WASHINGTON (Dec. 7, 2000)—Bridgestone Corp. Chairman Yoichiro Kaizaki has pledged $450 million to help U.S. subsidiary Bridgestone/Firestone Inc. cover the costs of litigation arising from the current ATX-Wilderness AT Firestone controversy.
At the same time, Mr. Kaizaki denied the claim of U.S. plaintiffs´ attorneys that the lawsuits pending against Bridgestone/Firestone could end up costing $50 billion in damages and bankrupting BFS. He said this was probably a ploy to justify adding the parent company as a defendant in the cases.
"Bridgestone/Firestone is in no danger of bankruptcy, and we remain absolutely committed to supporting that company," he said.
New figures from the National Highway Traffic Safety Administration, meanwhile, reinforce the eventual extent of legal liability Bridgestone and BFS could face. NHTSA now has reports of 148 deaths associated with Firestone tires, up from the 119 it had in October.
The new figures include the first four fatalities reported since the 6.5-million-tire recall began Aug. 9. It also includes five deaths connected not with the recalled tires, but with the 1.4 million additional Firestone tires the agency named in a consumer advisory Sept. 1. BFS said it would inspect and replace those tires free of charge for motorists who requested it, but refused to add the tires to the recall.
Issuing his prepared statement Dec. 5 in Tokyo, Mr. Kaizaki said he planned a Dec. 14 news briefing to discuss the probable financial impact of the recall on Bridgestone and BFS. But he issued the statement about damage claims to rebut an article in the Dec. 4 issue of USA Today.
In that piece, plaintiffs´ attorneys said the legal claims against BFS could end up totaling $50 billion. This was prompting them, they said, to add Bridgestone as a defendant in their lawsuits to assure payment to their clients in case BFS collapsed under the heavy liability.
"The extreme reports presumably reflect the desire of plaintiffs´ attorneys to draw the Japanese parent company into the legal proceedings," Mr. Kaizaki said. "The basis for the alleged sum of $50 billion is totally incomprehensible."
Bridgestone consulted with the accounting firm of Deloitte & Touche and its own legal counsel to determine that $450 million was an adequate sum for Bridgestone/Firestone´s legal claims, he said. BFS has its own reserves of $2.3 billion it can use to meet legal challenges, he added.
The legal fund established on BFS´s behalf brings to $900 million the charges Bridgestone will take against earnings on account of the recall in the fiscal year ending Dec. 31, Mr. Kaizaki said. The firm announced an initial charge of $350 million early in the recall, and added $100 million to that total later.
The $50 billion liability figure, which the Japanese media picked up quickly after its appearance in USA Today, caused the price of Bridgestone´s stock to tumble on the Tokyo stock exchange. On Dec. 6 it ended at $9.45 per share, off 25 percent from two days before.
USA Today said there are now nearly 180 product liability cases against Bridgestone/Firestone consolidated in the Indianapolis federal district court under Chief Judge Sarah Evans Barker. This is nearly triple the 62 cases originally filed with the court. BFS officials could not be reached to confirm the new number.
A number of news organizations, meanwhile, have reported that plaintiffs´ attorneys plan to add the parent company as a defendant in the litigation, much as attorneys in silicone breast implant cases sought to add Dow Chemical Co. and Corning Corp. as co-defendants with Dow Corning Corp.
Bridgestone´s being named as a defendant not only assures payment to clients, they said, but also is just. They said they can produce ample evidence that the parent firm played an active role in the design and manufacture of the recalled tires.
Robert J. Patterson, a Corpus Christi, Texas, lawyer, told The Wall Street Journal that he would name Bridgestone in the next case he filed. "We may leave Firestone´s name out of it entirely," he said. Neither Mr. Patterson nor other plaintiffs´ attorneys could be reached for further comment.
In further legal news, Bridgestone/Firestone and Ford Motor Co. reached an out-of-court settlement Dec. 5 with Tony Adams, whose wife, Trina Thurman Adams, was killed in a July 1999 accident involving a 1994 Ford Explorer equipped with Firestone tires.
Tony Adams was driving the vehicle near Yazoo City, Miss., when it spun out of control and rolled over. Trina Adams was ejected from the vehicle. The case was to have gone to trial the week of Dec. 4 in the Yazoo County court. Tony Adams sought $60 million in damages; the amount of the settlement was not disclosed.
In addition to 148 deaths, NHTSA reported "more than 4,300" complaints as of Dec. 6, an increase of about 800 from October. It also reported more than 525 injuries from these incidents.
Of the four deaths to occur since Aug. 9, Bridgestone/Firestone reported three to the agency and NHTSA found the fourth independently, the agency said.
Regarding the five non-recall-related deaths, NHTSA issued its Sept. 1 consumer advisory on 1.4 million tires, most of them intended for the replacement market, in 24 different sizes and models. These tires, according to the agency, had tread separation rates which exceeded those of the recalled tires.
"Since Firestone has chosen not to expand the recall at this time, you may not be able to obtain free replacement tires from Firestone," NHTSA said at the time. "However, in light of these concerns, NHTSA recommends that you consider replacing the tires in question and that you retain all documentation."
While making the offer of free inspection and replacement, BFS said it refused to recall the 1.4 million tires because "our preliminary review of the advisory reveals differences between our information about these tires and the agency´s."
Probably fewer than half of those tires were still on the road "after years of service and miles of safe driving," the company added.