KENNEWICK, Wash.—After months of depositions and negotiations, the states of Washington and Oregon have fined the Northwest Tire Dealers Association for advocating a policy of selling four studded tires to consumers instead of two. The group signed a consent decree Oct. 1 with the states and has agreed to pay an undisclosed sum to both states for attorney fees, according to Executive Director Richard Nordness. The NWTDA's membership resides in those states.
The Washington state attorney general's office began investigating the group last November for antitrust violations because the NWTDA had urged its dealers to install four studded tires on front-, four- and all-wheel-drive vehicles even if customers asked for two.
The group had distributed brochures and signs to its members in September 1998 to warn customers that studded tires ``must be placed on all four wheels, as required by the Tire Industry Safety Council, the AAA Traffic Safety Council and the Northwest Tire Dealers.''
Although the NWTDA had intended to promote public safety, an irritated customer complained to the Washington state attorney general's office after a Les Schwab Tire Centers Inc. store in Tacoma, Wash., refused to sell him only two studded tires.
Investigators from the attorney general's office first questioned the language of the literature because they said no car owner manuals contain information on studded tire usage, Mr. Nordness said. The state then suspected the NWTDA of conspiring with its members to increase studded tire sales.
The Oregon attorney general's office became involved only after Washington contacted it, he said.
Under the consent decree, the NWTDA cannot advertise nor make objective comments to consumers that four vs. two studded tires is ``necessary'' or ``required'' unless it is substantiated.
The association also cannot enter into agreements with other groups or members about what policy should be followed on studded tires. However, individual dealers still can adopt their own company policies on studded-tire installation, as long as they don't advertise or use the association's name, Mr. Nordness said.
He admitted the states' fines have drained the association's treasury, but the NWTDA could not have afforded an antitrust lawsuit.
``It was to our benefit to sign the consent decree and get this out from underneath us so that we can do our normal job instead of spending all our time talking with attorneys,'' he said.
Despite the penalties, the group hasn't admitted liability nor does it agree with the outcome, but plans to lobby state legislators to adopt laws mandating installation of four studded tires, Mr. Nordness said.
The group's members also must remove all warning signs and brochures with the NWTDA name as a condition of the decree. The NWTDA has sent letters to all members requesting such action.
He wouldn't elaborate on the amounts the NWTDA must pay to both states, but said the fines from Washington were much higher because that state initiated the investigation. As a result, the association most likely will need to raise member dues next year.
The consent decree offers no official position by either state on studded tire usage, Mr. Nordness said—nor does it protect the association or its dealers from liability.
A dealership that follows a customer's wishes to install two studded tires could still be sued if that motorist is later involved in an accident, Mr. Nordness said.
That risk is what stirred the NWTDA to develop a studded tire policy. In May, Prineville, Ore.-based Les Schwab settled a $1.3 million lawsuit with the estate of a woman killed in an accident caused by a car with two studded tires.
The association wanted to prevent future liabilities like the Schwab case and set standards to protect motorists, Mr. Nordness said.
``Somewhere along the line we need to establish some industry standards,'' he said. ``Basically, that was what we were trying to do last winter. However, the attorney general in Washington said there are no industry standards.''
The Rubber Manufacturers Association's Tire Industry Safety Council has said in its Motorist's Tire Care and Safety Guide that studded tires ``must'' be placed on the rear axle of a vehicle if studded tires are mounted on the front axle. However, Mr. Nordness claimed the RMA didn't respond to his calls or letters seeking support on the studded tire issue.
Steven Butcher, RMA vice president of technical and standards, said the group did answer interrogatories from the state of Washington, and has responded to all inquiries about its studded tire position.