PHOENIX — A federal appeals court on Monday upheld an unusual and perhaps unprecedented directive that a major national tire manufacturer must disclose in all future lawsuits how it withheld information from a Tucson family.
The order by the 9th Circuit Court of Appeals directs Goodyear Tire & Rubber Co. to tell anyone else who sues the company that a trial judge found there was “clear and convincing evidence” that it and its attorneys engaged in a fraud by not disclosing it had done tests on the tire model in question.
Those test results, wrote appellate Judge Milan Smith Jr., could have been used to support the allegation that the tire was improperly designed and not suitable for high-speed use in the desert climate. More to the point, Smith said it could have resulted in the plaintiffs getting more in a settlement.
Separately, the appellate court upheld a $2.7 million sanction levied against the company’s attorneys, an amount designed to compensate the plaintiffs in the case for all the costs they had incurred in filing the suit. Smith said imposing the fees is the only real way to punish the attorneys as there is no way to know what the couple might have obtained had the company not hidden the information.
“We are disappointed with the decision and are considering our options,” Goodyear spokesman Keith Price said.
The company’s problems may not be over: It and its lawyers now face a new lawsuit in state court charging them with fraud.
The case involves a Tucson couple driving through New Mexico in 2003 in their motor home. While on a freeway, one of the tires allegedly failed, causing the vehicle to go over an embankment and flip over, causing serious injury to driver Leroy Haeger, his wife and their daughter-in-law.
In filing suit against Goodyear, attorney David Kurtz demanded all the information the company had on testing of the G159 model of tire. What they did not get was some data on high-speed testing, data that U.S. District Court Judge Roslyn Silver found the company clearly had at the time.
In fact, Smith said, an attorney for Goodyear told the trial judge that the company had “responded to all outstanding discovery.”
“This response to Judge Silver was false,” Smith said. He said the attorney had been sent the tests. Kurtz finally got that information.
Ultimately, Smith said, the family settled “for a small fraction of what they might otherwise have done.” The terms of the settlement are sealed.
But what Kurtz did not know until after the case had settled out of court was that the company also had internal heat and speed tests. And even as Goodyear was arguing after Kurtz went back to court that it had done nothing wrong, Smith said the company disclosed “apparently by accident” it had even more tests that would bear on the question of whether heat could cause the tread to separate.
What the court also found was that Goodyear has a history of “lengthy discovery battles” every time someone sues the company over one of its tires. At the same time, the court noted, when Goodyear has provided documents it has done so with the understanding that the attorneys in that case do not share them with the lawyers in any other case.
By Howard Fischer Capitol Media Services