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Law360 Talks to Judd Law Group — Sanction Could Prove Fatal to Toyota in Acceleration MDL

By Greg Ryan

Law360, New York (May 31, 2012, 9:26 PM ET) — A California federal judge indicated Wednesday he would sanction Toyota Motor Sales USA Inc. for failing to alert plaintiffs’ counsel about a post-crash car inspection, a blow that could destroy the automaker’s chances to prevail in the highly anticipated bellwether trial over an alleged sudden acceleration defect, attorneys say.

U.S. District Judge James Selna said in a tentative ruling that if the case goes to trial, he would issue an adverse inference instruction to the jury regarding Toyota’s handling of a data recorder before the suit was filed. The plaintiffs, who blame an accident that killed two of their family members on the purported unintended acceleration defect, said that Toyota employees may have destroyed or altered potentially damning evidence on the data recorder.

Judge Selna maintained that while there was no evidence Toyota had resorted to such “Machiavellian conduct,” the automaker’s failure to notify plaintiffs’ attorneys about the inspection called for a sanction — including, possibly, a shifting of the burden of proof. He did not specify how an instruction would be worded.

If such a sanction is handed down, it may be impossible for Toyota to maintain credibility with a jury, attorneys told Law360 on Thursday. The case is scheduled to go to trial early next year.

“A negative inference jury instruction is almost insurmountable,” said John Boudet, a partner at Roetzel & Andress LPA. “It has the potential to taint the defendant in the court’s eyes, which it clearly has. In the hands of a good trial lawyer it will become the focal point of the case.”

Judge Selna said Toyota should have anticipated that the plaintiffs would file suit over the accident, considering they already had retained counsel at the time of the inspection and multidistrict litigation over the alleged defect was already in place. In any case, a duty to preserve evidence is present even before a suit is filed, according to the judge.

An attorney for the automaker declined to comment on the tentative ruling. Toyota
spokeswoman Celeste Migliore said in a statement that the plaintiffs’ sanction motion was baseless.

“Toyota has clearly shown that the evidence at issue was appropriately preserved and that there was no corruption of the data from the vehicle’s event data recorder,” she said.

But despite Toyota’s attempt to downplay the situation, the damage may already be irreparable, said Boudet.

“This would be a huge development in any case,” he said. “Will the court invite the jury to speculate that evidence was destroyed? I think that’s what the judge is getting at. If that’s what the judge is going to read, it becomes insurmountable.”

Aside from the suspicion cast on the automaker, Toyota could also be crippled by the judge’s tentative findings regarding a broken piece of plastic key to the inspection, attorneys said. A Toyota technician said he found the plastic on a closed throttle valve, picked it up, photographed it, and returned it to the same spot. The owner of the repair shop where the inspection took place, however, testified that the plastic was wedged in the throttle valve and that the technician’s actions caused the valve to close.

Judge Selna said that he found the shop owner’s testimony credible and that as a result, he would instruct jury members that they “should regard testimony of the Toyota personnel who were present concerning the inspection of the valve and the condition of the valve with greater caution than that of other witnesses.”

The conflicting testimony means Toyota would likely have a difficult time prevailing in court regardless of whether the sanction is finalized, with its credibility taking another serious hit, according to attorneys.

But not everyone agrees that the sanction ruling would be the death blow many assume it would.

The proposed sanction amounts to nothing more than a “slap on the wrist,” according to Jeffrey Judd of Judd Law Group, and the payoff could be big if Toyota continues to pursue the case as a bellwether.

“A defense verdict could cause Toyota to be very bullish and say, ‘Even with this weight, we were able to persuade the jury that the vehicle was not defective,’” he said.

Whether or not that is still an option, though, remains to be seen, as the tentative ruling will likely jeopardize the suit’s status as the first bellwether in the sprawling MDL, attorneys maintained.

Judge Selna instructed the parties in a hearing Wednesday to inform him during a June 13 status conference as to whether they wished to keep the case at the forefront of the litigation.

“I’ve got to think, from Toyota’s point of view, this case isn’t number one anymore,” Gordon & Rees LLP partner Fletcher C. Alford said.

But the plaintiffs believe the suit remains an appropriate bellwether and will push hard to keep it that way, according to Mark P. Robinson ofRobinson Calcagnie Robinson Shapiro Davis Inc., an attorney for the plaintiffs.

“We’ve done all the work for trial, and we want to go to trial,” he said.

Whatever the suit’s destiny, the tentative ruling will have implications beyond the case, according to Jeffrey Fazio of plaintiffs’ firm Fazio Micheletti LLP.

“Automakers [will] bend over backwards, or at least make a little more sure that plaintiffs have the opportunity to participate in inspections,” he said.

The plaintiffs are represented by Robert A. Krause of The Spence Law Firm and Mark P. Robinson, Kevin F. Calcagnie and Scot D. Wilson of Robinson Calcagnie Robinson Shapiro Davis Inc.

Toyota is represented by Vincent Galvin, Mark V. Berry, Neil M. Kliebenstein, Anne O. Hanna and Ryan A. McCarthy of Bowman and Brooke LLP.

The case is Van Alfen et al. v. Toyota Motor Sales USA Inc., case number 2:11-cv-08120, in the U.S. District Court for the Central District of California.

The MDL is In re: Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices, and Products Liability Litigation, MDL number 8:10-ml-02151, in the U.S. District Court for the Central District of California.

–Editing by Cara Salvatore.
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