NASHVILLE, Tenn. (Nov. 9, 2001)—Bridgestone/Firestone Inc. will pay $51.5 million to settle tire recall-related claims made by state attorneys-general who suspected the Nashville-based tire maker of deliberately misleading the public into buying defective tires.
According to the settlement agreement announced Nov. 8 in Nashville, Bridgestone/Firestone will pay $500,000 to each of 50 states plus the Virgin Islands, Puerto Rico and the District of Columbia, to be spent as each state or territory sees fit.
The company will spend $5 million on a tire safety education campaign for consumers and $10 million to pay the states' legal costs. It also will review tire replacement claims that it previously rejected “in order to address the states' interest that consumers with legitimate claims under the program have received proper consideration and payment.” BFS expects to pay up to $10 million to satisfy this portion of the agreement, a company spokeswoman said.
In a press release, Bridgestone/Firestone called the settlement “another important step in the company's efforts to reach resolutions of recall-related issues, even though it strongly disagrees with many of the states' claims.”
The tire maker has worked with the state attorneys general for more than a year to achieve a mutually acceptable agreement, said Bridgestone/Firestone CEO John T. Lampe in the press release. The settlement, Mr. Lampe said, will “permit us to focus our energies and our resources on rebuilding our company and the Firestone brand.
“While we take serious issue with many of the states' allegations, we believe that significant portions of the settlement, such as those related to consumer education, are very much in line with the company's own initiatives,” he said.
The company began its recall of 6.5 million defective Firestone ATX, ATX II and Wilderness AT tires on Aug. 9, 2000. In September of that year it had its first legal problems with a state, when South Carolina sued the BFS because it had not included South Carolina in its original priority list of states to receive replacement tires.
That same month, a working group of 38 state attorneys-general—led by Tennessee Attorney General Paul G. Summers—was investigating Bridgestone/Firestone and Ford Motor Co. for alleged consumer fraud, and a multistate lawsuit seemed likely.
“With what information we have, both Ford and Firestone knew they had a problem and yet they continued to sell a product,” Florida Attorney General Bob Butterworth said last May.
Besides agreeing to pay the states, Bridgestone/Firestone also agreed to a permanent injunction against misrepresenting the safety of any tire or tread pattern, and not to make any specific tire safety claims without being “able to substantiate (them) with competent and reliable scientific evidence.” The company is also forbidden to provide inconsistent information on tire pressures or retroactively change any guarantee or warranty on a tire.
In his press release, Mr. Summers said the agreement “provides greater protection for consumers who purchase Bridgestone/Firestone tires…We appreciate Bridgestone/Firestone working cooperatively to resolve the problems.”
Ford was not a party to the Bridgestone/Firestone settlement, which didn't surprise Bruce Kaster, an Ocala, Fla., plaintiffs' attorney who has taken a leadership role in legal actions against Firestone and Ford.
Judge Sarah Evans Barker of the Indianapolis federal district court is expected to rule soon on whether to certify as a national class action more than 300 personal injury cases involving Firestone tires on Ford Explorers. Mr. Kaster said the class action presents two different questions—the responses of Ford and Firestone—and the response of Ford is much more likely to be hard-line.
“I can tell you from my own experience that Ford is hardening its stance in personal injury cases, while Firestone is eager to settle,” he said. “This is exactly the opposite from when these cases began, and I'm not the only one finding this.”
Part of the reason for this might be that personal injury lawyers in turn are hardening their stance against Ford, because of information they've found on what Ford knew about the Explorer and the Firestone tires, Mr. Kaster said.
“They're reluctant to let Ford off the hook, based on what they know.”
Along with the settlement agreement, Bridgestone/Firestone also announced it would end Dec. 31 a consumer satisfaction program it started Sept. 12, 2000. This action involved a list of 1.3 million Firestone tires the National Highway Traffic Safety Administration wanted the tire maker to add to the list of already recalled tires. BFS declined to do this, but did offer to inspect and replace the tires on the NHTSA list free of charge.
In a news story published in the Indianapolis Star, Indiana Attorney General Steve Carter was quoted as saying that one of the most important provisions of the settlement was that Bridgestone/Firestone agreed to stop making all 24 allegedly defective tire models.
However, a Bridgestone/Firestone spokeswoman said: "I don´t know what they're talking about."
What the tire maker agreed to do, she said, was not to make or sell any more of the tires it has already recalled. These include all ATX and ATX II tires, size P235/75R15; all Wilderness AT P235/75R15 tires from Decatur, Ill., a plant Bridgestone/Firestone has closed; and all Wilderness AT tires, size P235/75R15 and P255/70R16, made before May 1998.
As for reports that BFS would help the attorneys-general in an investigation against Ford, the spokeswoman said the attorneys-general opened an investigation against Ford at the same time they opened one against the tire maker.
"All we agreed to do was help them if they asked us," she said. "It's our corporate policy anyway that if any government or law enforcement agency requests our help, we help them. We would do that even if it weren't in the agreement."