A Toyota dealer and his two California stores have accused Toyota Motor Sales U.S.A. of fraud and bad faith, alleging it took retaliatory action after the dealer developed software to notify owners about open recalls.
Roger Hogan developed the software, Autovation, in response to Toyota's 2009-14 safety recall concerning "sticking accelerator pedals, floor mat entrapment and braking flaws," according to the plaintiffs' suit, filed July 25 in Orange County Superior Court.
Hogan, Capistrano Toyota in San Juan Capistrano and Claremont Toyota in Claremont assert Autovation was "wildly successful" and drew tens of thousands of customers to the two stores and licensee dealerships for recall repairs from 2012 to 2014 — albeit at huge expense to Toyota. Still, "Toyota rejected [the software] and refused to notify customers about unfixed safety recalls," the suit said.
Toyota pressured other dealers not to use Autovation, delayed or denied vehicle allocations for Hogan's stores, "unfairly" rejected his sons for leadership positions and diverted Toyota website users to rival stores, the suit claims. It also asserts Toyota is blocking Hogan's succession plan in which his sons would take over the stores.
Toyota said in a statement: "We believe Mr. Hogan's allegations are entirely without merit, and we intend to defend Toyota vigorously against his claims. Toyota undertakes robust outreach efforts in line with industry best practices to notify Toyota and Lexus drivers about recalls. We are focused on the safety and security of our customers and remain committed to remedying as many vehicles as possible for each recall."
The suit seeks more than $100 million in damages from Toyota, accusing it of "wrongfully concealing the critical fact" that it planned to force Hogan out as a franchisee "in retaliation for his efforts to increase customer safety and the threat those efforts posed to Toyota's profit margin" and of violating its obligation of "good faith and fair dealing."
Hogan's lawyer, Louis Miller of Los Angeles, said the case is "hotly disputed" and "will be up to a jury to sort it out." He said the next steps will include depositions of Toyota executives.
The suit notes that Toyota Motor Corp. paid a $1.2 billion penalty in 2014 to resolve a Justice Department charge that it "misled U.S. consumers by concealing and making deceptive statements about two safety issues affecting its vehicles, each of which caused a type of unintended acceleration."