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Toyota Says Investors Fail to State Securities Claim in Acceleration Suit

January 22, 2011
2 min to read


Toyota Motor Corp., accused by investors accusing the carmaker of misleading them by not disclosing acceleration-related defects that it allegedly knew about, asked a judge to dismiss a securities-fraud lawsuit.


Toyota said in a filing yesterday in federal court in Los Angeles that the shareholders’ case fails to state a claim under U.S. securities law, Bloomberg reported. The statements cited by the plaintiffs as misleading are puffery or “highly generalized statements about the quality and safety of Toyota vehicles” that aren’t relied on by the securities markets, the company said.

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“This class action is an attempt by plaintiffs to mutate product liability, consumer and automotive industry regulatory claims into securities fraud,” Toyota said in the filing.


With other allegedly false and misleading statements cited by the investors, the complaint doesn’t identify the people who made them and doesn’t cite any facts to support that those people knew the statements were false or misleading, as is required under U.S. securities law, the carmaker said.


The shareholders, led by the Maryland State Retirement and Pension System, said in their Oct. 4 consolidated complaint that internal documents show the Toyota City, Japan-based company deliberately concealed unintended sudden acceleration problems in the U.S. They said the company knew about the defects as early as 2000 and “stonewalled” regulators to avoid recalls.


Toyota’s recalls related to sudden acceleration defects erased $30 billion in market capitalization, the investors said. The Maryland pension fund seeks to represent investors who bought Toyota’s American depositary receipts from May 10, 2005, to Feb. 2, 2010.


The fund also wants to represent investors who bought the carmaker’s common stock in domestic transactions during that period as well as, through claims made under Japanese law, all investors who bought the common stock during that time, according to the complaint.

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Toyota said in yesterday’s filing that the U.S. court doesn’t have jurisdiction over claims brought under Japan’s Financial Instruments and Exchange Act. The carmaker said the plaintiffs added the Japanese law claims “to make an end-run around” a U.S. Supreme Court decision last year that prevents investors from suing under U.S. law for securities traded on foreign exchanges.


Gerald Silk, a lawyer representing the Maryland pension fund, didn’t immediately return a call seeking comment after regular business hours.


Toyota’s American depositary receipts, each representing two common shares, fell 64 cents to $83.36 in New York Stock Exchange composite trading yesterday.


The case is In re Toyota Motor Corp. Securities Litigation, 10-00922, U.S. District Court, Central District of California (Los Angeles.)

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