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The company agrees to pay $41.5-million as part of a settlement with Florida and other states in advance of a lawsuit being filed today.
By ANITA KUMAR
© St. Petersburg Times,
published November 8, 2001
Bridgestone/Firestone Corp. has agreed to spend $41.5-million and undergo manufacturing changes as part of a massive settlement the company reached with Florida and other states over defective tires that led to hundreds of deaths nationwide.
The beleaguered tiremaker will pay 53 states and territories $500,000 each, use $5-million for a consumer education campaign and reimburse the states $10-million in attorneys' fees, according to a settlement to be released today in Florida.
Firestone also will agree to stop making certain tires, change manufacturing procedures, undergo additional reviews and testify against former partner Ford Motor Co. in any future legal action brought by the states.
The settlement is a blow to Firestone, which already has spent more than $1-billion to recall defective tires, severed its century-old relationship with Ford and suffered a public relations nightmare.
Attorneys general had threatened to sue both Ford and Firestone but negotiated a settlement with the tiremaker prior to filing suit. Ford still could face legal action by the states.
The lawsuit and settlement, expected to be filed simultaneously today in the 50 states, Washington, D.C., and two territories, blames both companies for producing faulty tires and vehicles that caused deadly rollover accidents, particularly in warm weather states like Florida.
Florida Attorney General Bob Butterworth, who has been vocal in blaming both companies for engaging in unfair and deceptive trade practices, is expected to announce the findings of the investigation in Fort Lauderdale today.
His office, along with Tennessee, Texas, Georgia, Connecticut and Wisconsin, has led the investigation for the nation. In Florida, five attorneys and two investigators spent months examining more than 1-million Ford and Firestone documents and questioning witnesses.
Butterworth and members of his staff would not comment Wednesday. Officials at Firestone's Nashville headquarters did not return phone calls. Other attorney generals' offices across the United States would only say that they could not comment until after today's announcement.
The federal agency that oversees the auto industry estimates 271 people died and hundreds more were injured in the United States in accidents related to Firestone tires. Most of them involved rollovers of the Ford Explorer, the best-selling sport utility vehicle in the world.
A St. Petersburg Times analysis earlier this year found that 44 people have been killed and 230 more injured in Florida alone since 1997 in SUVs equipped with Firestone tires, making it one of the leading states for those types of crashes.
The agreement between the states and Firestone allows the $500,000 paid to each state to be used for anything, but some industry experts think it is not likely to be enough to fairly compensate consumers.
"It's a fine -- a civil penalty -- not compensation for everyone," said Mike Eidson, a Coral Gables attorney who is a leading lawyer in a federal class-action lawsuit.
Some published reports, however, say the agreement calls for up to $10-million to reimburse consumers. Firestone will review previous reimbursement requests that were denied, either because the vehicle owner's tire model had not yet been recalled or because the amount the consumer requested was above the $100-per-tire limit set by Firestone.
Industry experts say Firestone can survive this latest financial setback.
"They can handle that," said Travis Pascavis, a financial analyst who studies Ford at Morningstar Inc., a Chicago company that analyzes mutual funds. The states "could have taken a much stronger stance."
Both Firestone and Ford still face much more severe financial problems through the hundreds of individual lawsuits filed across the nation and overseas from families of those injured or killed and a potential class-action suit in federal court in Indiana. Firestone already has settled more than 400 lawsuits nationwide.
Eidson, a leading lawyer in the class action case, said he expects the state settlement is the first step in Firestone's plan to settle before a hearing next week at least the part of the class-action case dealing with property damage. The case involves more than 4-million people and a settlement, he said, could reach into the hundreds of millions of dollars.
"It just doesn't make sense to settle with the attorneys general and leave the class action," he said. "I can't imagine they would do one without the other."
Together, Firestone and Ford have recalled an unprecedented 27-million tires -- most of them Wilderness ATs and ATXs -- and engaged in a nasty, public feud. Firestone stopped producing ATX tires, but Wilderness ATs still are manufactured, primarily at the company's plants in Joliette, Quebec, and in Wilson, N.C.
The federal government is expected to release the results of an investigation in the next few weeks that will conclude that the Explorer does not have more problems than any other SUV, essentially exonerating the automaker, said automobile industry analyst David Healy of Burnham Financial Group in California.
Ocala lawyer Bruce Kaster, an expert in tire litigation with several cases against Ford and Firestone, said today's agreement with Firestone still leaves the door open for states to pursue criminal charges against Ford, which shares the blame with Firestone.
Though Ford is shelling out $3-billion for its recall, it has not taken as much heat as Firestone. However, last week the company did fire CEO Jacques Nasser.
Firestone has agreed to testify against Ford, but Healy said today's news may not hurt the second-largest auto manufacturer much because Firestone has blamed Ford all along.
"It tends to support Ford's position that it's not an Explorer or SUV problem," Healy said.
-- Times researcher Kitty Bennett contributed to this report, which also includes information from Times wires.