Lawyers win $1.1 billion settlement, Toyota customers will pay

As president of Acme Motor Company, you’re enjoying record profits with your best-selling car, the Acme Pterodactyl, but you’re caught off guard when your archrival, Widget Motors, starts selling a snazzy new model called the Coolway. As sales of the Coolway soar, Pterodactyl sales plummet. What do you do? You could bring out a snazzy new model of your own to steal some of the Coolway’s thunder, but that would take time. You have to do something quickly to suppress Coolway sales and get Pterodactyl numbers up again. How about an advertising campaign insinuating that there’s danger associated with the snazziness of the Coolway and that the Pterodactyl is the “safe choice”? That could work. Better yet, how about getting some seemingly objective third party to reinforce the idea that the Coolway is unsafe? You could also encourage Coolway owners who’ve had accidents to file lawsuits against Widget Motors, alleging design flaws in the vehicles. Now you’re getting some traction. Coolway sales are dropping and Pterodactyl sales are picking up. This fiction is reminiscent in some fashion to the story about the Corvair, the sporty GM car in the 1960s that made the Ford Falcon look old and square. Ford did, in fact, run an advertising campaign insinuating that the Falcon was safe and the Corvair wasn’t. Ralph Nader soon burst upon the scene as a “consumer advocate” echoing that message with the first chapter of his book, Unsafe at Any Speed, and lawsuits against GM proliferated. Several years later, after the damage had been done and GM had discontinued production, the National Highway Traffic Safety Administration conducted extensive tests and found that the charges against the Corvair were baseless. The story of Toyota’s battle against accusations of “sudden acceleration” sounds much the same. Even though no defects were found, the company recently agreed to a $1.1 billion class action settlement just to make a bunch of accusers like Charleston attorney Ben Bailey go away. Bailey and the others lawyers will carve up $200 million in legal fees awarded separate from the settlement. Apparently the car manufacturer decided that the settlement was cheaper than contending with the daunting expense of a protracted court case, its inevitable appeals and the continuing negative press. You can thank Ben for helping drive up the price of Toyotas.

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