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Plaintiffs’ lawyers representing shareholders of Toyota Motor Corp. are fighting to preserve claims brought under a Japanese securities law that executives failed to inform investors about the problems associated with sudden acceleration, according to court documents filed on March 21. The suit asserts claims for shareholders of American depository shares – Toyota shares sold on the New York Stock Exchange – under the U.S. Securities Exchange Act of 1934, and for a class of shareholders who bought common stock on the Tokyo Stock Exchange under Japan’s Financial Instruments and Exchange Act. The Japanese law claims were added following the U.S. Supreme Court’s decision last year in Morrison v. National Australia Bank, in which the justices found that, under U.S. securities law, investors who purchase a foreign company’s stock on a foreign exchange lack standing to sue in U.S. courts. In its motion to dismiss, Toyota sought to toss out the Japanese law claims, could prove the largest class of shareholders in the case. “There is nothing unfair or unreasonable about permitting investors to sue Toyota in the United States while also giving Toyota the benefits of its home law,” wrote David Stickney, a partner in the San Diego office of Bernstein Litowitz Berger & Grossman, one of the lead attorneys in the multidistrict litigation against Toyota over shareholder losses. “This case also has a strong connection to the United States, as the underlying wrongful conduct largely occurred in this country and particularly in California, and many of the witnesses and much of the relevant evidence are located here.” A hearing on Toyota’s motion to dismiss the consolidated complaint is scheduled for June 6. The consolidated complaint alleges that Toyota issued false and misleading statements during conference calls with investors, in filings with the U.S. Securities and Exchange Commission and in interviews with the press – all of which artificially inflated its shares’ values. The class covers investors who owned shares between May 10, 2005, and Feb. 2, 2010. Toyota has insisted that most of the statements at issue either were not false or misleading or that any executives knew that their statements were not true. Furthermore, the company argued, the statements had no material effect on Toyota’s shares. Toyota’s motion “mischaracterizes the Complaint’s allegations, attempts to spin facts and ignores or glosses over allegations explaining Defendants’ materially false and misleading statements,” Stickney replied in court papers. “Defendants’ representations about safety and quality went to the heart of Toyota’s reputation and consumer appeal.” In support of the Japanese claims, Stickney attached a declaration by Minoru Tokumoto, professor of law at the University of Tsukuba School of Law and of counsel to Masuda & Partners in Tokyo; and Eiji Masuda, managing partner of Masuda & Partners. They agreed that a U.S. judgment would be enforceable and present no conflict with existing law in Japan. Stickney also attached a declaration by Matthew Wilson, associate professor of law at the University of Wyoming College of Law and an expert on Japanese law. Toyota has recalled about 10 million of its vehicles due to defects in accelerator pedals and floor mats that have been blamed for incidences of sudden acceleration. Toyota has agreed to pay $48.8 million in fines for failing to inform government regulators immediately of the problems. Amanda Bronstad can be contacted at [email protected].

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