TEAM 3Consumerism & Consumer

Protection

Kyle DealMelisa GrzanichDianne MillerMike MyersMike Shumack

Focus on Ford-Firestone Tire Crisis

Introduction to Consumer Protection Bridgestone/Firestone Ford Motor Company NHTSA Involvement Consumer Advocate Agencies Who’s protecting the Consumer?

Who is responsible?

Consumer Protection

Who helps protect the Consumer?

There are over 50 Consumer Protection Agencies

and hundreds of Consumer Advocacy groups– EPA– FDA– NHTSA– CPSC– SEC– FDIC

Four Legal Theories

Negligence

Manufactures have an obligation to do what a

reasonable person would be expected to do.

They can be held liable for injury resulting from

unintentional but reasonably foreseeable misuse

of a product.

Legal Theories

WarrantyWhen a product is sold there is an implied warranty that the product is fit for the ordinary use for which it was intended.

Express - explicit claim made by manufacturer to seller

Implied - item fit to use as is intended for

Legal Theories

Strict LiabilityMakes it possible for injured consumers to hold all those in the chain of distribution responsible for defective products

Joint-and-Several LiabilityIf the primary party responsible for damages or If the primary party responsible for damages or injury can not make full restitution, the injury can not make full restitution, the secondary parties will be required to do so.secondary parties will be required to do so.

Firestone: Key Facts

May 2000 Firestone under federal investigation

August 2000 Recall 6.5 million tires

November 2000 Firestone internal investigation of

Decatur, IL plant

March 2001 Bridgestone President Yoichiro Kaizaki

resigns

August 2001 First trial for Firestone

What did Firestone Know?

Employee concerns

1999 two safety studies conducted

Results of studies not released

Profit vs. Safety?

Compensation

By August 2001 Firestone settles 150+ cases for undisclosed sums

August 2001 Dr. Joel Rodriguez and family lawsuit – $6 million settlement

Casualty Statistics

December 2000– 148 deaths– 525 injuries

August 2001– 203 deaths– 700 injuries

Final Numbers– 271 deaths– 800+ injuries

Ford Motor Company

Firestone puts onus on Ford

Ford profits take big toll

Court hearings begin

Ford Motor Company

Florida Death Toll rises

Consumer lawyers watching Texas

Firestone exposed

Ford: Key Dates

Sept 2000: Ford Motor Company insists blameless in fatal accidents.

Jan 2001: Ford offers tire warranties on new car sales

March 2001: Ford releases annual report listing damages

Ford: Key Dates (continued)

May 2001: Relationship with Firestone terminated

May 2001: Ford recalls Firestone tires

Aug 2001: Firestone agrees to pay damages for first trial

Ford Motor Company

Ford hides defects

Jury finds Explorer defective

Ford ends tire replacement program

National Highway Traffic Safety Administration

NHTSA formed 1970

Purpose - to reduce

deaths, injuries, and

economic losses

resulting from motor

vehicle accidents

NHTSA Involvement

NHSTA notified of tire trends 1998

NHTSA recommends additional recalls

May 2001: Ford recalls an additional 13 million

NHTSA Responses

NHTSA creates the TREAD Act of 2000

New performance standards for tires

Increased financial penalties

Tire pressure monitoring devices

Consumer Advocacy Organizations

Center for Auto Safety– Consumer Union & Ralph Nader

autosafety.org

Successes– Lemon Laws– Ford Pinto recall– Firestone 500 tire recall

Center for Auto Safety

May 2000 warned NHTSA of trend

Nylon cap $1 part

Sues Firestone/Ford – recall all ATX, ATX II & Wilderness tire

Center for Auto Safety

Basis of Law Suit

– Breach of express warranties– Breach of implied warranties– Reckless, intentional or negligent

misrepresentation

Warranties

Express warranty– explicit claim made by manufacturer to seller

Implied warranty– fit for the ordinary use to which it is intended

Basis for lawsuit

1999 recall in foreign countries

Non-Decatur production sites

Promote Explorer as safe vehicle

Public Citizen

Ralph Nader, 1971– citizen.org

Goals– consumer safety from all products & services

Successes– Creation of NHTSA

Public Citizen

Concerned about SUV rollovers– 1995 to1997 2D Explorer

Worst rollover death rate Worst death rate overall

NHTSA vehicle stability ratings– Initially available on internet

Push for New Federal Safety Rules

Revised tire safety standard

Dynamic roof crush standard

Dynamic rollover standard

Ejection prevention standard

Increase early notification of defects

Tread Act Ineffective

Special interest lobbying

– Lacks criminal penalty legislation– Secrecy provisions to withhold data from public– Lack of information on used vehicles

Tire Pressure Monitoring

Direct v Indirect monitoring– Direct – monitors all 4 tires– Indirect – measures difference in rotation

speed

New regulation gives manufacturers choice– Automakers provide direct monitor as upgrade

Who’s Protecting the Consumer?

Where did Firestone fail to serve the consumer?– Employee concerns– Failure to act on study results

Who’s Protecting the Consumer?

Where did Ford go wrong?– Vehicle design v. tire design– Hid lawsuit information

What did Ford do right?– Voluntary tire replacement– New vehicle tire warranties

Who’s Protecting the Consumer?

What could NHTSA have done better?– Prompt reaction to initial reports– Does Tread Act go far enough?

What are Consumer Responsibilities?

Maintain vehicles according to manufacturer specifications– measure pressure

Sources

http:\\autosafety.org http:\\citizen.org http:\\elslaw.com http:\\ford.com http:\\nhtsa.dot.gov http:\\msnbc.com http:\\safetyforum.com

Sources

http:\\statefarm.com http:\\usatoday.com Business, Government & Society, 9th ed.,

Steiner, George and John F. Steiner; McGraw-Hill, 2000, pp 560-573.