How Important Is Safety to Toyota? | Dallas, Texas Personal Injury Attorney Blog

How important is safety at Toyota? According to a document sent to a U.S. congressional committee investigating Toyota and its handling of the recent disclosure defects with so many of the Toyota line of vehicles, Toyota Motor Corporation was able to saved $100 million by “negotiating” recalls of its vehicles. According to internal Toyota documents, Toyota executives described their ability to negotiate around recalls as “Wins for Toyota.” Toyota was able reduce or to delay the effect of proposed rules on roofs, door locks and protection in side-impact crashes, according to the document that was turned over to the House Committee on Oversight and Government Reform and obtained yesterday. By delaying the rules, Toyota was credited with saving about $135 million. Yet Toyota continues to claim “Our first priority is the safety of our customers and to conclude otherwise on the basis of one internal presentation is wrong. Our values have always been to put the customer first and ensure the highest levels of safety and quality.”

In contrast, over the past few years, when owners of Toyota vehicles complained about unwanted acceleration, Rep. Bart Stupak, D-Mich. said Toyota representatives “commonly responded … by concluding that the events the consumer described could not have happened.” Stupak also accused Lentz of misleading the public in television interviews in which he said Toyota studied the problem and the cause was the sticky pedals and floor mats. He said experts interviewed by the committee demonstrated that the report used an extremely small sample that would not get to the root of the problem. One of the primary authors of the Exponent report said they did not examine any vehicles or components that had the unintended accelerations.

Toyota’s Internal Documents

Toyota’s internal documents reveal:

Toyota saved $100 million referring to a 2007 investigation in which Toyota recalled 55,000 vehicles, including Camry and Lexus ES cars, citing the potential for floor mats to trap accelerator pedals, after an investigation by the National Highway Traffic Safety Administration.

Toyota was able to avoid investigations of the Tacoma pickup for rust as well as resolve a labeling recall without civil penalties, saving approximately $20 million in “buybacks.”

Toyota saved thousands of hours of labor by delaying NHTSA’s revamped consumer ratings, the New Car Assessment Program, according to the document. The program grades new models on a five-star scale based on how well they fare in crash tests.

Federal Grand Jury Supoena Issued to Toyota

As if Toyota was not already in enough trouble, a federal grand jury in the Southern District of New York issued a subpoena that requested Toyota and its units produce documents related to unintended acceleration of Toyota vehicles and the braking system of the Prius, the automaker said in a regulatory filing to the SEC. This new development of being subpoened by a federal grand jury has far reaching implications. There is no doubt that it will create issues for Toyota executives who are scheduled to testify at hearings Tuesday and Wednesday. Not only is the subpoena an indication that Toyota may face large civil penalties and fines for the automaker, but that the United States government may even decide to issue criminal indictments against Toyota executives. Even a carefully crafted apology could be used against the company or the executive in a criminal trial.

Further, considering the scope of the problems Toyota has been dealing with and the public outrage, lawmakers are likely to press for direct answers to specific questions and to be unsatisfied if executives refuse to answer questions by asserting their Fifth Amendment rights. For example, Rep. Bart Stupak, D-Mich., who will run Tuesday’s hearing, said documents and interviews demonstrate that the company relied on a flawed engineering report and resisted efforts to link Toyota’s electronics to the problems with unintended acceleration in an effort to reassure the public that it found the answer to the problem and that the problem was limited in scope. In a letter to Toyota, Stupak said a review of consumer complaints shows company personnel identified sticking pedals or floor mats as the cause of only 16 percent of the unintended acceleration reports and that approximately 70 percent of the acceleration incidents in Toyota’s customer call database involved vehicles that are not subject to the 2009 and 2010 floor mat and “sticky pedal” recalls leading Stupak to the conclusion that Toyota was not being up-front in its disclosures to the public or the handling of the problem.

SEC INVESTIGATION

In addition, the SEC is also beginning an investigation of Toyota and whether or not Toyota complied with SEC regulations since its stock is publicly traded. Quinn Gillespie & Associates, a prominent lobbying firm, meanwhile, said it had stopped representing Toyota because of a conflict that posed with another client. Quinn Gillespie officials would not identify the other client, but an auto industry official speaking on condition of anonymity to reveal private information said it was State Farm, the giant auto insurer that told federal regulators in 2004 and 2007 about reports of unexpected acceleration in some Toyotas.

It is not clear what laws Toyota might have broken. While the subpoena would specify why prosecutors sought company documents, Toyota would not comment beyond its disclosure with the SEC. Likewise, a spokeswoman with the U.S. Attorney’s Office for the Southern District of New York declined to comment, saying it does not confirm or deny its investigations as a matter of policy.

The Politics Behind the Scene

As we mentioned in our previous post, it will be interesting to watch how the politics of this situation play out. Clearly there are safety issues involved, yet some political figures appear to be more concerned with the financial gains they or their constituents receive from doing business with Toyota than with the safety of Americans. Texas Governor Rick Perry is among those who seem to be more concerned with the business impact of Toyota than with the safety concerns over Toyota vehicles and whether Toyota is telling the truth to its customers and to the government. Last week, Rick Perry commented that ,”It does sometimes appear, however, that the negative news is being encouraged by plaintiffs’ trial lawyers, union activists and those interested in cutting into Toyota’s market share.” This approach is not atypical as according to government documents, Toyota has been steadily increasing its lobbying efforts to obtain favorable legislation and treatment. For example, 10 years ago, Toyota spent $685,684 on Washington lobbying as compared to 2009 when it spent $5.2 million.

Stay tuned. We are sure that the hearings this week will definitely lead to more questions about Toyota’s handling of this crisis.