WASHINGTONMassive vehicle recalls grabbed the litigation headlines for the tire and auto industries in 2014, though business and regulatory suits also abounded during the year.
The major controversy over the early part of 2014 emanated from the recall of ignition switches from a wide swath of late-model cars built by General Motors Co. The auto maker eventually recalled more than 13.6 million vehicles equipped with the ignition systems that allegedly led to the deaths of 13 motorists.
In May, GM was forced to overhaul its legal department to facilitate the recall and handle millions of expected claims. Soon after, a used car dealer in Arkansas sued GM, claiming the company had saddled him with an inventory of highly dangerous vehicles.
In June, former U.S. Attorney General Anton Valukas issued a report sponsored by GM. Though Mr. Valukas faulted the auto maker for its delayed handling of the recall, he found no evidence of a deliberate cover-up.
Mr. Valukas' conclusions, however, were challenged by Thomas Henry, a personal injury attorney based in Corpus Christi, Texas. We believe there is way more hidden than what is outlined in the report, Mr. Henry said.
However, the GM ignition recall was superseded in the news by reports that Takata Corp., a Japanese airbag manufacturer, had equipped millions of vehicles manufactured by 10 different auto makers with airbags that potentially sprayed metal shards when deployed in accidents. These alleged defects were connected to the deaths of at least four motorists.
As of November, Takata and Honda Motor Co. faced a massive lawsuit in a Los Angeles court, claiming that Takata deliberately destroyed evidence that the airbags were defective. The U.S. Senate Committee on Commerce, Science and Transportation scheduled a hearing Nov. 20 on the Takata airbag situation.
Also, the National Highway Traffic Safety Administration (NHTSA) issued a public demand that the regional U.S. recall of 7.8 million vehicles be expanded nationwide, and that Takata and the 10 auto makers provide further information on the airbags under oath.
An airbag accident outside the high-heat, high-humidity areas of the regional recall necessitated the new demands, according to NHTSA, which said it would force a national recall if Takata and the auto makers did not agree to perform it.
Ford Motor Co. also faced its share of litigation. In October, Ford petitioned a federal court in California to dismiss a lawsuit accusing the auto maker of marketing defective electric power-assisted steering systems on some Ford Fusions and Focuses.
Lawsuits directly related to tires covered all major aspects of the industry. In October, Goodyear sued Sears, Roebuck & Co. for alleged breach of contract. Sears' decision to select a new tire supplier, without warning to Goodyear, left Goodyear with nearly 220,000 co-branded tires it was forbidden to sell.
The following month, residents of a Louisville, Ky., neighborhood called Valley Station sued Liberty Tire Recycling L.L.C. for alleged negligence in a massive tire fire in the company's Valley Station facility Nov. 3.
The fire began just as inspectors for the Kentucky Department of Environmental Protection arrived at the site to determine if Liberty Tire had corrected alleged scrap tire storage violations. News reports said the fire lasted 30 hours and forced some 1,000 Valley Station residents to remain in their homes.
In a holdover from a court action from 2013, the Delaware Chancery Court ruled in November that Cooper Tire & Rubber Co. could not recover the $112 million breakup fee emanating from its failed merger with India's Apollo Tyres Ltd.
The rebellion of Chengsan Cooper Tire (CCT) against the Cooper-Apollo merger was the cause of the merger's failure, meaning that Cooper was not entitled to be reimbursed for the breakup fee, Judge Sam Glasscock III ruled.
In August, the Minneapolis federal district court ordered Royal Tire Inc. to pay a $182,500 fine and submit to a consent decree to settle a wage discrimination lawsuit.
Christine Fellman-Wolf, Royal Tire's human resources director, had filed suit with the Equal Employment Opportunity Commission (EEOC), claiming the company had paid her less than a male employee who held the same position.
Also, the EEOC brought action against auto parts retailer AutoZone Inc. in May, claiming the company violated federal law by implementing a nationwide attendance policy that failed to accommodate disability-related absences.
This was the fourth such charge the EEOC had brought against AutoZone in the past few years. Early in 2014, a federal court ordered the company to pay $415,000 in one of the earlier lawsuits.
In September, auto parts manufacturer TRW Automotive Holdings Corp. found itself the target of an investigation by law firm Levi & Kornsinsky L.L.P. over TRW's agreement to be acquired by ZF Fried-richshafen A.G. for $13.8 billion.
TRW promised its shareholders $105.60 for each share of TRW stock they owned. Levi & Korsinsky, however, said it would investigate whether the TRW board breached their fiduciary duty to their shareholders by not adequately entertaining other bids for the company.
To reach this reporter: [email protected] crain.com.