WASHINGTON—Death and taxes may be the two certainties in life, but for the tire industry there is a third: litigation.
Whether the subject was product liability, trademark infringement or disputes over a business deal, there was no shortage of lawsuits involving tire manufacturers, tire dealers and allied tire and automotive industry companies in 2013.
The most prominent court case came late in the year, when the biggest merger of the year turned into the biggest dispute.
Findlay, Ohio-based Cooper Tire & Rubber Co. filed suit in the Delaware Chancery Court Oct. 4, asking the court to hold India's Apollo Tyres Ltd. to the exact terms of the $2.5 billion merger agreement the two companies signed June 12.
Cooper alleged that Apollo deliberately delayed an agreement with the United Steelworkers union to justify asking Cooper for a reduction of the $35-per-share price Apollo had agreed to pay.
Apollo said Cooper intentionally overestimated its corporate value while at the same time downplaying the possibility of strife with Cooper Chengshan (Shandong) Tire Co. Ltd. (CCT), Cooper's joint venture in China with Chengshan Group Ltd.
On Nov. 8, Judge Sam Glasscock III issued a partial bench ruling that Apollo had not breached the terms of its contract with Cooper. Cooper appealed to the Delaware Supreme Court, and on Nov. 15 the high court granted the company's motion to expedite a ruling on completion of the merger. The high court ordered oral arguments on Dec. 19.
But the Delaware Supreme Court reversed itself in mid-December and rejected its own granting of an appeal by Cooper of an earlier ruling by the Delaware Chancery Court seeking an “expedited” completion of the deal. The court instead now contends its granting of Cooper's appeal on Nov. 15 was “improvidently accepted,” which—according to legal definition—means the court recognized it made a mistake in granting the appeal in the first place.
The ruling means the case reverts to the Delaware Chancery Court, where, as yet there are no hearings scheduled.
Goodyear also found itself the target of a class-action suit in April when the Comite d'Etablissement d'Amiens Nord, the union representing Good-year's Amiens Nord tire plant in Amiens, France, accused the tire maker of breaching its contract with the union when it reduced consumer tire production at the plant without notifying the union.
In May, the lawsuit was moved to the Cleveland federal district court from Summit County (Ohio) Common Pleas Court. Akron-based Goodyear is still waiting for the district court to rule on its motion to dismiss the union's complaint, a spokesman for the tire maker said.
Meanwhile, Goodyear faced continuing headaches in Arizona courts regarding a decade-old product liability case.
Leroy Haeger, his wife and daughter-in-law were injured in 2003 when their motor home flew over an embankment and flipped over.
Mr. Haeger filed suit in 2005, claiming the failure of a Goodyear G159 truck tire on the motor home caused the accident. The lawsuit continued after Mr. Haeger's death from unrelated causes in 2008.
In November 2012, Chief Justice Roslyn O. Silver sanctioned Goodyear and attorneys representing Goodyear for withholding documents relevant to the case. Judge Silver went so far as to encourage the Haeger family to sue Goodyear and its attorneys. In May 2013, the Haeger family did just that, accusing Goodyear and its attorneys of four counts of misrepresentation and fraud.
Michelin North America Inc. found itself faced with a $16.5 million jury verdict in November, before a court in DeKalb County, Ga.
Two Bhutanese immigrants were killed in 2011, and 12 others injured, when a Michelin tire on the rear of their van allegedly failed, causing their van to crash. The jury found Michelin 80 percent at fault and the driver 20 percent at fault.
Michelin—noting the tire in question had been driven more than 50,000 miles and had an improper repair of a half-inch cut—pledged to appeal.
Toyo Tire & Rubber Co. Ltd. found itself on both the giving and receiving ends of lawsuits at year-end.
In November, Toyo and its U.S. subsidiaries filed suit in Nevada federal district court against Toyama Tyre Corp. Ltd. of Tokyo and its subsidiaries, accusing Toyama of marketing and selling tires using trademarks, domain names and logos that infringed on Toyo's.
A few weeks later, Toyo pleaded guilty in federal district court to being involved in two separate conspiracies to fix prices of anti-vibration and driveshaft parts in vehicles sold in the U.S. and elsewhere. Toyo agreed to pay a $120 million fine and cooperate in further investigations of the price-fixing conspiracies, the U.S. Department of Justice said.
Bridgestone Corp. and its subsidiaries were active in protecting its patent and trademark rights in 2013. In May, the tire maker won a design patent infringement suit in a court in Qingdao, China, against Qingdao Genco Industrial Group Co. Ltd. Bridgestone alleged that Qingdao Genco illegally copied one of Bridge-stone's patented truck and bus tire tread patterns.
In October, Bridgestone Americas Tire Operations L.L.C. sued Iron Cross Innovations L.L.C. in Middle Tennessee federal district court, alleging Wisconsin-based Iron Cross made and sold Bridgestone logo-lettering kits for truck tire sidewalls despite the tire maker's refusal to grant them a license.
Meanwhile in May, TEK Corp. filed an appeal of a San Francisco federal district court ruling for TEK to pay $1.25 million to Accessories Marketing Inc. (AMI) and Sealant Systems International Inc. (SSI).
AMI and SSI accused TEK of infringing their patents for Slime and Fix-a-Flat tire repair sealants.
Tire dealerships were plaintiffs and defendants alike in court cases. In April, Elizabeth, N.J.-based Inter City Tire & Auto Center Inc. sued Michelin and Service Tire Truck Centers Inc. (STTC) in Newark federal district court.
Inter City accused Michelin and STTC of violating the Racketeer Influenced and Corrupt Organizations (RICO) Act. The Michelin-affiliated commercial tire dealer and retreader said it had uncovered a scheme involving former Michelin sales executives who allegedly used shell corporations to divert discounted tires intended for national fleet accounts and resell them to Inter City's competitors.
Michelin declined comment on the case, except to say that two “rogue” employees had been terminated, and STTC denied all of Inter City's allegations. Tire Supply of New Jersey L.L.C., which was mentioned in the lawsuit, also denied any involvement in the alleged corruption scheme.
Les Schwab Tire Centers Inc., the Bend, Ore.-based tire retailing giant, found itself embroiled in accusations of violating state wage laws.
In February, a jury in the Multnomah County, Ore., Circuit Court found that Les Schwab forced more than 200 assistant store managers in Oregon to work overtime without pay, in contravention of Oregon's wage laws.
This was followed in November by a class action suit in Seattle federal district court, seeking compensation for Les Schwab workers who allegedly were cheated out of overtime pay because the company designated them as assistant managers.
Dale Thompson, chief marketing office for Les Schwab, said the company firmly believes it has always complied with all applicable wage laws.
“We are committed to creating a culture of loyalty, hard work and promotion from within,” he said.