A federal appeals court on Monday upheld an unusual and perhaps unprecedented directive that a major national tyre manufacturer must disclose in all future lawsuits how it withheld information from an Arizona family.
The order 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 tyre model in question.
Those test results, wrote appellate Judge Milan Smith Jr., could have been used to support the allegation that the tyre 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 US$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,” said company spokesman Keith Price.
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 tyres allegedly failed, causing the vehicle to go over an embankment and flip over, causing serious injury to driver Leroy Haeger, his wife, Donna, and daughter-in-law Susan.
In filing suit against Goodyear, attorney David Kurtz demanded all the information the company had on testing of the G159 model of tyre. 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 have 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 tyres. 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.
So Silver ordered Goodyear to inform anyone else who sues in the future to be informed that the company engages in legal “hide and seek” and has hidden information that may be relevant.
“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,” Silver wrote. “It will also serve as notice of the existence of certain tests Goodyear attempted to conceal in previous cases.”
Smith specifically cited Silver’s order in pointing out that she was trying to send a message.
“Litigation is not a game,” the trial judge wrote.
“It is the time-honored method of seeking the truth, finding the truth, and doing justice,” Silver wrote. “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.” – AZ Daily Sun