California Law Business
By Jeffrey Anderson
December 11, 2000
General Motors, Ford, Firestone and now Goodyear are learning to fear [Santa Monica attorney]. With other consumer attorneys, he’s on a mission to shed new light on the auto industry’s dirty little secrets. By Jeffrey Anderson
Remember the Ford Pinto, the egg-shaped economy ride that sometimes exploded when struck from behind? Mark Robinson does.
He also remembered the look on the faces of the jurors who awarded $127 million to his client, 13-year-old burn victim Richard Grimshaw, in 1978, based on a design flaw that led to the deaths of 27 people from fuel-tank fires in Pintos.
The jurors were outraged to learn that the Ford Motor Co. became aware of the risks of passenger deaths in 1971 yet waited until 1976 to move the Pinto’s gas tank from behind the rear axle to a safer spot above the center of the axle.
“Ford made a decision to place money ahead of human lives,” Robinson says, waving an Aug. 26, 1971, fuel system integrity memorandum. That damning piece of evidence advised Ford executives not to recall or re-design the Pinto “until required by law.” Thirty years later, Robinson charges, little has changed.
The automobile industry continues to place profits ahead of people, he says. In recent years, they’ve added a new weapon to their arsenal, according to the plaintiffs’ bar: protective orders granted by courts and genuflecting judges that keep corporate transgressions out of the public eye.
Recently, aided by lawmakers, consumer groups and the media, plaintiffs’ lawyers have begun firing back, asking courts to let the sunshine in to cleanse dirty little secrets like those behind the Ford Pinto.
The Colonel’s Secret Recipe and the formula for Coca Cola – the trade secrets on which corporate defendants rely to close court files and discovery documents-are a far cry from the prescription for defective tires, Robinson says.
Once again, the automobile and tire manufacturers have placed public scrutiny directly on the courts.
First there was the hail of litigation from rollover accidents involving Ford Explorers equipped with “de-treaded” tires and the recall of 6.5 million defective Bridgestone/Firestone tires in August.
Then in October, it was revealed that Goodyear Tire & Rubber Co. had also manufactured tires involved in fatal accidents – and questions were raised about what the company knew and when they knew it.
Goodyear received 3,000 complaints about its tires in 1995 before they launched an internal investigation and ostensibly altered some tire designs. For the next four years, the company quietly replaced thousands of defective tires at no cost to consumers.
In October, plaintiffs’ lawyers and the media, notably v the Los Angeles Daily journal and the Los Angeles ‘Times, brought to light the mounting .deaths and injuries from accidents in which Goodyear tires were involved. They also brought to light a New Jersey case involving the tires in which key documents were reportedly sealed.
Shortly after, Goodyear put away the batch kit and notified the National Highway Traffic Safety Administration on Oct. 26 that tread separations of Wrangler Load Range E tires and a spate of sport utility vehicle rollovers have led to 15 deaths and 133 injuries since 1994.
They also notified the agency there are 27 million such tires and about half are still on the road. The National Highway Traffic Safety Administration ordered a preliminary investigation into Goodyear’s light-truck tires on Nov. 21.
News of that investigation, the Firestone recall and dozens of lawsuits filed against both tire manufacturers nationwide have called into question the access to information affecting public safety.
Goodyear, like most corporations that get sued, clings to its right of privacy and the need to protect trade secrets as justification for obtaining protective orders. Pro-secrecy groups contend that public access to court documents does not extend to pretrial discovery or settlements outside the courtroom.
The consumer bar and anti-secrecy groups attribute an unspoken motive here. They charge corporations with using protective orders to hide information related to well-known hazards and limit liability exposure.
Meantime, the California Judicial Council has enacted rules to limit the use of protective orders in papers filed with the court, and state Assemblyman Darrell Steinberg, D-Sacramento, introduced AB36, on Monday, which would further limit their use in product defect, environmental hazard and financial fraud cases. However, defense attorneys warn that such measures could hamper free exchange of documents, burden courts with excessive pretrial discovery motions and force parties to go to trial rather than settle for reasonable amounts.
Robinson has been confronting these issues for decades, The former president of Consumer Attorneys of California was eager to discuss tires. trucks and SUVs – and the protective orders he claims corporations rely upon to make sure vital information never sees the light of day.
He and partner Kevin Calcagnie of Newport Beach’s Robinson Calcagnie & Robinson agreed to meet at their firm’s warehouse, where they store a small fleet of crushed vehicles they’ve purchased from insurance -carriers to demonstrate the need for stricter safety standards.
Calcagnie downloaded statistics showing the probability of an SUV rollover given its center of gravity, tire height, track width and wheel base as Robinson spoke of the auto industry’s current woes and its dark past. Firestone is not totally to blame for deaths from tread separations on Ford Explorers, Robinson said. ‘The real problem is vehicle stability,” he says of the popular SUV design that lets passengers;ride tall in the saddle.
Looking up from his computer Calcagnie says, “Instead of lowering the engine mounting on the Explorer, Ford raised it.”
“Ford made a conscious decision not to lower the center of gravity in 1995,” Robinson adds. ‘They developed a safer system but decided for cost reasons not to implement it. I’ve seen the memo but it’s under a protective order.” (Ford spokeswoman Susan Erusel replies that Ford turns over all documents in liability cases except financial data, computer programming formulas and product planning information: “We haven’t had a plaintiffs’ lawyer charge us with inappropriately seeking trade secret protection on the Explorer in l0 years”)
Sitting near a reconstructed Pinto amidst a carnage of sport utility metal, Robinson said “This whole secrecy debate goes back to the Nixon years.”
The critical moment came on April 27, 1971, Robinson says. during a secret meeting held in the Oval Office between President Nixon, auto maker president Henry Ford II and then-chairman of Chrysler Corp. Lee Iacocca
The auto makers were concerned because times were beginning to look tough in Motor City. Japanese companies Honda, Toyota and Datsun were introducing curiously small, fuel-efficient cars that challenged the market dominance of the Big-Three, Ford, General Motors Corp. and Chrysler.
And the federal government wasn’t helping. The National Highway Traffic Safety Administration was proposing 70 safety and auto emissions standards that threatened to increase costs and erode the dominance of the Big Three.
Evidence of the closed-door meeting is eerily contained in Nixon’s secret White House tapes and in 1991 depositions taken of domestic affairs assistant mid former-White House Counsel John Ehrlichman, who would later spend time in prison for his Watergate role and die in1999.
During the meeting, Ford told Nixon that the auto industry would have to spend one-sixth of the gross domestic product to comply with National Highway Traffic Safety Administrations requirements by 1975, according to the Ehrlichman deposition. And, Ford warned the president the price of the popular Pinto would go up 50 percent in three years if the National Highway Traffic Safety Administration standards were implemented.
Cool it, or you’ll break us up.” lacocca complained to the president. Of particular concern were the costs of complying with bumper strength and air bag requirements.
Ford passed away in 1987 and Iacocca, who invented the B-bike, an electric transportation system, now heads EV Global Motors Inc. in Los Angeles and did not return calls for comment.
The entreaties of the auto magnates had an effect on Nixon, according to Ehrlichman’s deposition.
Later in the day, he met with the president. “I’m strongly against them all, it’s not good government,” Ehrlichman testified of Nixon’s reaction to the National Highway Traffic Safely Administration proposals. “Tell [Department of Transportation Secretary John] Volpe to delay all of this.”
Then, on May 13, Nixon met with the Big Third, General Motors chairman James Roche. That same day Nixon reiterated his order that the National Highway Traffic Safety Administration table the safety regulations. But there was a price. He instructed Ehrlichman to tell assistant Charles Colson, a lawyer and self-described “hatchet man” for Nixon, to “exploit the Ford meeting,” meaning, in Ehrlichman’s words, “hit Ford up for a political contribution.”
Volpe, who had shown crash test films to Ehrlichman and several other of the president’s men, strongly objected to yielding to the auto industry, according to Ehrlichman. However, after receiving his marching orders from Colson, Volpe instructed the National Highway Traffic Safely Administration to withdraw the proposed regulations and advised the White House staff that “it was a bad decision.”
Volpe died in 1994. Colson, who would not comment, later served seven months of a three-year sentence for his role in Watergate and now lives in Northern Virginia, where he is an evangelical lay minister, author and founder of the Prison Fellowship.
Among the shunted the National Highway Traffic Safety Administration regulations was one that would have required automobiles to sustain rear impacts of up to 30 mites per hour by 1974, not just 20. After the verdict in the 1978 Pinto case – which left the victim burned over 90 percent of his body after his car stalled on the freeway and was struck from behind – National Highway Traffic Safely Administration officials quickly arranged a meeting with Ford and a recall of the vehicle.
“That meeting between Ford and lacocca and Nixon set the stage for 30 years of inadequate safety standards,” said Robinson, after looking out the window of his Orange County warehouse and squinting into the sun.
Consumer groups have long been dispirited with what they saw as the National Highway Traffic Safely Administration’s history of regulatory malaise, pointing to the conservative nature of governmental agencies in general as well as the number of former National Highway Traffic Safety Administration leaders who went to work for the industry as executives, attorneys, consultants or lobbyists.
“Starting with [president] Reagan the top NHTSA appointees went right into the industry,” says Joan Claybrook, head of The National Highway Traffic Safety Administration from 1977 to 1981 and current president of Ralph Nader’s consumer organization Public Citizen.
After the Pinto recall, the National Highway Traffic Safely Administration did not implement any significant auto and tire-safely standards until President Clinton signed into law Nov. 1 the Transportation Recall Enhancement Accountability Documents Act, Claybrook says. The act directs the National Highway Traffic Safety Administration to update 30-year-old tire safely standards, develop a dynamic rollover test improve testing of vehicle child safely restraints and require manufacturers to certify that their products comply with federal safety standards.
The act also requires The National Highway Traffic Safety Administration to issue rules requiring manufacturers to submit early warnings about defects and imposes criminal penalties on manufacturers that give false statements to the government. It increases the maximum civil fine for regulatory violations from $925,000 to $15 million and adds a $5,000 maximum daily penalty for withholding documents, up to $15 million.
Still, consumer advocates complain, “There is no criminal penalty for missing a recall that results in death and the civil penalties have no teeth,” Claybrook says. “Firestone shows us that NHTSA must be more proactive in obtaining early warning information and following up on that information.”
However, National Highway Traffic Safely Administration chief of media relations Tim Hurd, says, “We had the biggest year in history for recalls last year and this year is expected to be even bigger,” noting that the National Highway Traffic Safety Administration had investigations pending in 86 of 371 recalls in 1999. Since the agency was formed in 1966, he adds, it has “influenced” 1,458 recalls, meaning a National Highway Traffic Safety Administration investigation was underway when an automobile or part was recalled. Those recalls have led to 165 million cars being taken off the road, he says.
“Compare that to 5,762 voluntary manufacturer recalls with no investigation pending which took only 9 million cars off the road,” Hurd says.
Despite an additional $9 million appropriation from Congress in the recently signed act, bringing the National Highway Traffic Safety Administration’s budget to $191 million, it remains under-funded and under-staffed, according to Claybrook. The National Highway Traffic Safely Administration’s office of defects investigation has only 47 employees, for instance – the same number it had in 1980.
“They wait for information to fall into their laps even then they don’t know what to do with it,” she says.
Yet the National Highway Traffic Safely Administration has a leg up on plaintiffs’ lawyers when it comes to obtaining elusive information, Manufacturers, for instance, are prohibited from withholding documents from the agency.
‘The agency has the power to obtain documents whether there is a gag order or not,” Claybrook says. ‘So, they should be following consumer complaints and lawsuits and checking with auto-repair associations and parts manufacturers.”
There were signs the agency was changing when Clinton appointed Dr. Sue Halley as administrator Aug. 3 after her predecessor left to work in the auto industry. Both Claybrook and Hurd agreed that Bailey has been committed to raising the agency’s profile, To what effect is unclear because the White House recently asked all appointees to tender resignations by Jan. 20, and future appointments are uncertain.
Amid this hazy regulatory scenario, tie increase in tire-tread separations.and SUV rollovers coupled with the lack of roof-crush safety standards is of particular concern to Calcagnie, who notes that SUVs roll over in 30 percent of accidents, seven times more often than other passenger vehicles.
“Toyota Forerunner, Jeep Wrangler and Jeep CJ-7 are all notoriously unstable” he says.
The numbers of auto-related deaths from rollovers also has inflamed [the Santa Monica attorney], president of the Consumer Attorneys of California. “We can’t afford to rely NHTSA to protect the public,” says [the attorney], partner in [a Santa Monica law firm].
He, too, points to the Firestone recall as an illustration of the National Highway Traffic Safety Administration’s failure protect the public, “Private lawsuits brought that matter to light, not the regulatory agency,” he says. ‘The truth is that the civil justice system is the only place where you can’t lobby your cause. There are no elections, no financial contributions, no partisan politics.”
But there are gag or.ders, And defense lawyers have persuaded judges grant them to car companies in recent lawsuits, inflaming the media and consumer attorneys.
Among the cases that weigh on [the Santa Monica attorney] is one he and partner Christine Spagnoli are handling on behalf the survivors of U.S. Air Force Capt Robert Frankl against Goodyear in Mercer County, NJ. Frankl v. Goodyear, MER-L-003052-99 (Mercer County Super. Ct, NJ.). Frankl sustained fatal skull fractures in July 1997 when a 1996 GMC Suburban carrying six officers and enlisted personnel was launched airborne on a Saudi Arabian highway, after the tread of Goodyear tire came off like an orange peel.
Two other fatalities occurred as the roof of the Suburban caved in.
That was not the first Goodyear case handled by [the Santa Monica attorney] and Spagnoli.
In 1997, before she even reviewed Goodyear documents in the Los Angeles Superior Court case of Los Angeles Police Department Office Brian Mathews, a former bomb-squad member who was thrown from a Chevrolet Suburban and rendered paraplegic, Spagnoli was instructed by the court to keep the records confidential, she says. Mathews v. Goodyear, PC018776 (L.A. Super Ct).
When she settled Mathews in 1999, a protective order required Spagnoli to return Goodyear’s documents, including 33 exhibits to a deposition transcript.
“I was not even allowed to reveal what topics the exhibits cover,” Spagnoli says.
Now, in Frankl, Goodyear has once again obtained a court order to seal public records, including pleadings related to whether the documents should be sealed, says Spagnoli, who claims such gag orders are “putting people in jeopardy.” Because of concerns about public safety, the Daily Journal Corp. and the Los Angeles Times have sought to intervene in the Frankl case.
Goodyear’s attorney William DelHagen, a partner at Los Angeles’ Belcher Henzie & Biegenzahn, says Spagnoli “didn’t challenge the protective orders during Mathews. Goodyear never had a protective order challenged until now.”
DelHagen also cautions that Spagnoli presumes that release of documents will materially improve the public’s health and safety. ‘That’s a large presumption, if you ask me,” DelHagen says.
“There are many procedures by which the public is protected,” he adds,
Despite that assertion, the newspaper companies have demanded that the court refrain from allowing future filings to be placed under seal absent a document-by-document review of whether Goodyear’s interest in secrecy outweighs public access to court records, particularly where health and safety concerns exist.
Attorney for the Daily Journal Marc Becker of Los Angeles’ Munger, Tolles & Olson confirms at press time that the New Jersey court has delayed the motion hearing until January, and that Associated Press and Bloomberg News plan to file papers requesting to join in the action.
Pro-secrecy advocates are adamant in their opposition to efforts to open court documents, however.
“We don’t disagree with plaintiffs’ lawyers that information important to public safety should not be concealed in any kind of court document,” says John Sullivan, president of the Sacramento-based Civil justice Association of California. “But the U.S. Supreme Court has said that there is no First Amendment right of public access to discovery materials neither used at trial nor used as the basis for adjudication.” Seattle Times Co. v. Rhinehart, 467 U.S 20 (1984).
Protective orders serve many purposes, he says. First, requiring corporations to disclose unprotected documents risks allowing trade secrets to fall into competitors’ hands. Plus, it leads to prolonged legal fights over discovery, which is supposed to be free and uninhibited.
Furthermore, allowing unfettered access to corporate secrets discourages defendants from entering into reasonable settlements, Sullivan says. Courts favor mutual resolution by the parties, and often require parties to engage in settlement negotiations be fore going to trial. Give overzealous plaintiffs lawyers the benefit of unprotected discovery documents and they are likely to make inflated demands that force companies to take their chances at trial, he says.
“I think the opposite is true,” media expert Sell Sager of Los Angeles’ Davis, Wright & Tremaine says. “If corporations know up front that only legitimate trade-secret information is protected they will try to settle the case early. If they know they can hide behind protective orders then both sides will drag out the case.
Yet reaching an out-of- court settlement is like seizing the holy grail for corporations as long as courts are lenient in granting protective orders during discovery phase.
[The Santa Monica attorney] has had to resort to many confidential settlements out of an ethical duty to his client, which has the undesired effect of allowing corporations to keep safety information in the dark. “I’m obligated to advise my client when reasonable settlement offer is made,” he says. “that’s my first priority, regardless of what’s in the public interest.”
Regarding the overriding interest in promoting public safety, Sager adds, “Early disclosure also gives corporations incentives to fix the problem to avoid a public relations disaster. We’re talking about matters of enormous public interest, not the formula for Coca Cola.”
[The Santa Monica attorney’s] partner Brian Panish appreciates the significance of hidden corporate documents. In 1999, he obtained a $4.9 billion jury award against General Motors, the largest verdict against an auto maker since the Ford Pinto. Anderson v. General Motors Corp., BC116926 (LA. Super. Ct).The evidence that turned the jury against General Motors was a cost-benefit memo similar to the one in the Pinto case.
In 1993, six passengers in a 1979 Chevrolet Malibu sustained severe burns as a result of a gas tank fire when a drunk driver struck the Malibu from behind at 70 miles per hour.
Since the early 1970s, General Motors had conducted studies of fire-related deaths in its vehicles. In a June 29, 1973, memo obtained by California Law Business, a 22-year-old advance design specialist named Edward Ivey calculated costs to the corporation of S2.40 per car for liability resulting from passenger deaths.
Anderson v. General Motors
In 1973, General Motors advance design specialist Edward Ivey In a memo, a key portion of which is excerpted below, calculated the costs of claims relating to fuel-fed fires, Consumer attorney Brian Panish, above, with survivors of a Los Angeles crash in 1993 involving a Chevrolet Malibu, right, used this document to prove to a jury that General Motors balanced the cost of human lives with the cost of improving the fuel tank design and placement in the 1979 Malibu, Anderson v. General Motors. General Motors attorneys had denied this for 17 years until a Florida court unsealed documents confirming Ivey’s role in the auto makers ‘ cost deiiberstions.The Anderson jury returned a verdict of $4.9 billion against General Motors, which was later reduced to $t2 billion. The case is on appeal before the 2nd DIstrict Court of Appeal.
The Ford Pinto Case
Newport Beach lawyer Mark Robinson won $127 million for a client in 1978, based on a design flaw in the Ford Pinto that led to the deaths of 27 people from fuel tank fires in the 1970s. “Ford made a decision to piece money ahead of human lives,” Robinson says, referring to an Aug. 20, 1971 Fuel system Integrity memorandum, the damning piece of evidence that advised Ford executives not to recall or re-design the Pinto “until required by law.”
Frankl v. Goodyear
US Air Force Capt. Robert Frankl (Frankl v. Goodyear) sustained fatal skull fractures in July 1997 when a 1996 GMC Suburban, above, carrying six officers and enlisted personnel was launched airborne on a Saudi Arabian highway, after the tread of a Goodyear tire, right, came off like an orange peel. Two other fatalities occurred as the roof of the Suburban caved in.
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