Products Liability - Toyota Motor Corporation - Case Study Example

Introduction Product liability could be defined as a section of law that holds manufacturers, suppliers and retailers of products, liable for injuries caused by their products, upon consumers. This law specifically targets the products as explained in tangible personal products. Lawsuits in product liability fall under the category of tort laws and the litigation occurs for different reasons. Among the reasons include defects detected in the products that cause injuries, or other related damages to consumers (Friedman, 2004). These defects could occur either on the finished product of part of the product not functioning according to the prescription, provided by the manufacturer. The case The “Toyota Motor Corporation” is a Japan-based automobile manufacturing company established in 1937, and continues to specialize in manufacturing of automobile since then. Though the headquarters of the company are in Aichi, Japan, the company operates as a multinational corporation with regional offices across the globe. Throughout the years, Toyota continues to experience growth in different aspects, and as of 2010, the corporation became the chief automobile maker in the world. The company also ranks, ninth internationally, among multinational corporations, in terms of revenue collection. The quality of the vehicles manufactured by Toyota Motor Corporation contributes significantly to the international accolades received by the company. Throughout the years the company continues to supply automobiles, for different purposes, to different consumers internationally. The client base of the corporation ranges from governments to individual consumers. Within the last half decade, the company has faced several product liability cases globally following detection of faults in several models of their automobiles. The lawsuits presented sought compensation for numerous consumers including large companies and individuals. The gas peddles and throttle systems in several Toyota models contained faults that led to unintended acceleration. The cases presented against Toyota were either individual or class action lawsuits seeking different forms of compensation from the company. The safety issues surrounding the lawsuits included the capability of the vehicles to accelerate more than desired by drivers. The car accelerators appeared to get trapped by the floor mat leading to the accelerators remaining pressed once an individual releases pressure on the accelerator. Unintended acceleration of these vehicle models had been associated with occurrence of fatal accidents and injuries to consumers using these vehicles. The company rectified the initial faults and later other faults were detected in the throttle system, also causing unintended acceleration. The company tried to recall several car models, sparking other lawsuits resulting from economic losses following recalls. The recalled models included automobiles that owners had not detected the defects leading to depreciation of these vehicle models. Owners of these automobile models instigated numerous lawsuits against the corporation for compensation. Following to the continued recalling of vehicles, the lawsuits continued between 2008 and 2010. Arguments The plaintiffs in these cases used two different approaches in seeking compensation for the damages incurred. The plaintiffs presented different lawsuits that could be classified into two categories. Personal injury lawsuits by individuals seeking remedies for injuries or deaths, supposedly incurred from the defects in Toyota automobiles and Class action lawsuits that were brought on behalf numerous groups seeking compensation for economic losses incurred following the recalls ordered by the Toyota Motor Corporation. Within the first year of beginning the lawsuits, an average of 300 lawsuits were presented against the corporation in Japan alone. The numbers of cases continued to rise in other parts of the world as recalls continued throughout the duration. Personal injury and wrongful death lawsuits These cases were presented by Toyota owners and passengers who claimed having been injured in automobile accidents caused by the defective accelerators in Toyota vehicles. These claims were presented as defective product liability cases in state courts across Japan. The plaintiffs argued that the defects within the company products led to injuries and death; hence the corporation was liable for the injuries (Fazioli, 2012). The plaintiffs argued that the faults experienced in the accelerator pedals caused unintended acceleration that resulted into an accident, in which the individuals suffered injuries or death. Class action lawsuits These lawsuits resulted from the recalls ordered by Toyota Corporation upon several models of their vehicles. Within these cases, plaintiffs sought compensation from Toyota for losses incurred following the recalls. Majority of these lawsuits were presented by Toyota owners, in both federal and state courts in Japan. These lawsuits were instigated by losses from value depreciation of recalled automobiles; expenses incurred trying to rectify the existing faults in the vehicles, and financial losses for not being able to undertake transactions using vehicles for a period of time. The plaintiffs argued that the corporation violated numerous laws like, warranty laws, consumer protection laws among other common laws, within the country. They argued that these defects and recalls immensely depreciated the value of the vehicles, thus they required compensation from the Toyota Corporation. The Toyota case remains in progress till now as the first cases remain yet to go into full trial. Expectations remain that; these cases should enter trial anytime in 2013. The National Highway Traffic Safety Administration (NHTSA), however, conducted an independent investigation into the claims raised by the lawsuits. In February 2010, NHTSA determined that the corporation had knowledge of the prevalent safety defects in its vehicles. Under the NHTSA regulations, the company remains obliged to inform consumers of defects in their products. Toyota Corporation failed to inform consumers of these defects resulting into a fine of $16.375 million (Michon, 2010). I totally agree with this decision because the failure to report these defects affected millions of people owning Toyota vehicles. As a law, the company failed to follow the stipulations of the NHTSA, hence the fine remained fair, awaiting trials. Adjustments Following these lawsuits, the company included several adjustments into the various models manufactured, aiming at fixing the problem, and consequently avoiding occurrence of such events in future. In 2009, the company recalled about 3.8 million automobiles of different models following detection of the fault. In January 2010, the company also recalled 2.3 million vehicles owing to the accelerator having problems with the throttle systems. The company informed clients of the recalls and the defects as well to ensure safety of the vehicles. While these problems appeared to partially fix the defects detected in the vehicles, the company made numerous changes aimed at offering permanent solution to the defective products. On January 26th 2010, the company suspended the production of eight vehicle models. Concurrently, the company also suspended the sales of any of these specified models, for safety purposes. The suspended models included among others, Lexus and Crown models of Toyota automobiles (Waichman, 2010). This suspension would remain valid until the corporation could completely fix the prevalent accelerator problems detected. In trying to permanently fix the accelerator problem, the company made a change into the design of the vehicle accelerators. The company only sells the models certified as safe for driving, and lacking notable defects. This regulation has ensured that no other Toyota vehicles have been recalled since 2010. Regulating agency The National Highway Traffic Safety Administration (NHTSA) is the authority that regulates the safety of Automobiles the United States of America. This agency works in regulating and enforcing safety, fuel economy and anti-theft standards in motor vehicles. In ensuring and avoiding hefty fines, like the one imposed on Toyota, the corporation should ensure it presents models of vehicles, intended for sale, to the agency for testing. The agency would perform comprehensive tests and pass the vehicles safe for use by consumers (Peltzman, 1975). When lawsuits occur under such circumstances, the company would have the agency as defence to the quality and safety. The defence lawyers under these circumstances would argue that the vehicle passed safety tests by the regulating authority, hence distancing the corporation from compensation claims, which could potentially harm the corporation’s reputation and revenue (Goodden, 2000). Recommendations The company should consider implementing changes into the production process to ensure safety of its vehicles. Any detection of faults in their products should result in immediate action of either rectifying the manufacturing or stopping production. This would seek to address the numerous issues that resulted in action class lawsuits following recall. Such regulation would also avoid instances of recall as faulty products shall not reach the market. The company should prioritise quality of products as opposed to the revenue returns. During the case, lawyers discovered that the corporation knew of the defects seven years before occurrence of the lawsuits (Waichman, 2010). The desire to make profits could have driven the company into selling faulty products, hoping to receive limited number of complaints or none. The company should make assumptions regarding consumers noticing faults in their products as the effects of such situations could be catastrophic. References Fazioli, T. (2012). Wrongful Death Claims: An Overview. Retrieved from Nolo law for All: http://www.nolo.com/legal-encyclopedia/wrongful-death-claims-overview-30141.html Friedman, L. M. (2004). American Law in the 20th Century. New Haven: Yale University Press. Goodden, R. L. (2000). Product Liability Prevention: A Strategic Guide. Milwaukee: ASQ Quality Press. Michon, K. (2010). Toyota Recalls and Litigation Over Acceleration. Retrieved from Nolo law for All: http://www.nolo.com/legal-encyclopedia/toyota-recalls-litigation-over-acceleration-32656.html Peltzman, S. (1975). The Effects of Automobile Safety Regulation. The Journal of Political Economy 83, no. 4 , 677-725. Waichman, P. (2010, August 3). Toyota Recall Accident Injury Lawsuits. Retrieved from YourLawyer.com: http://www.yourlawyer.com/topics/overview/toyota-recall Read More