Toyota Prius Hybrid Inverter/IPM Defect

 

In January 2018 Fazio | Micheletti LLP filed a nationwide class action in Los Angeles County Superior Court against Toyota, alleging that the company had fraudulently concealed the nature and scope of a safety defect in more than three-quarters of a million 2010 through 2014 model-year Prius and 2012 through 2014 model-year Prius hybrid vehicles by falsely representing to government regulators that the defect would be eliminated by simply updating the onboard software that controls the hybrid inverters Toyota installed in those vehicles. Plaintiffs also alleged that Toyota saved roughly $2 billion by updating the software instead of replacing the defective inverters -- which cost an average of $3,000 each to replace -- in more than 800,000 vehicles.

When a similar class action was filed by Los Angeles-based Miller Barondess LLP a week after the LA Superior Court action had been filed, the state-court judge decided to abate the state case (i.e., put it on hold) until after the federal litigation was resolved. Unwilling to sit on the sidelines while the litigation proceeded in federal court, Fazio | Micheletti dismissed the state-court action and filed a complaint on behalf of a nationwide class in the U.S. District Court for the Central District of California. The cases were consolidated for the purpose of trying them together before a jury, and the federal court appointed Fazio | Micheletti and Miller Barondess as interim co-lead counsel for the proposed nationwide class of Prius drivers; and a consolidated complaint that merges the claims alleged in both cases was filed in the federal action. (A copy of the operative complaint can be found here.)

After initially denying that there was anything wrong with the Prius and Prius hybrids it had recalled in 2014 and 2015, Toyota later admitted that the defect was still causing those vehicles to suddenly decelerate or stall while being driven. 

 

Accordingly, in October 2018 Toyota announced that it was conducting a second safety recall of the same 800,000 Prius and Prius hybrids it had recalled several years earlier. Rather than replacing the defective components with non-defective ones, Toyota justified its decision to update the onboard software again by claiming that the software it had installed during the previous recalls was the actual cause of the problem and, therefore, that another software update was the solution.

 

There were three basic problems with Toyota's representations.

 

First, the safety risk was not created by software; it was caused by defective hardware -- namely, the Intelligent Power Module (IPM) that is part of the hybrid inverter, which generate so much voltage that the transistors in the IPM malfunction and fail -- so the safety defect cannot be eliminated by modifying the software.

 

Second, the updated software would not prevent the IPM transistors from failing. Toyota conceded this, but insisted that updating the software would ensure that the vehicles could continue to be driven after the IPM transistors failed, thereby reducing the severity of the safety risk posed by the defect.

 

Third, 2014 to 2015 model-year Prius and 2014 to 2017 model-year Prius hybrids were equipped with the same software Toyota had installed in over 800,000 recalled 2010 to 2014 model-year Prius and 2012 to 2014 model-year Prius hybrids. Yet, when Toyota announced it was conducting another recall in 2018 to correct a problem with that software, it limited that recall to the 800,000 vehicles it had recalled previously -- even though the later model-year vehicles were equipped with the same software. 

Plaintiffs demanded an explanation for this inconsistency, and they received one a few months later -- but not in response to the formal discovery Plaintiffs had propounded. Instead, Toyota announced that it was recalling each of the later model-year vehicles it excluded from the 2018 recall. As Toyota explained in a press release on June 24, 2020, it "is conducting a safety recall involving certain 2013-2015 Model Year Prius and 2014–2017 Model Year Prius v in the United States.  Approximately 267,000 vehicles are involved in this recall."

Meanwhile, Toyota recently filed a motion by which it seeks to prevent Plaintiffs from presenting their claims to a jury in a class action. According to Toyota, the contracts most of the Plaintiffs signed contain arbitration provisions that preclude them from participating in a class action and from having a jury decide any of their claims. Plaintiffs believe Toyota's position is factually and legally baseless, and they will be opposing Toyota's motion to compel arbitration in the near future.

Plaintiffs are also preparing a motion to certify the proposed class of current and former Prius drivers' claims to be tried as a class action, which will be filed in late September.

 

Assuming Plaintiffs defeat Toyota's motion to compel arbitration and succeed with their motion to certify the class, the case will proceed to a trial before a jury in which Plaintiffs will seek, among other things, an order notifying the class of the true nature and scope of the IPM defect and requiring Toyota to provide a cost-free replacement of the defective hybrid inverters in all class vehicles.

 

Alternatively, Plaintiffs will seek an award of compensatory damages in amounts equal to the cost of replacing the defective inverters, as well as an award of punitive damages in an amount sufficient to deter Toyota from engaging in similar conduct in the future. To determine the sufficiency of the punitive-damage award, Plaintiffs will ask the Court to consider (a) that Toyota had been charged with federal crimes for misrepresenting and concealing material facts pertaining to the existence of a safety defect in 22 million Toyota- and Lexus-brand vehicles, which created the risk of suddenly and unexpectedly acceleration and the injury and/or death of persons in and around the vehicle when the defect became manifest; (b) that Toyota avoided responsibility for those crimes by entering into a deferred-prosecution agreement with the U.S. Attorney for the Southern District of New York; and (c) that Toyota was subject to that agreement at the time Toyota was engaging in the active concealment of the nature and scope of the IPM defect and what was actually necessary to eliminate it.

 

The deferred-prosecution agreement required Toyota to refrain from misleading, misrepresenting, and concealing material facts pertaining to safety defects in its products for four years after the execution of the agreement. In exchange, the U.S. Attorney agreed to refrain from prosecuting Toyota for the crimes it committed while fraudulently concealing a defect in millions of Toyota- and Lexus-brand vehicles, which could cause them to suddenly and unexpectedly accelerate, and allegedly resulted in numerous deaths.

 

Plaintiffs allege that this is precisely the same type of conduct that led to the present case. As it did in connection with the sudden-acceleration defect, Toyota has fraudulently concealed and repeatedly misled state and federal regulators in connection with the IPM defect as a means of avoiding the multi-billion-dollar cost of eliminating it.

We continue to investigate complaints from consumers who have experienced a problem as a result of the IPM defect. If you own a 2010 through 2015 model-year Prius hybrid and/or a 2012 through 2017 model-year Prius hybrid, please contact us. You can reach us by submitting the form on our Contact page or by sending us an email message that includes a brief description of your experience with your vehicle and the best way we can reach you. 

Fazio | Micheletti LLP is not affiliated with the companies depicted, described, or identified on this website.

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