Litigation continued to rear its head in the tire industry in 2004 as tire manufacturers were sued by consumers and customers alike, settled cases and challenged several court actions.
Nashville, Tenn.-based Bridgestone/Firestone saw two ongoing class-action lawsuits against it end favorably-at least for the time being. In March, Judge Donald Floyd of the Beaumont, Texas, state district court approved an approximately $149 million settlement between the company and 30 class-actions from plaintiffs who owned recalled Firestone ATX, ATX II and Wilderness AT tires. An appeal by the plaintiffs' attorneys on the grounds that the settlement benefits only BFS and trial lawyers is still pending.
Also in March, BFS scored a victory in its legal fight against plaintiffs' attorney Joseph L. Lisoni and his associates over alleged defects in Firestone Steeltex tires-but not without some drama. California Superior Court Judge Christopher Sheldon dismissed Mr. Lisoni's motion for certification of a nationwide class-action seeking the recall of at least 30 million Steeltex tires. He did so without prejudice, allowing Mr. Lisoni to file a new motion.
The Pasadena, Calif.-based attorney then filed a complaint against Judge Sheldon with the State of California Judicial Council, charging the judge with incompetence. The appeal on the Steeltex ruling was heard Oct. 20, in which the judge ordered Mr. Lisoni to file further documents, which he did. The case is still awaiting a ruling from Judge Sheldon.
More recently, a Florida state appeals court ruled Nov. 24 that a plaintiff suing BFS for an accident involving a Firestone tire tread separation on a Ford Explorer can seek punitive damages despite suffering no physical injuries. The tire maker said it will appeal either to an appellate court or a higher court.
BFS wasn't the only company trying to settle longstanding cases from the Firestone recall. Ford Motor Co. in August settled a suit in which it was found 50-percent liable in the death of a construction worker from a rollover accident. Meanwhile, Cooper Tire & Rubber Co., the manufacturer of the tire that allegedly separated in the accident, was found blameless in the crash.
Ford won a big victory when the Sixth Circuit Court of Appeals in Cincinnati upheld a lower court's dismissal of a class-action lawsuit by Ford shareholders. These plaintiffs had claimed the auto maker had lied to them about the safety of Firestone tires and failed to warn them of possible lawsuits and recalls.
The company had another rollover-related lawsuit it settled with the families of two U.S. Marines killed and 11 others who were injured from a 2001 accident involving a Ford E-350 van and Goodyear's Load Range E tires. The suit claimed the van rolled over after the tread came off the rear tire. Goodyear also settled with the families for undisclosed terms.
Cooper also had its share of litigation in 2004, and the most recent stemmed from the sale of its Cooper-Standard Automotive division to a group formed by Cypress Group and Goldman Sachs Capital Partners in New York. The United Steelworkers of America sued to block the deal on the grounds that labor contracts at four plants precluded a sale until the new owners reached agreement with the union. The union particularly had raised pension and medical liability questions concerning the sale.
Findlay, Ohio-based Cooper and the USWA reached an agreement that ended the injunction Dec. 1, and the deal is expected to close by year-end or early in 2005.
In another case, a Mississippi federal judge granted summary judgment in August to two plaintiffs' attorneys who were sued by Cooper for allegedly interfering with the company's agreement with a former employee. Judge W. Allen Pepper Jr. of the U.S. District Court for the Northern District of Mississippi, Western Division, ruled Cooper's pact with the former employee, Cathy Barnett, was illegal.
In a case involving four people killed and two boys crippled in a 1998 accident, Ms. Barnett had said in an affidavit that she and another Cooper employee had burned documents relevant to the lawsuit on the order of a supervisor. Her testimony was stricken from the record, and Ms. Barnett had agreed after the suit's settlement not to make negative comments about Cooper without the company's consent.
Cooper then sued attorneys Bruce Kaster and John Booth Farese for allegedly interfering with its contract with Ms. Barnett. The tire maker is appealing Judge Pepper's ruling.
Other tire manufacturers found themselves sued by dealers or distributors. Florida tire distributor James McCrory filed suit against Goodyear for allegedly selling the same tires to his competitors for 15-40 percent lower per-unit prices. Mr. McCrory, owner of Tires Inc. of Broward, also named as defendants Wal-Mart Stores Inc., Sears, Roebuck and Co. and various nearby tire distributors.
Meanwhile, Cheng Shin Rubber USA Inc. settled with Joey Roland, owner of Jasper, Ga.-based Discount Tire and Parts Inc., who had sued Cheng Shin for alleged price discrimination, breach of contract and fraud. Mr. Roland had claimed that Cheng Shin had promised him sole distribution rights for its Maxxis brand in northern Georgia, then awarded those rights to another distributor.
The past year also saw tire manufacturers suing dealers and distributors. Yokohama Tire Corp. sued St. Louis-based Zisser Tire Co. and South China Tire & Rubber Co. Ltd. of Panyu/Guangzhou, China, for an alleged patent and trade dress infringement. Yokohama and Zisser later settled, with Zisser agreeing to stop marketing and selling the Chinese-made Wanli S-1099, which Yokohama claimed copied the design, look and tread pattern of the Yokohama AVS Sport tire. Yokohama's suit against South China Tire still is pending.
BFS filed suit against Hempstead Tire Service Inc. of West Hempstead, N.Y., for alleged wrongful collection of profits and commissions on the sale of its tires and for allegedly evading federal excise taxes. The tire maker ended its business relationship with the dealership and sued for damages to be determined at trial. It claimed Hempstead Tire's total indebtedness to it was an estimated $4.5 million.
The two companies settled the lawsuit for undisclosed terms on Nov. 17.
Finally, the Northeast Ohio Regional Tire Dealers Association (NORTDA) became a third party-defendant in a suit involving a tire dealer and alleged medical complications caused by a hypnotist NORTDA hired to entertain at its 2001 Christmas party. Jim and Mary Federico, owners of Federico Tire Inc. in Painesville, Ohio, sued hypnotist Dan Mannarino for $25,000 in damages, and Mr. Mannarino brought NORTDA in as a defendant.
NORTDA settled with the Federicos for $1,000 after voting to disband due to legal costs. Mr. Mannarino also settled for $500. The legal costs coupled with declining membership caused NORTDA to dissolve as an association.