling if “based on a fair evaluation of all material facts, such labeling is false or misleading in any particular.”
The FDA Process for Marketing Generic Drugs
Contrast this with the simpler, less demanding approval process required of generic drugs. In 1984, Congress passed the Hatch-Waxman Amendments to the FDCA, which altered the federal regulatory regime governing generics. Thanks to these Amendments, once a pioneer drug loses patent protection, a drug company may seek permission to market a generic version through a significantly simplified process, known as the abbreviated new drug application procedure, or ANDA. ANDA drugs must be the “same as” a name brand drug that has already been approved by the FDA as to active ingredients, route of administration, dosage form, strength, and conditions of use recommended in the labeling. Under Hatch-Waxman, generic drug manufacturers need not repeat the clinical work of their name brand counterparts, but instead must only establish the generic drug’s bioequivalence with the name brand drug. By avoiding “unnecessary,” “wasteful,” and “unethical” duplication of previously-performed human clinical trials, Congress meant “to provide a careful balance between promoting competition among pioneer . . . and generic drugs, and encouraging research and innovation.” In turn, this increased competition, coupled with the elimination of “retesting” of a drug that has already been determined to be safe and effective, would result in significant cost savings to the American public. Indeed, the Congressional Budget Office estimated that generic drugs save American consumers between $8 billion and $10 billion each year. Generic drugs now account for seven out of ten prescriptions filled in the United States.
In their application, generic manufacturers must also show “that the labeling proposed for the new drug is the same as the labeling approved for the listed drug. Applying to market a generic drug, then, requires “[a] statement that the applicant’s proposed labeling is the same as the labeling of the reference listed drug except for” enumerated differences irrelevant here; without such a statement, the FDA will deny the application.
Despite the Supreme Court’s decision in Wyeth v. Levine finding the failure to warn cases agains the original drug manufacture are not pre-empted, Actavis claimed that failure to warn cases against the manufacturer of generic drugs should be pre-empted because the manufacturer of a name brand drug may change its label unilaterally-through the FDA’s “changes being effected” (CBE) process-while seeking the FDA’s approval of the change, but that a generic drug manufacturer must produce the same drug and use the same label as the name brand drug manufacturer.
Here, as in every preemption case, “[t]he purpose of Congress is the ultimate touchstone.” Congressional intent to preempt state law can either be expressed in statutory language or implied in the aim and structure of federal law. Implied preemption comes in two forms: field and conflict preemption. Field preemption is inferred where federal law is so pervasive that it leaves no room for state supplementation. When Congress has not completely displaced the possibility of state regulation, preemption may nonetheless occur when state law “actually conflicts” with federal law. This conflict might be with a federal statute or an “agency regulation with the force of law.” Actavis claimed that under the Supreme Court’s decision in Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996) it was impossible to comply with both the federal regulatory regime governing generic drugs and the state laws which imposed more a more complete disclosure on its warning labels, and that Louisiana law obstructs the goals of the FDCA, as amended by the HatchWaxman Amendments and implemented by FDA regulation.
Courts have been particularly reluctant to find preemption in such cases without an unambiguous signal of congressional intent. This is especially true in cases that involve health and safety concerns, because “[s]tates traditionally have had greater latitude under their police powers to legislate as to the protection of the lives, limbs, health, comfort, and quiet of all persons.”
Demahy’s case seeks to hold Actavis liable for failing to take steps to change its warning label after approval in order to provide adequate warning once additional risks emerged. Generic manufacturers are subject to the requirement that their labeling “be revised . . . as soon as there is reasonable evidence of an association of a serious hazard with a drug.” Demahy claims that Actavis failed to comply with this requirement despite reasonable evidence that long-term use of metoclopramide poses a serious hazard.
As one court stated, “the purpose of [the] regulation was not to prevent a generic manufacturer from improving or strengthening its warnings. It was, instead, to ensure that the FDA could require a generic manufacturer to modify its labeling to match labeling changes in the reference listed drug.” In Levine, the Supreme Court found it “difficult to accept” that “the FDA would bring an enforcement action against a manufacturer for strengthening a warning.” Nor is “a drug . . . misbranded simply because the manufacturer has altered an FDA-approved label”; rather, the misbranding provisions concern the accuracy of the label’s substance and the adequacy of its warnings and the FDA “contemplates that federal juries will resolve most misbranding claims.”
In addition to the CBE and prior approval processes, Demahy claims that Actavis could have satisfied its state-law duty to warn by communicating directly with doctors, through a “Dear Doctor” letter. These letters are used in the industry to advise medical professionals of the risks associated with prolonged use of metoclopramide-would also be subject to FDA regulation because they fall within the agency’s broad definition of “labeling.” The FDA made clear that its labeling requirements “do not prohibit a manufacturer . . . from warning health care professionals whenever possibly harmful adverse effects associated with the use of the drug are discovered.”
Thus, though generic manufacturers cannot send “Dear Doctor” letters without prior FDA approval, they can suggest that the FDA send such letters on their behalf; the FDA will then send letters out if it determines that they are a necessary part of a risk evaluation and mitigation strategy.
This decision is clearly a victory for consumers. This decision encourages manufacturers of generic drugs to promptly update its warning labels to properly and timely advise consumers of the dangers associated with their drugs and discourages drug manufacturers from hiding the risks of their drugs from doctors and consumers. At Montes Herald Law Group, L.L.P., we believe drug manufacturers should be held accountable for the products they design, and distribute and for the warnings that need to be given for their product so that doctors and patients can make informed medical decisions about whether or not to prescribe or to take a drug. The FDA was correct when it advised the Supreme Court these lawsuits against drug manufacturers are beneficial not only to compensate individuals for the injuries they have sustained, but that these lawsuits also serve an important role in our society to ensure that manufacturers are held accountable to develop and to distribute safe products.
If you or a loved one has been injured because of the use of Reglan or other dangerous drug, contact Rachel Montes or Tom Herald to discuss your case. Visit our website at www.MontesHerald.com or call us at (214) 522-9401 for a free, no obligation case consultation. Our office is located in Irving, Texas near Dallas and Fort Worth however, we handle cases all across Texas and the United States.
Three Teenages Killed and Three Others Seriously Injured In Crash In Denton
By Rachel E. Montes posted in Auto Accidents: Fatality Collisions on Tuesday, January 5, 2010
Adrian Alvarez (18), and Fernando Cuevas, (19), and Jose Ramos (16), were all tragically killed in a violent crash just before midnight on New Yar’s day. In addition, three passengers, and the driver, were seriously injured in the crash.
The accident occurred at the Highway 380 exit along North Loop 288 in Denton. According to police, the teens died in a high-speed car crash when the driver of the car slammed into a traffic barrier along North Loop 288 while trying to elude police. A state trooper began a pursuit of the Ford vehicle the teenagers were occupying after radar showed the vehicle to be going approximately 78 mph. According to Rachel Enriquez, a sister of one of the occupants, the other teenagers urged the driver to slow down, but that the driver insisted if the cop was going to stop him, the cop would have to catch him. Enriquez’ sister Rachel was ejected from the vehicle and landed 15 feet from the car, breaking her leg. She was the only one conscious after the crash.
Toxicology reports are pending. If the driver is found to have been intoxicated during the crash, he could face criminal charges
Montes Herald Law Group, LLP certainly hopes that you are your family and friends never have to deal with the loss of a loved one like this. Whether the incident involves drunk driving, or just reckless driving, tragedies such as this are completely preventable. In cases such as this one, it is very important that you seek competent legal representation immediately to make sure that a thorough investigation is performed, to ensure that evidence is preserved, and to hold all of those involved with the incident accountable to the fullest extent allowed by law.
We strongly recommend that if you are the victim of a drunk driving accident, immediately contact Rachel Montes or Tom Herald of Montes Herald Law Group, LLP to discuss your case and to understand your rights. We are experienced and qualified attorneys. We handle wrongful death cases and cases involving reckless driving and drunk driving collision cases on a regular basis. Call us at (214) 522-9401 and visit our website http://www.montesherald.com/ for more information about our attorneys, our practice areas, and they way we approach cases such as this. While we are located in Irving, Texas, we handle cases such as this in Dallas, Tarrant, Denton, Collin, Rockwall, Ellis, Hood, and Johnson County, as well as all across the State of Texas.
213,000 Baby Play Yards With Bassinets Recalled
By Rachel E. Montes posted in Defective Products: Product Recalls on Tuesday, January 5, 2010
The U.S. Consumer Product Safety Commission, Health Canada and Dorel Juvenile Group Inc. today announced a voluntary recall of about 213,000 Safety 1st Disney Care Center Play Yards and Eddie Bauer Complete Care Play Yards due to possible suffocation hazards. According to a December 30, 2009 press release,”the one-piece metal bars supporting the floorboard of the bassinet attachment can come out of the fabric sleeves and create an uneven sleeping surface, posing a risk of suffocation or positional asphyxiation.” The press release describes the toys as “portable and were sold (at Babies “R” Us, Kmart, Sears, Target and Walmart from January 2007 through October 2009) with a bassinet attachment and a built-in changing station. The recalled products involve the following:
•· Safety 1st Disney Care Center Play Yards
•· Eddie Bauer Complete Care Play Yards
•· Models included in this recall are: 05025, 05026, 05037, 05088 and 05350.
•· The model number is printed on a sticker on one of the support legs underneath the play yard. ‘Safety 1st’ or ‘Eddie Bauer’ are printed near the bottom of the fabric sides of the play yards.
Consumers are advised to immediately stop using the bassinet attachment to the play yard and to contact Dorel Juvenile Group for a free repair kit including replacement bassinet fabric, bassinet bars and installation instructions.
Dorel’s Recall Hotline: (888) 233-4903 between 8 a.m. and 5 p.m. ET Monday through Thursday, 8 a.m. and 4:30 p.m. ET Friday
Dorel’s Web site: http://www.djgusa.com/
If your child has been injured because of a defective play yard or other dangerous product, contact Rachel Montes or Tom Herald at (214) 522-9401 for a free case consultation. Montes Herald Law Group, LLP is located in Irving, Texas. Visit our website www.MontesHerald.com for more information about our law firm and our attorneys.