Congress panel cites evidence of Toyota concealment

Toyota Motor Corp's logo on a car is seen in Tokyo February 24, 2010.

LOS ANGELES (Reuters) - A U.S. congressional panel has found evidence Toyota routinely withheld company records it should have turned over in court and settled personal injury cases to avoid revealing key engineering data dubbed the "Books of Knowledge," the panel's chairman said on Friday.

A paper trail of Toyota's alleged misconduct in defending itself against personal injury suits was revealed in documents subpoenaed from a former in-house Toyota lawyer, said Edolphus Towns, chairman of the U.S. House of Representatives Committee on Oversight and Government Reform.

The documents "indicate a systematic disregard for the law and routine violation of court discovery orders in litigation," Towns wrote in a letter to Toyota Motor Corp's North American chief, Yoshimi Inaba, demanding an explanation.

Moreover, the documents "raise very serious questions as to whether Toyota has also withheld substantial, relevant information" from U.S. auto safety regulators, Towns wrote.

The disclosure represents a potential bombshell for Toyota, whose top executives testified under oath before Towns' panel that the company was fully cooperating with investigations into safety issues, including sudden, unintended acceleration, that have led to a worldwide recall of some 8.5 million vehicles.

In a statement issued on Thursday in response to Towns' letter, the company defended its legal conduct, saying, "It is not uncommon ... for companies to object to certain demands for documents made in litigation."

"Consistent with that philosophy, we take appropriate steps to maintain confidentiality of competitive business information and trade secrets," Toyota said. "We are confident that we have acted appropriately with respect to product liability litigation and our discovery practices and look forward to addressing Chairman Towns' concerns."

'BOOKS OF KNOWLEDGE'

The committee's review of the subpoenaed documents found multiple references to a secret cache of data called the "Books of Knowledge" and kept in electronic form by Toyota engineers, consisting of design and testing data for all vehicle lines and parts, Towns said.

According to his letter to Inaba, the documents "indicate that Toyota entered into multimillion-dollar settlements in tort cases where they feared the plaintiff's lawyer was getting close to discovering the existence of the Books of Knowledge."

In one of those cases, the documents show, Toyota agreed to pay $1.5 million to settle a lawsuit stemming from a rollover accident in Texas that left a young woman, Pennie Green, a quadriplegic.

The material Towns cited was obtained by his committee under subpoena last week from Dimitrios Biller, who headed Toyota's U.S. products liability legal team from April 2003 to September 2007.

Biller took the 6,000 pages of documents with him when he left the automaker and has since offered them as evidence in a lawsuit he filed against Toyota under U.S. racketeering laws, as well as for wrongful termination and emotional distress.

In the Green case, Biller said that Toyota Motor Sales -- the automaker's U.S. sales arm -- had agreed to settle for up to $2 million to avoid disclosing key engineering information.

"Plaintiff's discovery efforts ... were getting too close to requiring (Toyota) to produce the 'Books of Knowledge,'" Biller wrote, according to a copy of the correspondence obtained by Reuters.

In one internal memo dated September 1, 2005, referring to the engineering data, Biller wrote: "Clearly, this information should have been produced in litigation before today." He added that Toyota "is clearly not producing all of the relevant information/documents in its possession," Towns said.

Toyota, which has sued Biller for breach of contract, has sought to discredit him while battling unsuccessfully to get back the internal documents he took, arguing that their disclosure would violate attorney-client privilege.

Biller's lawyer, Jeffrey Allen, told Reuters his client gained a "sense of vindication" from Towns' finding that there was evidence of Toyota withholding information in defiance of court orders.

"For the congressional committee ... to come to such a conclusion in such a public manner, based on what appears to be an initial review of only some of the documents, it certainly gives a certain sense of validation of what we've been trying to do for so long," Allen said.

In his letter, Towns asks Inaba a number of pointed questions raised by the Biller documents, including whether Toyota has disclosed the existence of the Books of Knowledge to U.S. safety regulators and whether the data had ever been produced in response to discovery requests in litigation.

The Biller memos also touch on broader issues widely seen as being at the heart of the automaker's current problems.

In one November 2006 email provided to congressional investigators, Biller warned that the secrecy of Toyota's headquarters was creating new risks for the automaker.

"Toyota is no longer a small company on the island of Japan thousands of miles from the United States," he wrote. "Toyota is a global, multinational corporation. ... We all understand this situation, but so do the plaintiffs' counsel and judges in the United States. They read the newspapers about Toyota and its expansion. The world has become incredibly small."

During two days of testimony before congressional investigators this week, U.S. lawmakers had criticized Toyota for not sharing safety information fully enough with its U.S. operations.

(Additional reporting by Kevin Krolicki in Detroit; Editing by Todd Eastham, Gary Hill)