Toyota Recalls 2009-2012: Class Action Law Suit

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Table of Contents

Introduction
Background to Product Liability Law
Theories of Product Liability Law
Negligence
Strict Tort Liability
Breach of Warranty
Defence for Product Liability Lawsuits
Bibliography

Introduction

Product liability law describes some commodities as rationally dangerous and/or unsafe for people consumption. As a result, when defective products cause injuries to people who use them, manufacturers, product distributors, or designers among other parties are held liable for damages. While exercising due care, manufacturers sometimes distribute faulty products without their knowledge. In a bid to avoid expensive class lawsuits against defective products, the Toyota Company recalled about 9 million vehicles in 2009 and 2010. This paper discusses product liability law with reference to this example of mitigating expenses in the payment of damage claims at the Toyota Company. The purpose is to provide an opportunity to look at product liability law in more depth and to develop an understanding of how this specific legal issue affects business operations and business decision-making. This goal is accomplished through a discussion of the background to product liability law, its basic theories, and defences to product liability lawsuits with reference to product liability legal issues.

Background to Product Liability Law

In the legal practice, it is unusual to set up universal policies that can be followed consistently. However, the case of Winterbottom v. Wright established such a unique general rule in 1842. Mr. Winterbottom sustained wounds upon the breaking up of the vehicle, which he was steering. As Jacobs reveals, the cause of collapse was established as poor construction. Mr. Wright was the manufacturer of the coach. He had retailed it to Postmaster General, which then engaged in an agreement for providing the means that were required for drag the coach. The coach owner hired Mr. Winterbottom as the driver. When Mr. Winterbottom suffered damage as resulting from poorly constructed coach, he sued Mr. Wright for negligence. The court dismissed the suit citing the general rule that a party that did not enter a contract with a manufacturer cannot sue the manufacturer for negligence, even if the cause of damage can be proven as attributed to poor manufacturing of the product. This claim implies that only a party in privity can sue a seller. Thus, Mr. Wright could not assume liability for a product he had manufactured.

The above precedence completely closed doors for legal suits involving any party that lacked privity key. The universality of the applicability of the precedence was transformed through the stipulation of exclusions to the broad privity statute. The first exception was provided for in situations involving a seller selling products or goods, despite him or her knowing that the products are defective, and that they can cause damage to a buyer who is unaware of the defectiveness of the goods or products. According to Jacobs, exclusion was also provided for commodities that are “deemed inherently or imminently dangerous such as guns, explosives, food and drinks, and drugs”. The case of MacPherson v. Buick Motor Co., which was settled in 1916, further enlarged the exception of imminently dangerous.

In the case, Justice Cardozo held that the exception of ‘inherent danger’ cannot only apply to products such as poisons and/or products alike in nature, but also to all products , which may cause destruction during their normal use. Thus, if any product that is negligently made poses threat to the life of its user, it amounts to the causation of danger. In his verdict, Justice Cardozo stated that if there exists supplementary information that any potential situation or element that can cause hazard to its consumers will be utilised by people other than its procurers, with consideration of the agreement or not, the producer of such an element is under a permissible compulsion to make it devoid of laxity. This claim implies that producers owe a duty of care to consumers of a commodity, with the agreement notwithstanding. In this sense, the case of MacPherson v. Buick Motor Co. provided legal remedy to persons who are not parties to any contract that involves the sale of products, which can cause harm including vehicles.

The reasoning behind the MacPherson v. Buick Motor Co. ruling was embraced by courts in many jurisdictions. It never attracted any serious challenges in its application. Consequently, the legal doctrine of privity was swept away. Legal experts ceased disputing against the premise that manufacturers are subject to assuming full liability for negligence in the manufacturing of their products. The case also made it reasonable that product liability should include parties foreseeable or anticipated to be influenced by the use of product by way of suffering injury due to product defects or even dangerous condition of use. Hence, if a shopper acquires merchandise from a third vendor, he or she can indict the producer for indemnity arising from slackness in plan or authentic development of the merchandise. This assertion establishes the legal discourses of strict liability in the product liability law as discussed in the next section on the theories of product liability law.

Theories of Product Liability Law

In many jurisdictions, people suffering injuries from the use of products may deploy one or even more of the three fundamental theories of product liability law to file a legal suit against a manufacturer. These theories are negligence, strict liability, and breach of warranty.

Negligence

Manufacturing companies are required to manufacture products while paying attention not to act in negligence to duty of care that they owe other people who are likely to use their products. In the most fundamental interpretation, negligence refers to the act of exercising legal duty by avoiding injuring people who use, or are likely to use products as Daller confirms. The concern that a producer would normally show is a function of the conditions that he or she comprehends when he or she makes a commodity. In fact, this revelation is one of the facts in a case that a court establishes while ruling on a lawsuit involving breach of duty of care through negligence.

In legal suits involving negligence, ignorance is not a defence. However, a subjective question arises in terms of what reasonable people can do when having full awareness and/or when subjected to the same circumstances as the defendant. Alternatively, this case is termed as constructive knowledge, which contrasts the actual knowledge. Courts use the premise of constructive knowledge for determination of the reasonableness of an act, in some particular prevailing circumstances, to mitigate injuries accruing from the use of products. For granting of suit against negligence, the plaintiff must prove that the damages suffered because of the use of a product were foreseeable by a manufacturer so that the product manufacturer can reasonably pay attention to his or her duty of care.

The above requirement implies that manufacturers do not owe all people duty of care. For instance, supposing a person decides to open up ignition system of a Toyota car following the failure of the system so that he or she can manually start the car, only to suffer severe shock as a result. Although, it is a good idea to claim that the Toyota Company had a duty of care while manufacturing the car by making it safe for people to consider alternative means of starting it, a person suffering such damages may not be owed a duty of care as manual ignition is not the standard way of starting a car. Thus, with reference to product liability law, it becomes a pity that the persons who suffered injuries started the car using the wrong procedure. In other words, such injuries were caused by the car owner’s negligence.

Failure to exercise duty of care amounts to its breach. However, the plaintiff must demonstrate proximity between injury and breach of duty of care for negligence lawsuit to be granted. This principle is termed as ‘but for’ causation. It applies in a case where a product manufacturer may raise a defence that injuries occurred due to cases of failure to warn or due to negligence of the product user. The universal law in a laxity lawsuit is exercising of commonplace concern together with a requirement for producers to provide secure and good-conditioned commodities. The case of Saylor v. Toyota Motor Sales, USA, Inc. exemplifies the applicability of negligence as a major theory that a plaintiff may rely on when claiming damages for injuries caused by a defective product. The suit involved a claim for payment of damages for death of four members of a family who died while driving Lexus ES350. The car had acceleration pedal problems, thus prompting it to stick. The driver lost control while the car accelerated to 120mph, thus killing the four occupants. The Toyota Company was held liable.

In the bid to avoid liability for defective products, which lead to expensive lawsuits, the Toyota Company recalls vehicles that are discovered to have defects. In 2010, the company recalled Lexus cars, trucks, and scion models from 2005 to 2010. These cars had breaking problems together with sticking accelerator pedals. The company remedied all recalled cars without charging the persons who had bought them. Yet, at the dawn of 2012, Toyota accepted to resolve a class-action court case for payment of damages amounting to $1.1 billion. This case evidences that manufacturing organisations are liable for making or assembling products using defective parts without discovery of such defects. The case of Saylor v. Toyota Motor Sales, USA, Inc. demonstrates that retailers need to take extra care while offering products in the market place. It follows that producers are indebted a duty of concern to people retailing their commodities, relatives to the retailers, passers-by, individuals hiring commodities, and persons who may even hold a merchandise for a purchaser.

Strict Tort Liability

In product liability law, strict liability involves liability without the necessity of a proof of proximity or fault. Two principles are applied when granting class-action lawsuits involving strict liability. The petitioners must ascertain that any manufactured good that is to them brought is faulty. Secondly, the product must cause the injuries. Hence, in stringent accountability lawsuits, the jury centres on the commodity as opposed to the behaviour of its producer. Thus, any proof of wrongdoing on the part of the manufacturer is not necessary.

Stringent legal responsibility holds in all lines of supply of merchandise. However, in the US, such modifications were made to the law. Many states require that plaintiffs provide a proof of negligence on the part of the retailer. This requirement emanated from the claim that innocent retailers would suffer injustice due to malpractices of the manufacturers who are located far away from the states, who buyers may find hard to sue. Proof of defect requires an understanding of the sources of defect in a product.

Products’ defects may originate from manufacturing defects, design defects, and failure to warn. Products have manufacturing defects if they deviate from other identical products, failure to meet design specifications, and/or failure to meet performance standards. In case of the Toyota Company, such defects may emerge from inappropriate assembly, using sub-standard components, loose parts, use of defective materials, and missing parts. As revealed in the case of Pena, et al. v. Toyota Motor Corp, in the automobile company, manufacturing defects may also emerge from lack of testing of each unit supplied to the market. Design faults occur when the settings of the manufactured goods make it reasonably hazardous to the customer.

As a universal principle in the merchandise plan, care must be taken to make commodities when bearing in mind the anticipated unconventional application together with ways of mishandling the good. One important issue that is considered in design fault lawsuits is whether producers have any additional secure design option. Otherwise, they should warn that defects are present in a product when a manufacturer fails to provide adequate signs, labels, or instructions.

Breach of Warranty

Warranties are minor terms, which do not form part of chief necessities for the existence of a contract. In case of breach of warranties, aggrieved parties sue for damages, but not the end of the contract. In the due process of selling products, negotiations are encountered. Negotiations that involve the purchase and sale of goods either fall into representation or term categories. Terms are either expressed or implied. According to Allen & Overy Lawyers, expressed terms encompass terms that are set out in an agreement by parties engaging in a contract. Implied terms are not set out expressly in the contract. However, law, usage, or even custom implies them.

Warranties are subdivided into express and implied warranties. Express warranties are incorporated in the sales contract. Otherwise, they are spoken in the process of negotiations. They can also be created through silence. Silence may create a wrong impression concerning the quality of a given product on sale. For manufactured products such as vehicles, an important source of express warranties involves the design specification and/or examination of samples that are shown to customers, or even on buying a product. In case of warranties that are created upon buying a product, the buyer presumes that another shipment would conform to the previous product performance and quality. In the past, people could not take legal action against any violation of state guarantees if not in privity with the individual providing the service agreement. However, courts strictly enforce such warranties today on the grounds that people alleging their breach depend on them in making purchasing decisions.

While a confirmatory act is a precondition for the creation of articulated permits, implied guarantees are supposed to hold unless “the seller clearly and unambiguously disclaims in it writing as part of the sale agreement”. Both express and implied warranties are important for manufacturing organisations. Any suit alleging breach of warranties amounts to expensive settlements. Miller v. Toyota Motor Sales USA, Inc. serves as an important case showing how breach of warranties may increase financial risks to a manufacturer.

Defence for Product Liability Lawsuits

Defence to product liability lawsuits takes two general forms. They include those, which seek to avoid liability and those seeking to reduce the degree of liability. One of the mechanisms of avoiding liability is the statute of limitations. It requires the petitioner to present a court case within a specified period. Failure to do so amounts to dismissal of the claims even if they are valid. Nevertheless, there are exceptions to this defence. Where offended people are below the stipulated age, the time required to file a claim does not add up not unless such people reach approximately 20 years. The discovery rule is applied in situations where injured people do not immediately learn about the injury. For instance, upon exposure to asbestos, time may only begin to count when the injured persons discover facts that are appropriate for the identification of the damage to file a claim.

Statutes of response follow similar principles to statutes of limitation. However, time only begins to run from the date of manufacturing a product or the date of sale. Although variations between states exist on the time of validity of statutes of response, it is ten years in many states in the US. Another defence that is available to a defendant is the principle of unavoidable danger. Manufacturers have legal obligations to ensure they take precautions together with ensuring adequate warning. They are required to provide appropriate instructions on proper use of products. However, the ruling may not hold producers and retailers strictly liable for situations where merchandise may be inevitably hazardous, but needed by the community. For instance, pharmaceutical manufactured drugs can cause harm if not reasonably used.

In product liability lawsuit, the defendant may cite the principle of contributory negligence in his or her defence. This involves situations in which injuries are caused by more than one causes. A standard that is used by many jurisdictions involves denial of recovery where the plaintiff is responsible for more than 50 percent of the fault leading to an injury. In some jurisdictions, the principle only reduces the recovery depending on the percentage of the plaintiff’s fault. Other defence principles that are available to the defendant in a product liability lawsuit include the principle of misuse, risk assumption, and alteration.

The principle of failure to mitigate may enable product manufacturers to escape liability. The law demands that people need to take appropriate and reasonable actions to ensure that injuries do not get worse. Thus, failing to mitigate them implies that an injured individual contributed to his or her injuries through negligence in acting reasonably. Consequently, failure to mitigate does not amount to a defence that seeks to escape liability. It seeks to reduce the damage recovery awards that the defendant would have paid anyway. The principle of a failure to mitigate any risk ensures that the jury does not serve injustice by punishing a product manufacturer through imposing strict liability for mistakes done by the plaintiff.

Bibliography

Allen & Overy Lawyers. Guide to Basic Principles of English Contract Law. London: Advocates of International Development, 2010.

Daller, Morton. Product Liability Reference Desk. New York: Wolters Kluwer Law and Business, 2013.

Jacobs, Edward. “Judicial Reform of Privity and Consideration.” Journal of Business Law 3, no. 2 (1986): 312-335.

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