Toyota Motor Corp. was ordered to pay $15.8 million in damages to a California dealer who accused it of retaliating against him because he had developed safety-recall software that was costing the automaker millions of dollars in car repairs.
A state court jury in Santa Ana on Monday found Toyota liable for unfair interference in a contract Roger Hogan’s two dealerships had with the automaker. But the jury found Toyota didn’t intend to deceive the dealerships by hiding material facts, and as a result didn’t have to pay punitive damages.
The owner of Capistrano Toyota and Claremont Toyota accused the Japanese carmaker of concealing that it was planning to oust him from its franchise system as far back as January 2011 while he was investing millions of dollars to expand and renovate his dealerships.
Hogan claimed that his Autovation program, which he started in 2011 after a massive recall related to sudden acceleration complaints, was much more efficient than Toyota’s own system in identifying and contacting customers whose vehicles hadn’t had repairs done.
According to Hogan, Toyota wanted to kill his program, which was also used by other Toyota dealers, and oust him because it was costing the carmaker too much money to fix all the cars Autovation identified.
At the trial, Toyota denied the allegations and argued that Hogan brought the lawsuit because the carmaker didn’t want to go along with the succession plan for his dealerships. The Autovation program was a for-profit side business Hogan was running in violation of his agreements with Toyota, the automaker’s lawyer said.
It was not immediately clear if Toyota would appeal the decision.
The case is Hogan v. Toyota Motor Sales U.S.A., 30-2017-00933647, Superior Court of California, Orange County (Santa Ana).