Pattern of Fraud Brings Down Goodyear

Is it time for Goodyear to just give up the ghost on the G159 tire? Sure, they had a good run for a while, selling the tire to the motor home industry – even though the tire was designed for urban delivery vehicles and speed-rated for only 65 mile per hour continuous use. And when those tires failed on motor homes, causing rollovers, catastrophic injuries, deaths and lawsuits, Goodyear had a good run limiting the damage by keeping the damning documents from spreading from one litigant to another – or just keeping them to themselves. But their run seems to be about done, for the tire and the legal strategy. The Chief Justice of the United States District Court for the District of Arizona, Roslyn O. Silver, has issued a lengthy and devastating sanctions order against Goodyear, and attorneys Graeme Hancock of Fennemore Craig PC and Basil Musnuff formerly of Roetzel & Andress, who represented the tiremaker against the product liability claims lodged by the Haeger family.  Judge Silver’s order starts like this: “Litigation is not a game. It is the time-honored method of seeking the truth, finding the truth, and doing justice. When a corporation and its counsel refuse to produce directly relevant information an opposing party is entitled to receive, they have abandoned these basic principles in favor of their own interests. The little voice in every attorney's conscience that murmurs turn over all material information was ignored.” And Judge Silver’s order doesn’t get any better for Musnuff, Hancock and company. Their misconduct, she wrote, stems the defense’s long history of refusing to turn over a slew of internal testing showing that Goodyear knew just how unsuited the G159 was for motor home use.  Hancock, Goodyear’s local counsel, was ordered to pay 20 percent of the total santions and Musnuff and Goodyear are jointly responsible for the remaining 80 percent. Saying that it’s likely that the case would have settled much earlier, Judge Silver started the penalty clock at November 2006, “after Goodyear served its supplemental responses to Plaintiffs' First Request. That was the first definitive proof that Goodyear was not going to cooperate in the litigation process.” “The actions of Judge Silver and her staff reflect an unwavering commitment to the pursuit of truth consistent with the highest standards of American jurisprudence,” said attorney David L. Kurtz, who represented the Haegers. “It is my honor to practice law in her court and she sets an excellent example of thoughtful decision making to guide the conduct of litigants in every court.” Judge Silver also required Goodyear to file a copy of this order in any subsequent G159 tire case. “Based on Goodyear's history of engaging in serious discovery misconduct in every G159 case brought to this Court's attention, filing this Order in future G159 cases will alert plaintiffs and the courts that Goodyear has, in the past, not operated in good faith when litigating such cases. It will also serve as notice of the existence of certain tests Goodyear attempted to conceal in previous cases.” She noted that thee Haegers are free to separately renegotiate their settlement agreement and pursue “an independent cause of action for fraud based on Mr. Hancock, Mr. Musnuff, and Goodyear's behavior.” Finally, Judge Silver alluded darkly to unspecified “unfortunate professional consequences,” for Hancock and Musnuff to follow. Litigating the G159 Goodyear had spent nearly a decade in the 1990s and 2000s marketing the G159 to the RV industry – even though the tire design was prone to overheat on RVs that typically travel at greater than 65- mph speeds for extended periods. Goodyear knew it was dangerous for motor homes, but didn’t want lose a market segment. So, in 1998, after speed limits increased nationwide, Goodyear bumped the speed rating of the G159 to 75 miles per hour.   In 1999, Fleetwood was the first motor home manufacturer to launch two recalls covering more than 3,400 Class-A motor homes because of inadequate total front tire weight capacity. It replaced the Goodyear G159s with a larger Michelin model, after four accidents involving two fatalities. In  2002, Goodyear issued a Product Service Bulletin announcing that the Monaco Coach Corporation would be offering replacement tires to owners of 1999, 2000 and 2001 Windsor model Class-A motor homes equipped with G159 tires. In all three cases, the problems were blamed on inadequate load margin and customer misuse; Goodyear assured the public that the tires are safe for all uses. But by 2006, Goodyear was marketing an entirely different model tire that had been developed for recreational vehicles, the G670 RV. According to Tim Miller, Marketing Communications Manager for Goodyear the G159 was not an appropriate application for RVs and noted “the G159 was a truck tire that was used on RVs.” But, since the tire itself had never been recalled, other RV manufacturers and owners were still using the G159 275/70R22. In June 2003, Leroy and Donna Haeger, owners of a Gulf Stream Coach were among them. Leroy Haeger was driving his Class-A motor home on Interstate 25 in New Mexico, when the right front tire failed. The Gulf Stream veered to the right and then rolled over, seriously injuring the Haegers and their passengers, Barry and Suzanne Haeger. The Haeger litigation was hardly unique. Goodyear has defended or is defending about 40 other death and injury and an estimated 20 property-damage tread separation cases involving G159s on Class-A motor homes. All but one have been quietly settled, with Goodyear securing non-sharing protective orders – if the Haeger case is any indication – to keep plaintiffs’ lawyers in the dark about what Goodyear knew about the G159’s propensity for over-heating and failing under the load of a motor home at highway speeds. Occasionally, evidence of Goodyear’s knowledge popped into view. In June 2003, Goodyear claims administrator, Kim Cox, reportedly admitted in a deposition that Goodyear knew that its G159 tire did not “perform properly” on Class A motor homes. (See: Goodyear Destroys Testimony Admitting RV Tire is Defective; Court Rules Deposition is not Protected)  The admission was apparently so damaging that the tiremaker’s counsel immediately terminated the deposition, negotiated a settlement and arranged for every scrap of the deposition’s existence to be destroyed. In 2008, U.S. District Court Judge Magistrate Nita L. Stormes ruled that Cox’s deposition was not subject to a Protective Order filed in the 2002 case of Phillips v. Goodyear, and ruled against a motion to modify the Protective Order to allow five plaintiffs in other pending G159 cases to have access to Cox’s deposition testimony, because Cox’s deposition was never protected to begin with. At the time, some attorneys predicted that the Cox deposition would drive a stake through the heart of Goodyear’s defense in these cases. But the tiremaker apparently continued to successfully silo each case, settling G159 tread separation cases involving serious injuries and deaths, in exchange for confidentiality. Then, in June 2010, a jury in Schalmo v. Goodyear handed the tiremaker its first public loss. (See: Goodyear G159 Tire Failures on RVs Finally Dragged Into the Public Eye)  A Pasco county, Florida jury found that the Goodyear Tire & Rubber Company had sold a defective tire marketed to recreational motor home manufacturers, even though the tire was not suitable for RV use. This was the first G159 tire case to be resolved in a public trial and the Schalmo family initially refused to agree to a confidential settlement. At trial, Schalmo’s attorneys, Christopher Roberts and Hugh Smith, 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. At verdict, the victims’ families hoped that Goodyear would recall the tire and petitioned the Florida Circuit Court to unseal the pertinent documents. But more settlement negotiations ensued and the documents remained under seal. Haeger Brings Pattern of Discovery Fraud into View The Schalmo case, however, may have, ultimately, undone Goodyear’s strategy to minimize the legal damage. Kurtz, of the Scottsdale Arizona firm bearing his name, had already settled the Haeger case in a brutal five-year litigation that included more than 1,000 pleadings, when he read about the Schalmo verdict in The Safety Record.  He suspected that the tiremaker had duped him into thinking that the tests it had produced during the discovery were all that were available – and he wasn’t the only one. In the Woods v. Goodyear case, which involved a Monaco Diplomat motor home crash, the Alabama judge lost patience with Goodyear’s discovery stonewalling tactics over three years, ordered the manufacturer in August 2007 to “to produce to the Plaintiff every document requested regarding the [G159] tire,” Silver wrote. “I fought tooth and nail for three years trying to get the relevant documents showing that the G159 was not suitable for over the road use by RVs,” recalled Attorney Rick Morrison, who represented the Woods family and litigated two other G-159 cases. “I remember the hearing like it was yesterday. The judge said: “Gentlemen, I am disgusted with this. You will produce every document that references the G-159. When you read Judge Silvers Order it appears that Goodyear’s production may still be in question.” Bogaert v. Goodyear, an Arizona case, involving a Fleetwood motor home crash, was also marked by the “extreme difficulty in convincing Goodyear to produce documents, according to Judge Silver’s Order. In 2008, the discovery special master ordered Goodyear to produce the “testing conducted by Goodyear of its [G159] tires that was undertaken, at least in part, to determine the suitability of such tires to be driven at 65 mph without an undue risk of tread or belt edge separations.” Kurtz had initially asked Goodyear for all the G159 testing, including “road tests, wheel tests, high speed testing, and durability tests.” Goodyear objected to the request and submitted a partial response, producing only National Highway Traffic Safety Administration compliance tests showing that the G159 meet federal standards – without acknowledging that its response was not complete. Although Kurtz had settled Haeger in April 2010, after he read about Schalmo, Kurtz wrote to Musnuff, asking if Goodyear had failed to produce everything requested. In all, there were three exchanges between Kurtz and Musnuff about the existence of other tests, particularly internal heat test records. In his last reply, Musnuff finally conceded:  “It is true there are testing records regarding the [GI59] tire that were not produced in the Haeger litigation. That fact was clear during the course of the litigation, and certainly at the time plaintiffs chose to resolve this case.” Musnuff went on to argue that Kurtz’s initial request for all testing data did not automatically create an obligation to provide it. Goodyear objected to the request, and submitted what it had determined was responsive. Goodyear never said that it had submitted all of its test data, Musnuff wrote. On May 31, 2011 Kurtz filed a motion alleging discovery fraud. By Judge Silver’s own account, she had been irritated with Kurtz for leveling similar allegations at Goodyear as the case ground on: “Throughout the numerous discovery dispute filings and hearings, the Court was under the impression that Goodyear had produced all test data relevant to Plaintiffs' claims. In fact, at various points the Court became exasperated with Plaintiffs' apparently unsubstantiated claims that additional information must exist. Based on personal observation and discussions with Mr. Hancock during in-court hearings, the Court came to believe Mr. Hancock thoroughly understood his discovery obligations and that he was making every effort to comply with them. There simply was no reason for the Court to question Mr. Hancock's representations and Plaintiffs' repeated attempts to cast aspersions on Mr. Hancock appeared misguided. Of course, now that Goodyear has been forced to admit additional information does exist, that exasperation was misplaced.” In a painstaking re-creation of the flow of information over a six-year period within Goodyear – among its engineering experts and its legal advocates in four cases – Judge Silver documented the “dizzying array of misstatements and simple falsehoods,” that constituted the tiremaker’s long-running cover-up and a deliberate strategy from all involved to lie to various plaintiffs about the existence of 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. Judge Silver was unsparing in her assessment of Goodyear’s corporate representative and expert, Richard Olsen, who lied in a September 2007 deposition in which he testified that the four tests that Goodyear had turned over to Kurtz represented the totality of the G-159 testing. Olsen, she said, “provided false testimony but the falsity emerged only as a result of Goodyear's inability to keep its falsehoods straight.” “From the very beginning,” Judge Silver wrote, “Mr. Hancock, Mr. Musnuff, and Goodyear adopted a plan of making discovery as difficult as possible, providing only those documents they wished to provide, timing the production of the small subset of documents they were willing to turn over such that it was inordinately difficult for Plaintiffs to manage their case, and making false statements to the Court in an attempt to hide their behavior.” What Does the Haeger Order Mean? Judge Silver’s Order may provide future litigants with the shortcut to an appropriate settlement, but how many more G-159 cases are out there yet to be litigated? Attorneys familiar with the landscape of G159 litigation say there are no more than a few active cases right now. But that doesn’t mean there won’t be more if Goodyear doesn’t recall the G159 tires still in service on RVs.  RV owners may only take their behemoth home-on-wheels out for a journey a couple of times a years. The low mileage on the tires, combined with the fact that they are re-grooveable, and that the G-159 tires have never been recalled, means that they are still on RVs – despite their age. “I get calls almost every month, asking me if it’s safe to take the G159 spare and put it on the RV,” says Morrison, of the Beasley Allen firm based in Montgomery, Alabama. “You have tires that are more than 9 years old that were never safe to be on the vehicle to begin with now even more dangerous, because of tire age. I received a call from a gentleman whose tires were nine years old, but only had 20,000 miles on them. Odds are they are going to be rotated into service.” In the wider context of product liability litigation, the lessons of Haeger are even more troubling. Judge Silver opined that litigation is not a game. But two recent orders in unrelated cases – equally acid in their judgment of the defense’s bad faith conduct – show that some defense firms do and Goodyear certainly didn’t invent the game. In January 2012, a federal judge in Atlanta ordered Michelin North America to pay attorneys’ fees and found that a Uniroyal Laredo Tire was “defective and reasonably dangerous,” in sanctioning the tiremaker for nearly two years of discovery abuse. (See: Michelin Rapped for “Bad Faith Conduct” ) “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.” And in July 2011, William T. Swigert, senior judge of Florida’s Fifth Judicial Circuit, issued a withering 51-page decision, which struck down Ford Motor Company’s defenses in a catastrophic Sudden Unintended Acceleration case (SUA) and ordered a new trial on the issues of compensatory and punitive damages only.  Relying upon the 12,000-page record, Judge Swigert laid out in great in detail how Ford had destroyed reports from company field engineers identifying the cruise control electronics as the source of the problem, and systematically lied to NHTSA and its own experts, allowing them to discredit plaintiffs’ experts by using government reports known to be ungrounded and unscientific. (See: How Ford Concealed Evidence of Electronically-Caused UA and What it Means Today) Morrison, who is on the Executive Committee for the Products Liability Section of the American Association for Justice and is chairman of AAJ's Product Liability Section, says that judges start with the presumption that both sides are following the rules of procedure, and it’s hard to persuade them that one side is breaking them with abandon. “Unfortunately this case demonstrates the situation where the defendant took advantage of that presumption” says Morrison. “But, the discovery system is important to protect the public from corporate wrongdoing. What’s so sad is that this order highlights the extent to which Goodyear placed profits over safety. They clearly knew that the tire wasn’t safe for RVs, and went ahead and sold it anyway. As a result, you have 30 to 40 families who lost loved ones and whose lives were forever changed.”  Morrison says that it’s important for plaintiffs’ attorneys to fight at the outset for sharing orders in confidentiality agreements, so that attorneys can work together and build on the discoveries in previous cases. “That’s critical,” he says. “You have to be dedicated and stay after the companies during discovery and prosecute the case to the fullest.”