Haeger High-Stakes Poker

So, if you bluff your way out of handing over legitimate discovery after the case settles, do you really owe the plaintiff’s attorney $2.6 million? That’s the story Goodyear may be telling in its appeal of a November sanctions order in the Arizona G-159 tire tragedy otherwise known as Haeger v. Goodyear, now in its eighth year of litigation.

When we last left the case, attorney David L. Kurtz, who represented Leroy and Donna Haeger, sought damages from Goodyear on a separate but parallel track (see The Wages of Fraud). In June he filed a seven-count, 153-page lawsuit, in Arizona State Superior Court, seeking punitive damages via a jury trial for five years of delay and deception in the original product liability action. But the history of Goodyear, the G159, and the Haeger case is so long and sad, we’re going to start from the beginning.

In June 2003, Leroy and Donna Haeger, along with their passengers, Barry and Suzanne Haeger, were seriously injured when the right front G159 tire on their Spartan Gulf Stream Coach RV failed, causing a rollover. The G159 and a Class A motorhome had a lousy marriage; the tire design was prone to overheat on RVs that typically travel at greater than 65- mph speeds for extended periods. Goodyear knew that from its internal testing – but, loathe to miss a market-share – it promoted the match successfully in the 1990s and 2000. Eventually, though, the G159 and RVs produced numerous lawsuits when the tires failed, injuring and killing motorhome occupants. The Haegers were among them, and in 2005 they filed suit. The action was torturous, with more than 1,000 pleadings. Kurtz had asked for all internal testing regarding the G159, and Goodyear responded by employing a tactic that it had used – with varying degrees of success in other cases – turning over as little as possible, and swearing to the court that it had no more.  The Haegers settled in 2010.

In June 2010, Kurtz learned from The Safety Record Blog about a $5.7 million plaintiff’s verdict in another G159 case, Schalmo v Goodyear. At trial, the blog reported, Schalmo’s attorneys presented Goodyear documents including internal heat and speed testing and failure rate data showing that Goodyear knew the G159 was improperly approved for 75 mph continuous highway use. Kurtz began corresponding with Basil Musnuff, formerly of Roetzel & Andress and formerly Goodyear’s national coordinating counsel, to determine if Goodyear had withheld such tests in Haeger. Eventually, Musnuff conceded that Goodyear had, but wasn’t obligated to turn over any more than its NHTSA compliance test results.

On May 31, 2011 Kurtz filed a motion alleging discovery fraud. Roslyn O. Silver, the Chief Justice of the Arizona District Federal Court began to untangle the six-year Gordian knot of Goodyear’s trial tactics, and the result: Goodyear, Musnuff and Graeme Hancock of Fennemore Craig PC who helped Goodyear’s in-house litigation chief Deborah Okey defend the tiremaker, were sanctioned for discovery abuse stretching back to November 2006. In a blistering decision, Silver found that Goodyear had employed a calculated strategy to make the discovery process as difficult as possible, presenting to the court a “dizzying array of misstatements and simple falsehoods” to cover up the existence Heat Rise, extended DOT, crown durability, and the bead durability tests. And, if forced to acknowledge them, lie about what they indicated about the RV application for the G159. She noted that similar behavior had taken place in two other Goodyear G159 cases: Woods and Bogaert.

Kurtz was tasked with tallying the value of his time wasted over five years of litigation, trying to get Goodyear to comply with his requests. Hancock, Goodyear’s local counsel, was ordered to pay 20 percent of the total and Musnuff and Goodyear were to split the remaining 80 percent. As an extra measure of legal insurance, ordered Goodyear to file a copy of her Order in any G159 case initiated after November 2012. In addition, the November order suggested that Kurtz mount a separate legal action against the trio for discovery fraud.

In December 2012, Kurtz submitted his bill for $2.8 million; Goodyear submitted almost as many reasons why the figure should be a lot smaller. Although Silver’s November order wasn’t final, Goodyear appealed it – and particularly the disclosure portion – to the U.S. Court of Appeals’ Ninth Circuit, based in San Francisco. Hancock and Musnuff’s initial attempts to appeal the monetary sanctions were dismissed by the appellate court because there was no final award yet in the lower court.

In late August, Judge Silver determined the final amount of the monetary portion to be $2,741,201.16, with $542,240.83 coming out of Hancock’s pocket and $2,192,960.93 from Musnuff and Goodyear. Both Musnuff and Goodyear and Hancock got supersedeas bonds, covering the sanction amounts, plus two years of interest, to obtain a stay of enforcement during appeal.

With a final order in place, the appeals process has commenced in earnest. We don’t know exactly what defenses it might employ before the appellate court. But, in a January motion filed by  Hancock, and joined by Goodyear and Musnuff, explaining why an appeal was filed before Silver’s sanctions order was final, there were a few hints – a lack of procedural grounds for the sanctions motion – other than the inherent powers of the court, and a matter of bad timing – the lawsuit “substantively sought discovery sanctions for fraud in a matter that undisputedly had ended more than one year before.”

Is that like killing your parents and asking the judge for mercy on the grounds that you are an orphan?

Goodyear’s Playbook Getting Wider Play

When we last wrote about Haeger, we asked what Judge Silver’s sanctions order meant in the context of G159 civil lawsuits, since most had been settled. But a better question might be asked about the spirited way Goodyear plays defense. This month, another Arizona Plaintiff’s attorney, Michael “Buck” McAllister filed a furious motion for terminating sanctions in Boland v. Goodyear. This case alleges that a right-rear 15-inch passenger tire, manufactured by Goodyear and sold as a private-label model through Discount Tire, suffered a catastrophic failure on a Mazda B3000 pick-up. On May 17, 2010, Berna Boland, 54, was on her way back to Phoenix when the tire failure caused a single-vehicle crash, leaving her seriously injured. Her lawsuit alleges that the tire had been awled improperly during manufacturing – a direct consequence of poor quality assurance and control. The Fayetteville, North Carolina plant, which produced Boland’s tire in 2008  has been plagued by labor unrest, and was the target of a series of undercover drug stings. While both of these controversies were public knowledge and the subject of ongoing media coverage, Goodyear produced no information about the facility’s problems. Nor did it disclose a recall of 40,000 tires produced at the Fayetteville plant roughly during that time period.

Boland was filed in September 2012, and after a fruitless year of discovery, during which McAllister, charges, Goodyear revealed no important or negative information about the plant and rebuffed all attempts to sort out these issues, he decided to shortcut the process. On September 13, McAllister filed a motion for terminating sanctions, which would speed the case past the liability question and go straight to the damages.

Many years ago, McAllister worked as an outside defense counsel for a number of major tire companies, so the one thing his finely barbed motion does not mince is words. He argues that Goodyear’s behavior in Boland is its de facto defense strategy, regardless of the rules of discovery, and he names names:  

“A brief review of some of the cases involving Goodyear that are reported or otherwise available establish without a doubt that the problems at Goodyear are caused internally in the corporate legal department, most likely by the philosophy, culture, and approach of Deborah Okey, the Associate General Counsel for litigation who signed off after approving of the discovery responses which were false, misleading, and downright lies, not only in Haeger but the other cases involving the G159 noted by Judge Silver in her Order. Ms. Okey was singled out for special attention in the Opinion of Judge Silver as someone who had misled the court and was involved in deceit. Shockingly Ms. Okey is still at Goodyear. And considering the pattern and practice exhibited in Haeger and in other cases, she is still, in one way or another, calling the shots and pulling the strings in these cases. The corruption that has permeated Goodyear at this point obviously points directly to the top and is at the apex of the Goodyear organization.”

“Out West, we take some pretty strong umbrage to approaches and attitudes that we think are really unjust,” he says. “It’s not that I’m personally mad; it was righteous indignation.  To have this occur, where material information in a case is not disclosed, is shocking in light of Haeger. This approach is antithetical to our system and people get hurt.”

To bolster his argument, McAllister names a handful of other cases in which Goodyear’s deny and delay tactics earned the judge’s ire – Ruiz, McCloud, Bahena

A ruling in Ruiz:

“After more than a year of litigation, the conclusion is inescapable; Goodyear has taken a position with respect to discovery and disclosure in this case which, in too many instances, is unjustifiable and which has frustrated both the letter and spirit of the discovery and disclosure rules. Such unjustifiable positions have worked to the prejudice of the Plaintiffs and, in some instances, to their Co-Defendants to the extent that sanctions against Goodyear are appropriate and overdue.”

In McCloud, a motorcycle tire failure case, the judge instructed the jury that Goodyear had withheld evidence and the jury returned a $15 million verdict.  Mid-trial, the plaintiff also filed a sanctions motion over an effort during discovery to determine the Goodyear employee who inspected the tire.

In Bahena, Goodyear was dinged by the Nevada Supreme Court, who, McAllister writes  “concluded that such sanctions were necessary to demonstrate to future litigants that they are not free to act with wayward disregard of court’s orders, and that the conduct of appellants evidence their willful and recalcitrant disregard of the judicial process. The matter proceeded to a jury trial. On the issue of damages the jury returned a verdict for $30,000,000. It was sustained on appeal.”

 McAllister says that more information is coming.

So now we have six – possibly seven – cases in which Goodyear’s ethically-challenged behavior has been called out: Haeger, Woods, Bogaert, Boland, Bahena, Ruiz, McCloud. Anybody else out there have a good Goodyear sanctions story? Give us a call.

Back to the better question: As more attorneys and judges get the dope on Goodyear’s playbook before the games begin, how effective will it be?

More on Goodyear G-159 tires:

Pattern of Fraud Brings Down Goodyear

Goodyear G159 Tire Failures on RVs Finally Dragged Into the Public Eye