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We Have Important Evidence for Concealment of Tire Defects Article - President - February 12, 2001

We Have Important Evidence for Concealment of Tire Defects
By: Eiichiro Tokumoto
February 12, 2001


Direct Interview with the Man behind the Bridgestone Stock Price Collapse

While driving a car and the tread of the tire suddenly comes off, making [the car] lose control and drift - The defective tireproblem of Bridgestone / Firestone, a US subsidiary of Bridgestone-Japan, came as a big shock to American consumers last summer.

The number of tires to be recalled (free replacement or recall) is 6.5 million. The burden of the cost lies on the shoulders of the Japanese parent company. Moreover, several lawsuits seeking damages by the victims have been brought in the United States.

One of the plaintiff’s lawyers is Mr. Kenneth Moll whose law firm is located in Chicago. Mr. Moll is renowned for his PL (product liability) litigations against tobacco and hotdog companies in the past. In this Firestone case, he is calling for lawsuits in the US, Saudi Arabia, and South America, leading a worldwide class action.

His name became known in Japan when an American newspaper reported he made a comment last December that the compensation amount claimed could reach $50 billion. As a result, the stock price of Bridgestone at the Tokyo Stock Exchange plummeted and President Kaizaki of Bridgestone was forced to call an emergency press conference.

Mr. Kenneth Moll is renowned for his PL-related class actions such as against tobacco companies.

I visited Mr. Moll in Chicago regarding the direction of the tire defects scandal that would determine the fate of a very prominent Japanese company.

The report that the amount of compensation claimed in the defective tires lawsuit could reach up to $50 billion caused a steep drop in Bridgestone's stock price.

Since this case became known, somebody has made a remark indicating that the amount of compensation claimed against Bridgestone would be $50 billion. When I was interviewed (by USA Today), the reporter asked for my comments regarding this amount and I answered, that amount can be possible. I believe that comment must have led to the article.

Bridgestone is accusing you that your comment is malicious and irresponsible.

At this point, nobody can really tell the exact amount of compensation. We are in the stage where we cannot foresee the final recall costs of defective tires or how much the amount of compensation claimed would increase. In the US, when this kind of issue arises, the amount is determined in accordance with the acts committed by and the assets held by the company. But Bridgestone expects the amount required for compensation to be $450 million and makes an allowance for extraordinary charges.

What on earth does that $450 million mean? You should think about it. Bridgestone has never paid a cent for any compensation lawsuits nor responded to our request to expand the recall. The only tires that have been recalled in the US are 15 tires. The 16 and 15.5 tires have not been the subject. If Bridgestone is referring to $450 million based on 650 million tires to be recalled, I can also assure you that such an amount is nothing but inadequate.

So you are saying this recall is inadequate and the cost of collecting the tires is likely to increase?

Exactly. While recalling 16 tires overseas, Bridgestone does not recall the same size of tires in the US despite government reports that 15tires are not the only ones affected with the possible defects. Bridgestone argues that expansion of the recall would not necessarily lead to improved safety.

That's nonsense. Many lives have been saved because of the recall since last August. The more you expand the subject of the recall, the more lives you can save. The cost of the recall should not be important. What is important is to save people's lives. The victory for us in the lawsuit is when Firestone and Ford recognize their fault and recall all tires.

Is an Extensive Settlement Package a Means to Avoid an Expanded Recall? Last August, Bridgestone/Firestone officially announced the tire recall. The subject of the recall were three types of tires; ATX, ATZ II, and Wildernesswhich were mounted on Ford Motor's popular SUVs (sports utility vehicles) and manufactured in 1990 or later. All types are 15tires and the total number of tires was 6.5 million. Bridgestone says the recall is near completion at this point.

However, it is a totally different story if other types of tires are added to the subject of recall. The cost will significantly increase. As a result, naturally, this will be reflected in the business performance of Firestone and its parent company Bridgestone. Bridgestone seems to be very nervous about this aspect and a settlement with a woman in Texas reached on January 8 of this year signifies that nervousness.

Ms. Donna Bailey of Texas was left paralyzed from the neck down after the accident of her Ford SUV equipped with Firestone's Wilderness tires, and she brought an action against Ford and Firestone for damages. In US judicial circles, this case was regarded as an important turning point.

It was important because the tires that caused Ms. Baileys accident were manufactured in the Wilson plant in North Carolina. Firestone has, on the other hand, claimed that the source of its defective tires is the Decatur, Illinois, manufacturing plant.

In other words, if Ms. Bailey wins the lawsuit, Firestone could be forced to significantly expand the existing range of the recall. It must have been an agonizing choice to make for Firestone to pay an enormous settlement package in order to avoid the expansion of recall.

Last October, you initiated a worldwide class action. Some people criticize you that it goes a bit too far to allow participation from overseas when the defective tire issue arose in the United States.

Compared to the tobacco lawsuits I had been involved in in the past, this Firestone case is different in several aspects; firstly, the defective tires were manufactured by Firestone, which is located in the US and is a 100% subsidiary of the Japanese company Bridgestone, and secondly, these defective tires were distributed around the world. In other words, it means that people around the world suffered from substantial damages on an equal level.

There is no difference whether tread separation (peeling-off of the tire surface), which is the issue here, happens in Saudi Arabia, Venezuela, or the United States. And the decisions leading up to manufacturing defective tires were made here in the US. I have already received over 1,000 requests to participate in the class action.

Do We Have to Have a Fatality before Any Action is Taken on This Matter?(PANA)

Various lawsuits against Firestone were consolidated in the District Court in Indianapolis [according to kbmoll.com it is the US District Court, Southern District of Indiana]. How do you read the direction of the lawsuit in the future?

Initially, we were hoping for the trials to be held here in Chicago. However, as many lawsuits against Firestone have been brought and numerous court documents would need to be prepared, the proceedings would be very complicated. We needed to consolidate a series of lawsuits into a single court somewhere. In this sense, I believe it was the best choice to consolidate in the District Court in Indianapolis in terms of expense and saving time.

The presiding Judge Sarah Parker [according to kbmoll.com it is Barker] is known for her excellence and we are satisfied. Preliminary hearings have already begun, and we are expecting a resolution by the end of this year.

Compared to the tobacco lawsuits you were involved in in the past, how difficult do you think this defective tires case is?

When I sued the tobacco companies, the defendants counter-argued that people seeking damages for health injuries chose to continue to smoke despite the risks of smoking.

I think Firestone's case is pretty simple and clear. A mother drives to school to pick up her kids who have just finished soccer practice. The surface of one of her tires suddenly comes off and a tragic accident happens. Is there any way she could have been aware of the tire defect? No, it is impossible. I believe this case won't cause any counter-argument like in the tobacco lawsuits, and the case should be solved in an expedited fashion.

However, the important point is the fact that Firestone had known about the defect of their tires since a few years back and nonetheless have taken no action.

You mean they concealed the information regarding the tire defects? That’s right. We have obtained an internal document that was sent in 1998 from Saudi Arabia to Bridgestone in Tokyo. It is in regard to tread separation. Another document that was sent in 1997 to a vice president from an engineer also indicates that they had known the existence of the problem.

Ninety percent of our lawsuits base their cause of action on the company’s faulty response to a defect, rather than the product defect itself. In this case, Bridgestone / Firestone should have promptly recalled their products and notified all the people involved in the problem. But on the contrary, they started cover-ups, beginning in Saudi Arabia and subsequently in Venezuela, Malaysia and Thailand. Why in these countries with a hot climate? They knew that tread separation is more likely to happen in a high temperature environment.

The lawsuits against Firestone also show a complicated aspect; the victims are spread out nationwide and 25 governmental agencies and law firms are involved. Therefore, plaintiffs attorneys formed a cross-sectional organization called PlaintiffsManagement Committee (PMC).

Smaller committees were formed under PMC that deal with such issues as collection of evidence, settlement negotiation and legal issues in order to hammer out the overall strategies. It is like an American football team. Mr. Moll is one of the strong members [of PMC].

On January 11, Bridgestone selected Mr. Watanabe, who is an engineer himself and has extensive experience in working overseas, as the new president. (PANA)

Sense of Distrust of Corporate Giants behind Lawsuits

The sense of distrust of corporate giants seems to explain the reason why the American people have such an interest in the defective tires problem.

As a result of big corporate consolidations and acquisitions in the 1990s, super mega corporations were born in many industries. The western petroleum industry is a good example as it was eventually consolidated into four players such as Exxon Mobil and Chevron Texaco. Their overwhelming market share and influence had a tremendous impact on the increase of petroleum and gasoline prices since last year in the United States.

Hollywood did not miss this trend in public opinion. Two movies were smash hits last year; one was Insider, a movie depicting the misconduct of tobacco companies and the second was Erin Brockovich,in which people win a large settlement package from a corporation that had polluted the environment.

It was presidential candidate Al Gore who best exploited the American peoples fear of corporate giants. In his presidential campaign last year, he criticized the price fixing by petroleum and pharmaceutical companies in order to gain more supporters.

In this sense, Firestone's tire defects problem came to light at the worst time. I heard that while advancing the legal proceedings, you are also continuing settlement negotiations with Firestone. What do you think about the prospect?

It is true that we have been negotiating. In negotiations, each side should sit at a table and discuss the resolution of the problem. If possible, I would like to visit the President of Bridgestone in Tokyo. I believe that they should know our intentions.

Three days after the interview, Bridgestone announced the resignation of President Kaizaki. Hearing this news, Mr. Moll said, the American side perceives that President Kaizaki failed in the management of this crisis. I think it would have been difficult to solve this problem while he was in office. I would hope that successor President Shigeo Watanabe will do a better job. To be honest, after all how much do you think will the final amount of the settlement with Firestone increase?

I have no idea, because there is information that has not been disclosed. As far as I have seen in Firestones response until now, they have not done what they should. If they have enough money to hire lawyers, Firestone should spend these monies on the recall of tires.

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