Getting sued is an automotive company’s worst nightmare. Litigation isn’t just a problem because it consumes a lot of time and adds to executive stress levels, it can also be extremely expensive, too. Billable hours for top litigants can exceed $500 per hour, and each lawsuit can cost hundreds of thousands of dollars, too.
But lawsuits happen, good or bad. And it’s important that shareholders, investment firms and those individuals investing in automotive brands have proper visibility into each case so they can make wise decisions for their portfolios.
Automotive litigation is common today
There are a handful of common reasons why automotive companies find themselves in litigation.
For example, employee discrimination lawsuits are common in the automotive industry. In 2021, Rivian Automotive Inc. was faced with a gender discrimination class action lawsuit after a former sales and marketing vice president described the work culture as a “toxic ‘bro culture’ ” that excluded her from executive meetings and stopped the company from acting quickly on concerns she raised about Rivian’s business plans.1
More recently this year, automotive dealers Victory Automotive Group, Inc. and Cappo Management XXIX, Inc. faced a disability discrimination lawsuit and had to pay $150,000 when the joint employers were found to have terminated a title clerk working at their Sacramento dealership over fears that she might have cancer2.
Discrimination can also take place with customers as opposed to employees. This past November, Napleton Automotive Group found itself in a lawsuit for adding illegal junk fees for unwanted add-ons to vehicle purchases and charged more in financing for African American consumers3. The company agreed to send payments totaling more than $9.8 million to the thousands of consumers affected as a result.
Labor laws are another common reason for automotive litigation. Frontier Auto Sales, Inc. found itself in a class action employment lawsuit in 2019 for violating wage and labor laws in California4.
Lastly, keeping employees and customers safe on premise can also lead to major injury lawsuits. CarMax in 2018 found itself in litigation with a female customer who was hit by her own car at one of its stores. The investigation found that a CarMax salesman knew the car had a remote starter installed, but the appraiser of the car was unaware, causing the remote starter to activate the car and hit the woman. A judge awarded the woman close to $3 million in compensation after proving that the starter system was installed poorly by the original owners of the car5.
Automotive litigation significantly impacts investors
Each of these cases stem from litigation that carries the potential to impact shareholders and investors who have a vested interest in firmly understanding an automotive company’s financial bottom line and any litigation that may affect a company’s profit standing – not to mention public reputation, which also impacts the bottom line over time.
These shareholders and future investors today are taking the power of transparency into their own hands, leveraging the Internet to avail themselves to the ability to research court case filings on every company.
Better transparent access to lawsuits for transparency
Known as a lawsuit search engine, these resources are specifically designed to search words and/or phrases and find results based on a crowdsourced search algorithm. These platforms serve as a news source for journalists and a resource for stock investors, researchers, employees, and anyone else seeking an unaltered source of information without commentary or opinion, based on facts only. These platforms differ from standard search engines because they do not include outside commentary pieces which tend to opine on subjects from analysts, bloggers and other parties that may have a particular interest or point of view which may or may not serve harmful to the automotive company.
This type of information-based platform is also proving beneficial for class action markets and group proceedings.
Class action asset recovery holds significant financial potential for investors. Advisers are often inquired about providing a solution to recoup fiscal losses associated with class action settlements. And, given today’s penchant for environmental, social and governance (ESG) issues more commonly litigated through the securities class action format, a bevy of today’s investors view participation in settlement opportunities as a means to execute on their ESG missions, in addition to recovery of significant monetary opportunities.
In addition to ESG and financial gains, investment advisers realize that the recovery of investment assets through the securities class action settlement process is necessary to any obligation for customer funds.
Furthermore, investors and interested parties who follow the automotive sector, such as media and analysts, understand the need to have access to better transparency and raw files of information in any part of their due diligence matters, whether it be for investment purposes, news stories or analyst reports.
About The Author: Kaylee Zhu is the Co-Founder of laWow.org, the first lawsuit search engine for public and media information that works like Google to help journalists covering important lawsuits or investors research ongoing litigation against certain companies when researching potential investment opportunities. For more information, visit https://www.lawow.org/
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