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Firestone: lawyers delight
August 30, 2000: 5:58 p.m. ET

Legal machinations of recall make for real-life drama to match any fiction
By Staff Writer Alex Frew McMillan
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NEW YORK (CNNfn) - Ford and Firestone's reactions to their massive tire recall are very different, and hotly debated. Experts predict the legal wrangling will go on for years. Who knew what, and when, has enough twists for several John Grisham novels.

In fact, the Firestone recall is one of the most-interesting product-liability cases in many years, according to Michael Krauss, a professor at George Mason University's School of Law.

Krauss, whose tort-law book Fire & Smoke: Government, Lawsuits and the Rule of Law came out this summer, thinks the recall is much more fascinating than the tobacco litigation and firearms cases he studied for that book.

"Those suits are patently unfounded, in my view," he said, despite any legal victories lawyers have eked out. But there could be real meat on the bones of the Firestone issue, he believes.

How big will the problem become?


Who's to blame and for what will almost certainly take years to sort out. There are two very different groups of consumers involved, and both have claims.

The National Highway Traffic Safety Administration is investigating more than 750 complaints about Firestone tires. Those complaints allege a link between the tires and 62 deaths and slightly more than 100 injuries.




Click on the following links for tips from CNNfn.com's Consumer Strategies section on how to handle the tire recall:

Get on right track with tires - Aug. 30, 2000

A long wait for new tires - August 11, 2000

Handling the tire recall - Aug. 9, 2000




That universe is expanding, given the intense media coverage of the recall. Bridgestone and Ford announced the recall of 6.5 million Firestone tires on Aug. 9. Click here for a timeline of the recall.

NHTSA is expected to furnish an updated count of the number of incidents it is investigating later Thursday, Aug. 31.

"You can be assured that any case that involves a tire failure and one of these [ATX, ATX II or Wilderness AT] tires, the allegation will be thrown in that the cause was this particular tire," said Jay Mayesh, a lawyer with Kaye, Scholer, Fierman, Hays & Handler. "It's very difficult to know how big the problem is going to get."

Personal-injury lawyers ply their trade


Which brings us to lawyers. Anyone with a death in the family or who has been injured is in a very different category from the millions of consumers who fear they may be driving on faulty tires. They're different from consumers who are angry they're having trouble getting their tires replaced.

graphicSeveral personal-injury lawyers have lengthy experience handling tire-related injuries. They have brought and, in some cases, settled suits about the Ford-Firestone combination over the years.

They say it's business as usual, though they are receiving more calls complaining about tires. Though the number is climbing, there are reportedly 50 to 100 tire-related personal injury suits outstanding nationwide.

For instance, Tab Turner, a Little Rock, Ark.-based attorney, says he saw his first Firestone-Ford related tire case in 1992 and settled it in 1996. He now has between 10 and 12 cases at any one time involving Firestone tires.

He has sued Nashville, Tenn.-based Bridgestone/Firestone, its Tokyo-based parent Bridgestone Corp. and Ford Motor Co. in each of them, he said.

Courts are reluctant to "pierce the corporate veil" by targeting a parent, according to Krauss. But Bridgestone/Firestone is a wholly owned subsidiary, so if it went bankrupt, the Tokyo company would likely be liable in the United States for damages caused by U.S. accidents.

In any case, Bridgestone/Firestone "is a strong company," according to company spokesman Ken Fields. "We will get through this difficult situation."

Legal scholars point out that, however horrible, there are only 62 deaths even linked to the tires at the moment, and those not proven. Airlines have withstood plane crashes that kill more at one time.

The companies are currently preparing to testify before Congress, handling the logistics and complaints over the recall and dealing with the media.

"The last thing they're worried about now is us," said Turner, who has settled cases for amounts he cannot disclose due to confidentiality agreements.

Compensatory settlements are fairly simple


It is typical to keep settlements confidential, partly because the settlements vary greatly by individual circumstances and partly to discourage copycat claims.

graphicThe difficulty in a product liability case is establishing blame. It's then fairly simple math, lawyers say, as far as compensation goes - how much was the person likely to earn before their life or career was cut short?

The more obvious the causation, the higher a settlement. But for the most part, lawyers run compensatory damages in cold hard cash. As the term states, they compensate.

The death of a middle-aged breadwinner with a long career ahead is a company's worst nightmare, and can result in a multimillion-dollar compensatory settlement. Thirty years at $100,000 salary is $3 million, without future raises. The present value of the settlement typically outweighs any possible interest or investment gains.

The attention around the recall "doesn't change the personal-injury litigation much," Turner said. In fact, "it makes it a lot slower."

Class-action lawyers follow suit


Ford and Bridgestone are also faced with class-action suits from prominent class-action law firms, often ones steeled by their experience pressing claims against Big Tobacco.

Some class actions aim to broaden the recall to include other tires that Bridgestone and Ford insist do not have a higher-than-normal accident rate. Others seek to speed up the recall, though both Ford and Firestone are scrambling to replace tires as quickly as possible, sometimes with other makes.




Click here for the recall news page from CNNfn.com's Consumer Strategies section.





Certain suits have also claimed emotional distress on behalf of worried drivers and lower resale values on vehicles consumers are selling or have sold.

Basically, the class-action cases aim to expand culpability beyond those obviously injured or killed, allegedly due to faulty tires, to include most or all consumers driving on affected -- or even nonaffected -- Firestone tires.

With Big Tobacco, lawyers successfully broadened personal-injury cases that had lost in court to a winning position in a broader injury class action -- representing states trying to recoup medical costs. And through "creative lawyering" some attorneys are trying to expand the "injury" allegedly suffered by consumers.

A tough case to make


Even those associated with the litigation admit it is not all merited.

"There are some opportunists who are inappropriately filing class-action suits," said Ralph Hoar, the director of Safetyforum.com and a consultant who has been coordinating information for the plaintiff's lawyers.

Hoar believes there are some worthy class actions looking to expand the recall, speed it up or make sure all consumers are compensated. But he, like many legal scholars, does not believe personal-injury cases belong in a class action.

"There's no commonality - when death and injury is involved you don't have a class," he said.

Legal experts say that only when all people involved in a class suffer the same personal injury - say, when a subway system overcharges $4 for a monthly pass, or a bank systematically bounces checks unnecessarily - does a personal-injury class action stand much chance of winning.

A social benefit, from lawyers?


But there's a social point to what some might see as the legal profession's best shot for Olympic gold in kitchen-sink throwing, according to Stephan Landsman, a tort-law professor at DePaul University.

"The lawyers serve an important function, to place a great deal of pressure on the company to clean up the mess and do it properly," said. "Lawyers will push beyond what is necessary and defensible."

They also collect their fees, Landsman said, which may be what they are really after. But perhaps they can play the hand of consumers who have been inconvenienced or annoyed, but not clearly "injured." They may be hoping Firestone or Ford will pay out rather than risk their brands.

"If you can pass the 'straight face' test, if you can get something in your complaint that everyone doesn't snicker [at] when they see it, they may want to buy peace here," Landsman said.

Hoar wants Ford and Bridgestone to expand the recall to include all Wilderness AT tires. The companies have resisted, targeting the recall to 15-inch tires, some but not all of which were made during a labor shortage. Ford has also withdrawn Firestone tires in 16 countries, many undeveloped nations, saying high temperatures, bad roads and unsafe driving led to higher failures.

The cost and logistics of a broader recall would be hard to bear. Bridgestone has already taken a $350 million hit to earnings to pay for the current recall.

"But all of these myriad class actions, I'd be hard-pressed to identify their value if Ford and Firestone ... get around to doing what's right," Hoar said.

Tire injuries pretty clear


It remains to be seen if the class actions can expand the scope of injury. Other high-profile product liability cases involving tobacco, asbestos litigation, breast implants and diet drug Phen-Fen have included hard-to-prove health damages.

In the Firestone recall, it is fairly clear-cut whether your tire had a tread separation or a blowout.

"Either you got hurt, and you have real litigation, or you have these defective tires, and you have a replacement issue. Is there a middle ground? I don't know," Landsman said.

The litigation will drag on - even the simplest tire-litigation cases take more than a year - and, with court backlogs, could take three to four years.

Who knew?


The fissures between Ford and Firestone's long working relationship also point to possible finger pointing as to who is ultimately to blame.

A Ford spokesman, Mike Vaughn, says the company only recognized a problem with Firestone tires when NHTSA began an investigation in May. Firestone then passed warranty data to Ford.

Ford then crunched the numbers via a Cray supercomputer. "We didn't know what they had until we ran their data just days [before] the recall," on Aug. 9, Vaughn said.

"I remember sitting in my office at 6:30 in the morning of the 7th, thinking, 'What have we got here?' It was evident there was an issue with these tires."

Fields, the spokesman for Firestone, said the company analyzed warranty and failure data as it always had.

"We, on an ongoing basis, get reports on all of our tires. We seek to evaluate those as fully as we can, and as quickly as we can," Fields said. "This situation was also the result of a process like that."

An important distinction


According to many observers, Ford has handled the recall better than Bridgestone/Firestone. It quickly took steps to make sure customers are satisfied, such as stopping production on its most-popular SUV to free up tires for affected drivers.

Ford "has done an admirable job of mitigating the damages," Krauss, the law professor, said. "There's been the same kind of concern for the public health that you saw in the Tylenol debacle."

Hoar, on the other hand, said Ford "has been too clever by half."

In any case, Ford's steps do not exempt it from legal liability. It is true that Ford doesn't guarantee the tires on its vehicles - the warranty is held by Firestone.

But the warranty is a matter of contract law, covering the cost of replacing tires and so on. If there are successful personal-injury claims, Ford is responsible under tort law, which includes product-liability law, Krauss said.

Ford sold many of the vehicles equipped with the tires in question. Under liability law, "the consumer buys the whole car from Ford, and so Ford is on the hook," Krauss said. Of course, other automakers are responsible for the liability on their vehicles, too.

Punitive damages bring the big awards


Ford may have an indemnity claim against Firestone to recoup its own legal losses, if it suffers any. But the issue of who knew what and when becomes vital if the personal-injury legal battle goes beyond compensatory damages and into the realm of punitive damages.

Punitive damages are designed to punish a company that knowingly acted in a way that resulted in injury. Though most punitive claims are in the order of $50,000 or $60,000, they can lead to eye-popping multimillion-dollar claims that render compensatory damages insignificant.

A jury can also punish a company, under the law, for acting so negligently in a personal-injury case that it might as well have acted on purpose.

And that may be where the legal wrangling is headed, according to Krauss. Punitive damages, if awarded in one case, show a defendant is weak in others, he said. Then the lawyers start to smell blood.

The companies are setting their defenses, and no causation or fault has yet to be established. But the plaintiff's lawyers are scouting those defenses out.

"If Firestone failed to communicate to Ford, it might be grounds for punitive damages," he said. "There is a degree of negligence that is so reckless that it becomes willful." Back to top

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A long wait for new tires - Aug. 11, 2000

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.