Michelin Rapped for “Bad Faith Conduct”

A federal judge in Atlanta has ordered to Michelin North American to pay attorneys’ fees and established that a Uniroyal Laredo Tire was “defective and unreasonably dangerous” as a sanction for nearly two years of discovery abuse.

“In sum, Michelin’s bad faith conduct caused serious prejudice to the integrity of the legal process and to Plaintiffs’ orderly, effective development and proof of their case,” U.S. District Judge Amy Totenberg, of the Northern District of Georgia, wrote in her 61-page decision. “The pattern of abuse by Michelin is extremely troubling.”

Judge Totenberg’s patience was pushed past its limits in Bates v. Michelin North America, a tread separation case. In November 2009, Johnny and Patricia Bates of Evergreen, Alabama sued Michelin North America for negligence and strict liability in a tire-related rollover crash. On December 25, 2008, Johnny Bates was belted and at the wheel of his 2001 GMC Jimmy travelling northbound on I-85 in Fulton County, Georgia, when the left rear tire, a Uniroyal Laredo suffered a tread separation. The tire failure caused a loss-of-control rollover, leaving Mrs. Bates with injuries. Mr. Bates suffered catastrophic and permanent spinal and brain injuries that have left him a quadriplegic.

The Atlanta firm of Butler, Wooten & Fryhofer LLP, who represented the Bates family, requested that Michelin produce, among other things, warranty adjustment data, design and production tolerances and documents relating to specific defects. But, after a year of wrangling over confidentiality and the scope of the request, Michelin had only produced a “strikingly small” number of documents. On January 3, 2011, the Court ordered Michelin to produce all of the documents the Bates family sought. Michelin petitioned for reconsideration, and, after losing that round, continued to withhold the documents.

In May 2011, the attorneys for the Bates family first asked for sanctions because Michelin failed to produce the warranty data. The tiremaker responded by giving over only a list of conditions identifying — by name only– the causes for warranty adjustments, but not the actual numeric codes.

On June 3, 2011, the judge ordered Michelin to produce those codes and all of the supporting documents, along with a stern warning: “Any further delays, manipulation of discovery … or basically failure to function in good faith in producing fully all information requested or ordered … will result in a substantive sanction …comparable to what Plaintiffs have asked the next time it comes in front of [the Court].”

Judge Totenberg then sanctioned Michelin for its actions and awarded the plaintiffs’ attorneys fees.

But, Michelin’s legal team paid no mind. In a second sanctions motion filed at the end of June, plaintiffs’ counsel again asked for tire adjustment documents for the Uniroyal Laredo series or similar models being withheld by Michelin. And by the end of September, when the judge held another hearing on the issue, other discovery abuses came to light. Plaintiffs’ counsel learned in depositions of two Michelin employees that the tiremaker had withheld other documents that were directly relevant to the defect issue.

At the September hearing, Butler, Wooten & Fryhofer presented evidence that Michelin failed to produce all of the adjustment data on three separate occasions and that the company’s responses to its request for warranty data were intentionally obscure. At first, Michelin produced a chart summarizing by month the number of tires produced and the total number of tires returned for tread belt separation – which was useless without the supporting documentation of the raw data, the codes, and the accompanying documents about how the data is collected, tabulated, and analyzed.

Michelin followed with a second chart, which was similarly useless:

“Despite being previously sanctioned for producing a meaningless list of adjustment conditions without the necessary interpretative documents, Michelin again produced a chart of adjustment data that could not even be interpreted by Michelin’s own in-house expert,” Judge Totenberg wrote. “Mr. Patrick testified that Michelin does not analyze its adjustment data in the format produced to Plaintiffs in this litigation and confirmed that the adjustment data, if presented in a meaningful format, could be used to determine whether (and how many) tires were being returned for conditions resulting from a manufacturing or design issue, whether Michelin was aware of such conditions in the tire, and whether any changes were made to the tire as a result of a high return rate.”

Unlike the recent discovery sanctions order in Stimpson v. Ford, in which Judge William T. Swigert of the Fifth Judicial Circuit in Sumter County, Florida found that Ford Motor Company had implemented a systematic internal and external cover-up of the electronic causes of Unintended Acceleration in some of its vehicles – including lying to the National Highway Traffic Safety Administration and its own in-house expert — Judge’s Totenberg’s order focused on a narrower production issue. Swigert’s and Totenberg’s orders, however, did share a frustration at the defense’s attempts to turn its obfuscation into a virtue.

Michelin pleaded that the omissions were nothing more than human error, but Judge Totenberg was not persuaded.

“First, Michelin made multiple misrepresentations to the Court that it had produced documents as ordered by the Court when it in fact had not. Second, Michelin repeatedly refused to produce documents in direct violation of the Court’s January 3rd, June 3rd and June 24th Orders. Third, Michelin intentionally engaged in an extremely narrow, unjustified interpretation of the Court’s Orders in order to limit, or altogether avoid, producing relevant and useful documents in response to Plaintiffs’ discovery requests.”

Judge Totenberg rejected outright Michelin’s argument that it did not have to produce Michelin’s Failure Modes and Effects Analysis, but did so “in good faith..” These documents, she said, were “very clearly relevant” to the plaintiff’s claims because they “discuss the precise conditions –trapped air, adhesion, molding, how those conditions develop in the manufacturing process, and the methods for detection and prevention of those conditions in a tire before it leaves the plant.”

The judge also noted that this abuse and the uncovering of documents that were key to the plaintiffs’ case would not have come to light but for plaintiffs’ counsel’s persistence:

“According to plaintiff, the subject tire failed to meet the tolerance limits and should have been scrapped.” Without the documents produced only after court intervention, plaintiff would not be able to prove the defect in the subject tire.

The order also specifically addressed Elizabeth C. “Kate” Helm, of Nelson Mullins, Riley & Scarborough, LLP, Michelin’s national discovery counsel, whose consistent forgetfulness on which Michelin representative gave her the incomplete or redacted information drew notice:

“Although the Court originally believed Ms. Helm’s affidavit testimony that the failure to produce the missing adjustment codes was an innocent oversight, and while this may very well be true, the credibility of her statements over time has been eroded by the actual course of discovery events. In light of Ms. Helm’s evasive and inconsistent testimony at the September 19th hearing and Defendant Michelin’s shifting representations made to the Court since June 3, 2011, the Court cannot simply rely on Michelin’s avowals of good faith regarding any of these discovery issues.”

The order left open for trial the question of whether the “defective and unreasonably dangerous” Laredo tire was the cause (or partial cause) of Bates’ car accident. Currently, lawyers for both sides are working through a thicket of motions. No trial date has yet been set.