Toyota has been offered to settle the class action lawsuit that was filed by investors for $25.5 million dollars earlier this week, over the unintended acceleration Toyota recall that ultimately claimed 10 million vehicles worldwide, and costing the Japanese automaker over $5 billion dollars. Also, the fallout of the total recall scandals resulted in the stock dropping by an unprecedented amount of $30 billion dollars. Some sizable companies don’t have a market value of $30 billion, let alone be able to withstand such a great loss like that.
The lawsuit claimed that Toyota had deceived their investors by improperly disclosing “safety and quality issues” related to the reports concerning accidents that were caused as a result of the unintended acceleration issue. The claims were filed back in February 2010, and this Toyota recall is still under investigation.
A prominent member of the lawsuit, The Maryland State Retirement and Pension System, had previously estimated that if this lawsuit would have been successful, it could have resulted in a payout as large as $124 million dollars. That being said, if you are considered to be a common stockholder, don’t look for a monetary windfall just yet. The only claims that are covered are those that were made by investors in Toyota’s American Depository Shares. I’m not sure that Toyota even has the capital to be able to cover all of the common stock, plus it would have to go through even more years of determining the validity of additional claims. Too bad, I was hoping that it would wipe out Toyota altogether.
Also, the settlement is merely a proposal, and would have have to be approved by Dale Fischer, an US District Judge presiding over the case.
A Toyota spokesman, Mike Michaels, had issued a statement on behalf of the company, stating that they are “pleased to be turning the page on this legacy legal issue.” Comments were declined by the plaintiff’s counsel.
One could also speculate as to whether or not the latest Toyota recall will spur even additional lawsuits…stay tuned…