FINDLAY, Ohio-Cooper Tire & Rubber Co. and attorneys representing 32 class-action tread separation lawsuits against the company have reached a tentative agreement to settle the suits.
The settlement is still subject to approval by the Superior Court of New Jersey where the suits were being heard. It ``denies any wrongdoing or legal liability by Cooper'' and will provide a free replacement to consumers who suffered a manufacturing-defect-related tread separation in any steel-belted radial passenger tire Cooper made in the past 16 years.
Cooper said it will record a third-quarter pretax charge of $55 million, or an after-tax charge of $34 million, related to the settlement agreement. Approximately $30 million of this sum will go to the plaintiffs' attorneys, a company spokeswoman said.
There were never any personal injury or property damage claims involved in the class actions, the spokeswoman said. This settlement has no bearing on other personal injury or property damage cases pending against the company.
Although complete details on the agreement weren't available at press time, Cooper said the five-year program envisioned in the settlement would:
* Offer Cooper customers a free replacement tire for every steel-belted radial tire Cooper made-including Cooper, Mastercraft, associate and private brands-between 1985 and 2001 that suffered a tread separation;
* Modify final inspection procedures for Cooper tires just before they enter the warehouse; and
* Create a massive consumer tire safety education program that, a Cooper spokeswoman said, will involve all Cooper tire dealers in the U.S.
The settlement expands the normal tire warranty coverage, which usually replaces a tire on a pro-rated basis.
The spokeswoman called the settlement plan, which could be finalized by the second quarter of 2002, an ``extremely positive'' development for the Findlay-based tire maker.
``We've spent a great deal of money defending ourselves against these class-actions,'' she said. ``It's a good business decision to put this behind us.'' The settlement will not include provisions for cash awards, according to the company.
The settlement cost, equal to 47 cents per share, is in addition to $33.6 million in charges the company has booked so far this year to cover costs related to litigation and product liability, the spokeswoman said. Net cash outlays related to the settlement will total $5 million in 2001 and $19 million in 2002, with the remainder spread across the agreement's remaining three years.
Cooper manufactured approximately 450 million steel radial passenger tires during the time span in question and estimates that 170 million are still on the road. Of that number, the company expects only a fraction of a percent may have suffered tread separations.
The pending class-actions were filed by 53 plaintiffs' law firms, the spokeswoman said. These attorneys have accused Cooper of poor quality control and knowingly selling defective tires-charges the company vigorously denies.
John Keefe, a Red Bank, N.J., attorney involved in negotiations with Cooper, called the proposed settlement a ``very pro-consumer deal. It's the gold standard for responsible class actions and responsible defendants.'' Cooper's extended tread separation warranty covers 170 million tires, he added.
The inspection modifications Cooper proposes have nothing to do with the company's manufacturing processes, the spokeswoman said. ``Our manufacturing process is one of the best in the industry,'' she said. ``If we have a chance to improve what's already great, we'll do it. This reconfirms our commitment to safety.''
As for the consumer education program, Cooper plans to collaborate with a national safety organization to prepare new driver safety literature that will concentrate on what to do in the case of tire failure and how to tell when a tire may be in danger of failure.
The company will disseminate this literature throughout its dealer network, along with the tire safety literature published by the Rubber Manufacturers Association (RMA) in its ``Be Tire Smart-Play Your PART'' campaign, the spokeswoman said. It also will post the information on its corporate Web site.
``We are going to all our dealers to urge them to get involved with their local student driver programs,'' the spokeswoman said.
Tire Business Staff Reporter Bruce Davis contributed to this story.