FEBRUARY 19, 2010

Reprinted for web use with permission from the Kansas City Business Journal. ©2009, all rights reserved. Reprinted by Scoop ReprintSource 1-800-767-3263.

Toyota recall fuels Kansas City-area lawyers

| INSIDE |

VOL. 28, NO. 24 kansascitybusinessjournal.com FEBRUARY 19-25, 2010 $3.00

BY STEVE VOCKRODT | STAFF WRITER

The chairman of the Greater Kansas City Chamber of Com-merce said there are no plans to alter the organization’s funda-mental structure.

Peter deSilva, who also is CEO of UMB Bank, said the chamber is looking to work more closely

with other area business groups, not to combine with them. He pointed to the fact that the city, the chamber, Downtown Council of Kansas City and the Econom-ic Development Corp. of Kansas City put forth a consensus legisla-tive agenda for 2010, the first time those organizations have done so.

“We wanted to take the collab-

oration to another level,” deSilva said. “It’s nothing dramatic here.

There’s no merger.”There has been

quiet talk among area business lead-ers about consoli-dating the functions of some organiza-tions, including the possibility of cre-ating a separate

chamber of commerce that repre-

sents Kansas City only. But the status of a separate dis-

cussion about forming a Kansas City-only chamber of commerce remains unclear. Sources have said the call for a new chamber and some consolidation with the Civic Council of Greater Kansas City has slowed down.

Talk of a Kansas City-only chamber appears to have evolved

BY STEVE VOCKRODT | STAFF WRITER

The massive Toyota vehicle re-call has given several Kansas City lawyers plenty of work to do.

Neil Sader, a lawyer with The

Sader Law Firm and a former Overland Park councilman, has been tapped by a large consor-tium of plaintiff’s lawyers to rep-resent clients in Kansas and Mis-souri who are suing Toyota for problems that caused a recall of 8 million vehicles.

“We’re beginning the process of trying to collect as many dif-ferent plaintiffs as we can, given

the varying degrees of circum-stances involved,” Sader said.

This month, Toyota recalled several models after loose floor mats were found to be catch-ing accelerator pedals and caus-ing cars to unexpectedly speed off. The accelerator on other cars would get stuck after being

Smith sets new course for plants

Gas pedal will stickon fi ling of lawsuits

Toyota recall fuels lawyers

SWIM TEAM: Larkin Group builds itself a niche in aquatics engineering. Growth Strategies | 15

BUSINESS LEADS 19-24

CLASSIFIEDS 27

GROWTH STRATEGIES 15-17

IN DEPTH 9-13

MICHAEL BRAUDE 30

ON THE MOVE 25

OPINION 31

STIMULUS WATCH 2

THE LIST 22

WEEK ON THE WEB 8

‘THE DOT’ ON THE MAP Join us for a panel discussion on

March 5 to hear about the careful planning that put Wyandotte County

on the development map.

For more details, go to kansascitybusinessjournal.com

TAXING CODE:An IRS audit of KCUMB

could prove costly to the school and its board. | 3

HOLD, PLEASE:Safety agencies aren’t

ready for a spectrum swap yet, Sprint tells FCC. | 3

NEWSMAKER:Ellen Darling keeps things

humming at the family business, Zimmer Cos. | 7

THE LIST:United Way recipients | 22

KC will retain offi ces, but share assembly

deSilva says group serves KC well

SEE CHAMBER | 29

SEE TOYOTA | 29

INSIDE |||

STAYING AFLOAT:

Banks set aside more money to shore up

reserves to cover bad loans.

Banking In Depth | 9

Chamber chair plans no big change

deSilva

DAVE KAUP | KCBJ

Neil Sader will be part of a national consortium of lawyers for plaintiffs in recall-related issues.

BY DAVID TWIDDY | STAFF WRITER

Smith Electric Vehicles U.S. Corp. plans to build as many as 20 regional assembly plants through-out the country, a dramatic change from its announced plan almost a year ago to base production of its all-electric delivery trucks in Kan-sas City.

CEO Bryan Hansel said the company, an affiliate of U.K.-based The Tanfield Group Plc., plans to pick the lo-cation of its second plant by the end of April and two more locations by the end of June. At least one new plant will be in California, where delivery fleet cus-tomers face pressure to cut emissions — and can receive $20,000 state vouchers toward the cost of an electric vehicle.

Hansel said Smith Electric still plans to employ as many as 120 people in Kansas City as the com-pany centralizes marketing, pur-chasing, engineering and other

HanselNEWSMAKER:

SEE SMITH | 28

Gas pedal will stick on filing of lawsuits

by STeve voCKrodT | Staff Writer

The massive Toyota vehicle recall has given several Kansas City lawyers plenty of work to do.

Neil Sader, a lawyer with The Sader Law Firm and a former Overland Park councilman, has been tapped by a large consortium of plain-tiff’s lawyers to represent clients in Kansas and Missouri who are suing Toyota for problems that caused a recall of 8 million vehicles.

“We’re beginning the process of trying to col-lect as many different plaintiffs as we can, given the varying degrees of circumstances involved,” Sader said.

This month, Toyota recalled several models after loose floor mats were found to be catching accelerator pedals and causing cars to unexpect-edly speed off. The accelerator on other cars would get stuck after being pushed down. The Detroit News has reported that 34 deaths are allegedly related to the problem.

Toyota’s popular Prius model also has been recalled for problems with its anti-lock brake system.

Sader is the local attorney in the Toyota Action Consortium, which includes 22 law firms in 16 states. It is being led by Tim How-ard, a law professor at Northeastern University. He coordinated litigation against Big Tobacco in the 1990s that led to the $250 billion Master Settlement Agreement with 46 states.

Sader, whose firm also handles bankruptcies, has taken on consumer protection cases in the past. Among those were suits against large soft drink-makers for the presence of benzene, a known carcinogen, in popular drinks. The case ended in confidential settlements, but companies like The Coca-Cola Co. reformulated beverages to remove benzene.

Sader said the Toyota case will have a long fuse on it.

“With all the revelations that continue to come out, it’s a moving target at this point,” he said. “Experts are being retained; engineering studies are being reviewed and pored over.”

Also taking up consumer lawsuits against Toyota is The Kuhlman Law Firm LLC. The Kansas City-based plaintiff’s firm specializes in automobile defect cases and is operating

independently of the consor-tium.

The firm has filed fed-eral class-action cases in Missouri, Kansas and Illi-nois, generally alleging that Toyota knew about potential problems with its cars and did not disclose them.

“It’s the biggest one out there,” partner Brad Kuhl-man said of the recall. “It’s the largest swath of vehi-cles.”

Kuhlman said a former firm partner tried a simi-lar case against General Motors in 2002 in Jackson County Circuit Court, drawing an $80 million verdict.

A hearing is set for March 25 in San Diego to determine whether the various federal cases will be consolidated in one court, which is almost a certainty at this point. Once a multidistrict litigation docket is formed, pretrial procedures and evidence for all the consolidated cases are produced in one courtroom. Personal-injury

cases will be spun back to their original jurisdictions for trial.

Another Kansas City law firm is taking up a class-action case on behalf of car dealerships affected by the Toyota recall.

Shawn Foster, a lawyer with Davis Bethune & Jones LLC, filed a class action in U.S. District Court in Jeffer-son City on behalf of Jerry Baker Auto Sales LLC on Feb. 12, saying that Toyota knew of the defects for a year before ordering dealer-ships to stop selling the cars.

That has left cars stuck in the dealerships’ inventory and dropping an estimated 20 percent to 25 percent in value.

“Most used-car dealerships are small busi-nesses that really cannot afford to hold excess inventory, particularly in these tough economic times,” Foster said. “This lawsuit seeks some reimbursement for the costs these dealers are incurring because of Toyota’s actions.”

FEBRUARY 19-25, 2010 | FROM THE FRONT | KANSAS CITY BUSINESS JOURNAL | 29kansascitybusinessjournal.com

pushed down. The Detroit News has re-ported that 34 deaths are allegedly relat-ed to the problem.

Toyota’s popular Prius model also has been recalled for problems with its anti-lock brake system.

Sader is the local attorney in the Toyo-ta Action Consortium, which includes 22 law firms in 16 states. It is being led by Tim Howard, a law professor at North-eastern University. He coordinated liti-gation against Big Tobacco in the 1990s that led to the $250 billion Master Settle-ment Agreement with 46 states.

Sader, whose firm also handles bank-ruptcies, has taken on consumer pro-tection cases in the past. Among those were suits against large soft drink-mak-ers for the presence of benzene, a known carcinogen, in popular drinks. The case ended in confidential settlements, but companies like The Coca-Cola Co. refor-mulated beverages to remove benzene.

Sader said the Toyota case will have a

long fuse on it.“With all the revelations that contin-

ue to come out, it’s a moving target at this point,” he said. “Experts are being re-

tained; engineering studies are being re-viewed and pored over.”

Also taking up consumer lawsuits against Toyota is The Kuhlman Law Firm LLC. The Kansas City-based plain-tiff’s firm specializes in automobile defect cases and is operating independently of the consortium.

The firm has filed federal class-ac-tion cases in Missouri, Kansas and Illi-nois, generally alleging that Toyota knew about potential problems with its cars and did not disclose them.

“It’s the biggest one out there,” partner Brad Kuhlman said of the recall. “It’s the largest swath of vehicles.”

Kuhlman said a former firm partner tried a similar case against General Mo-tors in 2002 in Jackson County Circuit Court, drawing an $80 million verdict.

A hearing is set for March 25 in San Diego to determine whether the vari-ous federal cases will be consolidated in one court, which is almost a certainty at this point. Once a multidistrict litigation docket is formed, pretrial procedures

and evidence for all the consolidated cases are produced in one courtroom. Personal-injury cases will be spun back to their original jurisdictions for trial.

Another Kansas City law firm is taking up a class-action case on behalf of car dealerships affected by the Toyota recall.

Shawn Foster, a lawyer with Davis Bethune & Jones LLC, filed a class ac-tion in U.S. District Court in Jefferson City on behalf of Jerry Baker Auto Sales LLC on Feb. 12, saying that Toyota knew of the defects for a year before ordering dealerships to stop selling the cars.

That has left cars stuck in the dealer-ships’ inventory and dropping an esti-mated 20 percent to 25 percent in value.

“Most used-car dealerships are small businesses that really cannot afford to hold excess inventory, particularly in these tough economic times,” Foster said. “This lawsuit seeks some reimbursement for the costs these dealers are incurring because of Toyota’s actions.”

svockrodt@bizjournals.com | 816-777-2206

TOYOTA: Recall suits face ‘a moving target at this point,’ lawyer says

CHAMBER: Leaders say organization ‘wonderful’ at advocating for KCMO

FROM PAGE 1

from proposed changes to the EDC.Michael Chesser, chairman of the EDC

and CEO of Great Plains Energy Inc., has said the EDC may be restructured to some degree to shift emphasis back to small business cultivation and busi-ness retention rather than a heavy focus on real estate development. More clarity on exactly how that will take shape is ex-pected in March.

Greater Kansas City Chamber leaders have said they see no need for a separate Kansas City-only chamber.

“At our last meeting, again, we reiter-ated it is our purpose to serve the en-tire community as well as (Kansas City,

Mo.),” said Eric Morgenstern, chamber vice chairman and member of its execu-tive committee and CEO of Morningstar Communications.

deSilva echoed the sentiment.“I think our chamber does a wonder-

ful job of advocating on behalf of Kansas City, Mo.,” he said.

The Greater Kansas City Chamber’s collaborative push stems, in part, from a survey of area residents presented earlier this month at its Governor’s Summit on Regional Economic Development. The survey showed that, among other things, residents find the political bickering and discord tiresome and said the business community should help lead the way to a more cooperative region.

Another fact that stuck out in deSilva’s mind was the revelation that Kansas City had fewer jobs in 2009 than in 2001.

“If that is not a wake-up call, I don’t know what is,” he said.

David Fowler, co-chairman of the KCADC, said a chamber-sponsored trip to Denver in the fall also stoked discus-sions of cooperation because the notion of regionalism was apparent in the Mile High City. Of course, Denver has the ad-vantage of a consolidated county and city government.

“They certainly don’t have a state line,” said Fowler, managing partner of KPMG LLP’s Kansas City office. “From 10,000 feet, that broad regionalization song played very well.”

Still, discussions about possible chang-es to how the metro area can attract and retain business remain ongoing.

“I think when you consider alterna-tives, you consider the entire spectrum,” said Mark Jorgenson, regional CEO of U.S. Bank and board member for the KCADC and Civic Council. “There hasn’t been any decision to that extent. Will there be? I think there just needs to be additional discussion.”

A timeline for when that will happen has not been established.

“When we come back together for the next Governor’s Summit,” he said, “we will want to have made a lot of progress.”

svockrodt@bizjournals.com | 816-777-2206

whereas other companies sell an Eng-lish-based system overseas.

Stockton said Cerner has made its biggest strides to date in the Middle East, Australia and Western Europe, in-cluding in the United Kingdom, where it is a prime contractor in the effort to automate clinical processes and digitize records for the national system.

Stockton estimated that the U.K. work accounted for a quarter of Cern-er’s $65 million global revenue in the fourth quarter.

Stockton said Cerner has outper-formed the other software provider in the U.K. project.

Cerner has finished installation at as many as 60 hospitals, he said, and the competitor is in fewer than five despite a two-year head start.

He said Cerner could gain even more ground as the government gives hospi-tals more flexibility to choose vendors.

“I would say Trace’s move to London could have a positive impact on that, in particular,” Stockton said.

msherry@bizjournals.com | 816-777-2214

RECALLED TOYOTA MODELS2005-10 Avalon2007-10 Camry2009-10 Corolla2008-10 Highlander2009-10 Matrix2004-09 Prius

2009-10 RAV42008-10 Sequoia2005-10 Tacoma2007-10 Tundra2009-10 Venza

Source: Toyota, National Highway Traffic Safety Administration

ate the network; this just gives us more certainty for our network operations,” Sullivan said.

FCC spokesman Rob Kenny said the commission is reviewing Sprint’s request. He said the agency has granted waivers for more than 600 public safety agencies requesting more time and is considering requests by hundreds more.

During a conference call with Wall Street analysts, Sprint CEO Dan Hesse acknowledged the potential problem and warned that “the process could take longer than planned.”

“We will work closely with public safety and the FCC toward a solution that makes sense for everyone,”

Hesse said.Sprint has spent $2.3 billion on the re-

tuning, Sullivan said, and the final tally is expected to be between $3.4 billion and $3.7 billion.

davidtwiddy@bizjournals.com | 816-777-2204

FROM PAGE 1

FROM PAGE 3

Hesse

SPRINT: FCC gives waivers to agencies

CERNER: Company looks to gain ground with U.K. workFROM PAGE 3

AROUND THE GLOBEInternational operations accounted for about $273 million of Cerner’s $1.7 billion in revenue last year.

Global revenue nose-dived by about 26 percent between 2008 and 2009, which the company attributed to the worldwide recession.

Cerner’s worldwide operations include clients in Canada, Western Europe, Asia, the Middle East and Australia.