Toyota will not be able to require arbitration in acceleration lawsuits

Article by Christian Andrei, on March 14, 2012

A ruling handed down by U.S. District Judge James Selna in Santa Ana, Calif. last Monday barred Toyota Motor Corp. from forcing named plaintiffs seeking group status for a lawsuit over alleged losses from unintended acceleration from arbitrating their claims instead of proceeding to trial next year.

He said that Toyota has given up any right it may have had to force the arbitration of 15 of the 20 class representatives' claims. So for the other five, Toyota (as a non-signatory) could not impose the arbitration deals located in the plaintiffs' purchase and lease contracts with Toyota dealers.

On Feb. 24, Selna had given a tentative ruling that denied Toyota’s request to compel the plaintiffs to arbitrate their claims.

Selna reiterated this decision last Monday, saying that with Toyota’s failure to assert its right to compel arbitration, it had prompted the plaintiffs to pursue their present expensive and time-consuming litigation strategy. The judge said that Toyota’s actions were “inconsistent with any right to compel arbitration."

He also said that the ensuing prejudice to the class representatives pushes the court to rule that Toyota waived any right to compel arbitration of the claims asserted by the 15 plaintiffs. Since 2010, Selna had presided over the consolidated litigation. For next year, Selna had scheduled three trials. These will likely serve as bellwether cases that the court will use.

Lawyers on both sides will also be able to test evidence and liability theories before proceeding to other trials and a decision by Selna on whether to approve a class-action status for the plaintiffs. In an e-mail, Steve Berman, a lead lawyer for the car owners, said that they’re “pleased” about the ruling and that they believe it’s “fair.” [source: Bloomberg]

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