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In re Toyota Motor Corporation Securities Litigation

This securities litigation arises from allegations that the price of Defendants' stock was artificially inflated as a direct result of Defendants' material representations, omissions, and concealment regarding the unintended acceleration condition in Toyota vehicles. Defendants filed a Motion for Partial Judgment on the Pleadings ("Motion"), arguing that Plaintiffs had not adequately alleged loss causation for several of the statements made by Toyota's corporate spokesperson, Bill Kwong. The statements at issue, which appeared in several newspaper articles, generally pertained to representations by Defendants that the unattended acceleration issue was caused by driver error and media-induced publicity, including the following:

• "[w]e don't feel it's an issue with the vehicle;"

• "a misapplication of the pedals by the driver" could account for complaints;

• there are "no flaws in the trucks and that many reports [of unintended acceleration] were 'inspired by publicity;'"

• "it is clear that the majority of complaints are related to minor drivability issues and are not indicative of a safety-related defect;" and

• "tests by the automaker and the NHTSA revealed no problems that would explain the complaints."

The Lead Plaintiff, Maryland State Retirement and Pension System, opposed the Motion, arguing that, in previously denying Defendants' Motion to Dismiss, the Court had already determined that the loss causation element was satisfied and, in any event, the Complaint adequately alleged facts demonstrating loss causation. Specifically, Plaintiff argued that under Dura Pharms., Inc. v. Broudo, 544 U.S. 336 (2005), the Complaint was only required to provide Defendants with notice of its loss causation theory - that is, "some indication of the loss and the causal connection." In an effort to satisfy this requirement, Plaintiff pointed to, among other things, specific allegations in the Complaint that Defendants made a series of partially corrective disclosures between September 14, 2009 and February 3, 2010, during which time the price of Toyota stock fell following the disclosure of information revealing the true nature, scope and severity of Toyota's unintended acceleration problems. Plaintiff also argued that, because loss causation was a fact-intensive question, it was particularly inappropriate for resolution on the pleadings alone and, as such, there were no Ninth Circuit cases granting judgment on the pleadings on the issue of loss causation.

On February 21, 2012, the Honorable Dale S. Fischer, after considering the submissions of all parties, denied Defendants' Motion, agreeing with Plaintiff that the Court had previously considered and rejected the arguments in issuing a decision denying the Motion to Dismiss. Noting the similar standards applicable to the two Motions, the Court stated that "[j]udicial economy would be undermined by allowing parties an unlimited right to revised issues raised in Rule 12(b)(6) motions via Rule 12(c) motions." The litigation is currently proceeding and discovery is ongoing.

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