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What does a $1.1B class action settlement have in common with Gilad Shalit's rescue?

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The Toyota settlement, widely reported (here's the WSJ take) is remarkable in many ways.

To recap: there was unintended acceleration in some Toyota vehicles. In every single case that could be verified, by private and government sources, the unintended acceleration had one of two causes: 1) the driver stepped on the accelerator pedal when he wished to brake; or 2) the driver had had the car washed, the driver's side mat had been removed by the car wash attendants and not rebuttoned in place, and it had scrunched up and was inadvertantly pressed against the gas pedal while the car was being driven.

Plaintiffs' lawyers tried to take down Toyota as they had Audi in years past, but this time government studies exonerating the manufacturer did not wait until the company was bled dry. Nonetheless, plaintiffs persisted. The Toyota cars were defective in design, they claimed, as they did not have a brake override (a mechanism that overrides the accelerator and applies only the brake when the driver presses on both pedals simultaneously). Of course a brake override prevents heel-and-toe driving, which requires some simultaneous braking/accelerating, and Toyota was prized among manufacturers for having resisted this dumbing down of its cars. Too bad, the cars will now be retrofitted with a brake override, and future models will be so equipped.

The class action that was settled mostly involved people who had never had an incident of unintended acceleration, but who were suing because the resale value of their vehicles was allegedly diminished by the (false) belief in the market that Toyotas could accelerate all by themselves. That ground of suit is nowhere legally accredited, and is baseless on several grounds: Toyota does not guarantee nor is there any legal right to any given resale value; the mistaken market belief about Toyotas, if it existed, was caused by misleading press reports and not by Toyota; etc.

Nonetheless, Toyota has decided that its future buyers are in large part too uninformed to understand these "complex" issues, and that public relations requires that the litigation end. The firm has made the problem going away with this mammoth payout, which includes a whopping $200,000,000.00 to the law firm that launched the suit. The payout of course makes future shakedown suits much more likely.

And that is what a $1.1B class action settlement has in common with Gilad Shalit's rescue -- both were done with the best of intentions, and both virtually guarantee that those who flout the law will recidivate in the future.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.