1Throughout this Memorandum, Ford Motor Co. is referred to as Ford US. Ford Motor de Venezuela,S.A. is referred to as Ford VZ. Bridgestone/Firestone, Inc. is referred to as BF US. Bridgestone/FirestoneVenezolana, C.A. is referred to as BFVZ. Depositions are cited by the name of the deponent followed pageand line cites. Documents are cited by their production Bates stamped numbers. All documents are found inthe Firestone CD set or in the Ford web site. Hard copies of documents not available through these sourceshave been included in Plaintiffs’ Appendix. “App.” cites are to Plaintiffs’ Appendix, referencing the specificdocument number. Ford US Stipulations Re: FNC are found at MDL Docket No. 1769. BF US StipulationsRe: FNC were filed on October 17, 2001 (MDL Docket No. not yet assigned).

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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF INDIANA

INDIANAPOLIS DIVISION)

In re: BRIDGESTONE/FIRESTONE, INC. )ATX, ATX II AND WILDERNESS TIRES ) Master File No. IP 00-9373-C-B/SPRODUCTS LIABILITY LITIGATION ) MDL No. 1373

) (centralized before Hon. Sarah Evans____________________________________) Barker, Chief Judge)THIS DOCUMENT RELATES TO ALL )ACTIONS LISTED ON APPENDIX A & B )ATTACHED HERETO ) ____________________________________)

PLAINTIFFS’ STATEMENT OF FACTS IN RESPONSE TO DEFENDANTS’MOTION TO DISMISS ON THE GROUNDS OF FORUM NON CONVENIENS

Plaintiffs, by and through undersigned counsel, file their Statement of Facts in Response to

Defendants’ Motion to Dismiss on the Grounds of Forum Non Conveniens and state as follows:

The Original Design of the Ford Explorer Vehicle

There is very little dispute that the original design of the Ford Explorers vehicle – which is

the subject of Plaintiffs’ design negligence allegations against Ford US – occurred in the United

States.1 Rather than cite to the hundreds of thousands of pages of production documents, thousands

of pages of deposition testimony, and scores of US-based witnesses that corroborate this basic

assertion, and in the interest of economizing precious pages for less obvious points about this case,

Plaintiff offer the following factual stipulations agreed to by Ford US which substantially cover these

issues:

2 The Ford US stipulations are confirmed and expanded upon in the deposition testimony of AntonioDa Silva, Head Engineer for Ford VZ: Explorer designed and tested in U.S. (Da Silva 86/23-25); engineeringspecs originate in U.S. (Da Silva 416/8-10); standard parts designed in U.S. (Da Silva 416/11-17); only FordUS had the authority to release standard parts for the Explorer (Da Silva 416/18-25); any unique part releaseto be used in VZ Explorers required engineering approval from Ford US (Da Silva 417/1-23);

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1) The Ford Explorer vehicles distributed in Venezuela from 1995 to 2000 were

substantially designed in the US by Ford US. (Ford US Stipulation No. 1).

2) Most original design and engineering documents for the Ford Explorers distributed

in Venezuela from 1995 to 2000 are located in the US. (Ford US Stipulation No. 2).

3) Virtually all documents in the United States dealing with the original design and

engineering of the Ford Explorer vehicles are in English. (Ford US Suppl. Stipulation No. 23).

4) Virtually all of the J-Turn and ADAMS testing of the stability of the Ford Explorer

vehicles was performed in the United States. (Ford US Stipulation No. 3).

5) Virtually all of the documents regarding the J-Turn and ADAMS testing of the stability

of the Ford Explorer vehicles are located in the United States. (Ford US Stipulation No. 4).

6) The persons most knowledgeable of the J-Turn and ADAMS testing of the stability

of the Ford Explorer vehicles reside in the United States. (Ford US Stipulation No. 5).

7) Virtually all documents in the United States dealing with the J-Turn and ADAMS

testing of the stability of the Ford Explorer vehicles are in English. (Ford US Stipulation No. 6).

8) Ford has performed a variety of tests in the United States during the past 10 years on

the stability of the Ford Explorer vehicles. (Ford US Stipulation No. 7).

These stipulations, albeit in the watered down form offered by Ford US, concede the obvious:

substantially all the relevant evidence and witnesses relating to the original design and stability testing

of the Ford Explorer vehicle distributed in Venezuela between 1995 and 2000 are found in the United

States.2

(FAAB0815757); the design of the VZ Explorer’s suspension system--critical to Plaintiffs’ allegations of avehicle instability problem--“originates in the United States” (Da Silva 433/15-16) (emphasis added); thechassis design also “originates in the United States” (Da Silva 433/20-21) (emphasis added); finally, anymodification to the vehicle design and critical components of the vehicle “must be approved by the UnitedStates because [Ford VZ has] no capability for design in Venezuela.” (Da Silva 220/7-12) (emphasisadded); (Caballero 489/3-10) (Ford VZ totally depends on Ford US for all design analysis because “[w]e don’thave the experience. We don’t have the resources...they are the design owners”) (emphasis added);(FAAB 0852430) (“We locally do not required a design engineering sign-off as we will not change thevehicle design, we basically copy and manufacture local parts following the source design, any localchange requested (like paint finish or color) if required will not affect the design of the vehicle and willbe signed off by the respective design engineer at [Ford US] TVC.”) (emphasis added).

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The Introduction of the Ford Explorer Vehicle into Venezuela

The Ford Explorer was introduced into Venezuela (“VZ”) in May 1995. (FAAB0852214).

The VZ Explorer model was a “complete knockdown” of the US Explorer. (FAAB1031338-44). A

“complete knockdown” means that the vehicle is assembled abroad from a “knockdown kit” of

component parts shipped from the US. (Baughman 52/10-17). The “knockdown kit” is assembled

at a Ford US distribution center in Jacksonville, Florida. (Baughman 52/10-53/10). Ford component

parts are shipped to this facility from various Ford US suppliers; the parts are sorted in Florida,

inventoried and crated for shipping to VZ. (Baughman 52/10-53/10); (Da Silva 428/12-430/10). All

major structural parts of VZ Explorers came from the U.S. (Da Silva 433/8-10). All of the

component parts contained in the “knockdown kit” are identical to the component parts used on Ford

Explorer vehicles in the United States. (Da Silva 430/11-23); (see also Ford US Supplemental

Stipulation No. 24) (most parts substantially similar). In paperwork submitted to the VZ government

upon importation, the Explorer was described as a “US certified” vehicle. (FAAB1215966)

(emphasis added).

Some percentage of locally sourced parts also are utilized to assemble the VZ Explorers. (Da

Silva 430/24-431/14). Approximately 25% of the total vehicle cost is accounted for by locally

sourced parts. (Id.); (FAAB1351752-3). The remaining parts – comprising most of the vehicle –

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are US sourced parts. (Da Silva 433/8-10). The locally sourced parts must be of “follow source”

design, meaning they must “follow” the US “source” design for the same component part.

(FAAB0815757); (Baughman 38/17-39/3). Ford US “follow source” requirements dictate that

locally sourced parts “are of the same quality level and manufacturing design specifications as the

parts they follow, consequently the words ‘follow source’ from the US production.” (Baughman

38/23-39/3). If a part is locally sourced or locally purchased it must meet minimum design

specifications established in the US. (Baughman 39/4-13). Ford US' Export and Emerging Markets

Engineering Department was “responsible for converting locally sourced parts from C3P to drawings,

modifying and releasing locally sourced parts requiring changes and providing engineering support

to the VZ suppliers through [Ford VZ] engineering.” (EAPX0771068). Any proposed design change

to locally sourced parts must be approved by Ford US or, as Tom Baughman (Ford US Engineering

Director for Trucks) testified, “the approval process went through Dearborn so that Dearborn was

aware that there was a local modification being proposed to the part.” (Baughman 46/16-18). As

Ford US concedes, the corporate follow source requirements represents about probably 95% of being

assured that you would not introduce a vehicle that would have a local market problem. (Baughman

188/2-188/4) (emphasis added). The local country's vehicle team’s (in this case Ford VZ's)

responsibility to identify unexpected or unpredictable local market conditions is deemed only 5% of

Ford's overall engineering safety process. (Baughman 188/2-23).

Between 1995 and 1997, approximately 22,607 Ford Explorer “knockdown kits” were

shipped from the US to Venezuela. (BAAE1601-1602). An additional 1500 fully assembled Ford

Explorer vehicles were shipped from the US to the Andina market (Venezuela, Colombia and

Ecuador). (Id.). The US assembled vehicles and US “knockdown kits” account for 100% of all Ford

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Explorers distributed in the Andina market (Ford US Stipulation No. 8) and all of the vehicles

involved in the underlying PI/WD cases.

The high percentage of common component parts, and the rigorous US design control over

locally sourced parts, led Ford VZ officials to concede in formal sworn testimony before the

Venezuelan National Assembly, that “the Ford Explorers vehicle assembled in Venezuela is the

exact same vehicle that is manufactured in the U.S.” (App. 15).

The Sourcing of Tires for Ford ExplorersDistributed in Venezuela and Colombia

The original radial ATX and Wilderness AT tires were designed in the US and modifications

to these tires were conceived and executed in the United States. (Parma 251/13 - 252/4); (Gonzalez

514/13-19). This original Wilderness AT tire design – and critical changes made to it by BF US and

Ford US personnel in the US – are the focus of Plaintiffs’ liability allegations in this action.

Plaintiffs incorporate by reference the findings made by the National Highway Traffic Safety

Administration (“NHTSA”) in its Engineering Analysis Report and Initial Decision (“Initial

Decision”) regarding file number EA00-023: Firestone Wilderness AT Tires. (App.16). NHTSA’s

Initial Decision finds “that a safety related defect exists in Firestone Wilderness AT P235/75 R15 and

P255/70 R16 tires manufactured to the Ford specifications prior to May 1998.” (Id.). As partial

grounds for this Initial Decision, NHTSA has cited the fact that the so-called “belt wedge” is

“generally narrower than the wedge gauge in peer tires.” (Id. at iv.). The Initial Decision also

observes that “[t]he interbelt gauge initially specified by Firestone for the focus tires is generally

narrower than the inner belt gauge in peer tires and is narrower than Firestone’s original specifications

for ATX tires in the early 1990's.” (Id. at v.).

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These critical design decisions were made in the US. (See Defendant Ford Motor Company’s

Notice of Filing of Public Records Relevant to Defendant Bridgestone’s Motion to Dismiss The

Master Complaint For Want of Jurisdiction, MDL docket entry 1731). As demonstrated in Ford US’

submission, not only were Ford US and BF US personnel involved in these critical decisions with

respect to the re-engineering of this tire, Bridgestone Corporation personnel were also involved. (See

Ford’s Statement in Opposition to Defendant Bridgestone Corporation’s Motion to Dismiss The

Master Complaint For Want of Personal Jurisdiction, MDL docket entry 1684). Plaintiffs incorporate

by reference the numerous record cites and documentary evidence offered by both Plaintiffs and Ford

US in connection with the pending Motion for Class Certification and Bridgestone’s Motion to

Dismiss, outlining the US- based conduct by Ford US, BF US and Bridgestone Corporation, which

preceded these critical design decisions. See MDL docket entries 1684, 1720-21, 1724, 1730, 1733-

34 and 1758.

BF US’ Latin American Tire Development Department was involved from the beginning in

the development of design specifications for Firestone tires to be utilized on Ford Explorer vehicles

in Venezuela. (BMD0036106); (Gonzalez 514/18-19) (“Design as we understand it, the design of

the tire was made in BFS–at BFS. Not in Venezuela.”). Beginning in May 1995, various BF US

employees in the Latin American Tire Development Department helped develop the design

development requirements for light passenger truck tires for the VZ market. (BMD0036103-105).

BF US’ Latin American Tire Development Department would “put in a spec request, the spec writer

[in the United States] writes the spec, the spec gets sent to the South American country, they convert

it to a plan spec and they build the tire.” (Parma 270/6-11). Once the design specifications were

established, the design specs would be sent to Venezuela and would be modified only if needed to

fit the unique manufacturing equipment available in Venezuela. (Id. at 269/2-7). Any changes to

3 The P255/70 R 16 Wilderness AT tire was the most common tire used on VZ Explorers. (Maron389/6-9).

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the design specs were required to go through the Akron Technical Center for approval. (Parma

270/19-23; 14/7-10); (Abreu 106/15-16) (“Any change should be approved by Akron Technical

Center”); (Abreu 134/7-10) (“To add any kind of material BFVZ cannot do it by itself. It has to be

– they ask for permission.”); (Abreu 122/18-20).

Pursuant to BF US procedures, a “product registration file” must be opened in order to obtain

“approval” from Ford US for the introduction of any tire on VZ Explorers. Approvals also had to

be obtained from BF US’ Development Department and South American Technical Support

Department. See, e.g., the project registration file for the P235/70R15 Wilderness AT tire.

(BMD0036101).

In anticipation of the introduction of the Ford Explorer model vehicle to VZ, Ford VZ

solicited the purchase of P255/70R16 Wilderness AT tires for use on Ford Explorers distributed in

VZ and Colombia, requesting "the same one used by Ford US" in the US. (App. 17).3 In the words

of BFVZ’ own president, “the design of the tire is exactly the same” in VZ as in the US. (Gonzalez

125/25 - 126/2) (emphasis added); (Gonzalez 130/24-131/5) (design of P255/70 R16 tire in

Venezuela is the same as that of the P255/70 R16 SL A/T- OWL tire in the United States); (Maron

147/16-24) (“our tire design was identical to the U.S.”) (emphasis added); (Parma 181/12-18)

(unable to identify a single material design difference between P255/70R16 tires manufactured in

Wilson, North Carolina and those from Venezuela); (Martin 141/13-142/6) (Venezuelan tires built

to identical specifications as US tires).

Consistent with the foregoing, in a letter dated August 21, 2000, sent by BFVZ to Samuel

Ruh, President of INDECU (the VZ consumer protection agency), BFVZ represented to VZ

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regulatory authorities that “the tire supplied to Ford VZ is the same tire being supplied to Ford in

the USA.” (App.18, at 3) (emphasis added). Similarly, in their submission to the VZ General

Assembly, BFVZ represented that the “tire that Ford VZ requested of us was a similar one to the one

manufactured in the United States ...” (App. 19, at 2). These representations were reaffirmed by

BFVZ’ President in sworn testimony in this case:

Q. Well, you told the Venezuelan National Assembly that the tirethat was used on Ford Explorers in Venezuela was the sametire used by Ford in the United States. Isn’t that correct, sir?

A. The same design tire, yes.

(Gonzalez 124/22-125/1).

Q. In fact, sir, what you told the Venezuelan authorities is that the tire suppliedto Ford Motor in Venezuela is the same tire being supplied to Ford in theUnited States of America?

A. In fact, so much so that we were importing the tire from the USA.

(Gonzalez 135/21-136/1).

In a further concession of this point, the “tire construction detail sheet” for the P255/70R16

Wilderness AT tire provided to the VZ General Assembly by BFVZ as evidence of the design of

Wilderness AT tires put on VZ Explorers is the identical construction detail sheet generated by Ford

US for all P255/70R16 Wilderness AT tires installed on Explorer vehicles in the US. (App. 20);

(see also Marble 135/14-20) (only difference in construction between US and VZ Wilderness AT tires

that he is personally aware of is the stamping - “Made in USA” vs. “Made in VZ”). This tire

construction detail sheet originated in Ford US’ Light Truck Operations Department and every

required “signoff/approval” signature is from a Ford US employee. (App. 20).

4 BF US documents reflect comparable, although slightly lower, estimates of the number of USmanufactured tires sold to VZ: approximately 60,000 (BF US’ Response to Plaintiffs’ FNC Interrogatories,Question No. 19); 58,041 (BHC0000132); 58,000 (BF US Stipulation No. 3); and 56,995 (BAAE1612).

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Distribution of US Manufactured Tireson Ford Explorers in Venezuela

The Wilderness AT tires used as original equipment on VZ Explorers were both US

manufactured and locally sourced. US manufactured tires were shipped from BF US’ North

American production plants in Wilson, North Carolina and Joliette, Canada. (BF US’ Response to

Plaintiffs' Second Set of Interrogatories Re: FNC, Question No. 19). In this litigation, BF US

conceded that the tires distributed to Venezuela from BF US' Wilson, North Carolina and Joliette,

Canada plants were produced in the same production runs as tires sold to the US market. (App. 21

at 5 (¶7)). Approximately 88,700 Firestone tires manufactured in the US were installed as original

equipment on Ford Explorers distributed in the Andina market.4 (Ford US Stipulation No. 9).

Approximately 60% of the source tires for Explorers and Ford F-150 trucks in VZ came from BF

US’ Wilson, N.C. plant. (BHA1042426). Through September 1, 1999, Firestone tires manufactured

in the US comprised roughly 48% of all tires installed as original equipment on Ford Explorers

distributed in the Andina market. (Ford Stipulation No. 10). Specifically, of the 76 cases that are

the subject of Defendants’ original motions to dismiss on FNC grounds, 32 (or 42%) involve tires

manufactured in North America. (App. 7, 8 and 22). Firestone’s blanket assertion in its motion that

the tires in these cases are manufactured in Venezuela is simply a false proposition.

The locally sourced ATX and Wilderness AT tires, produced by BFVZ in Venezuela, were

manufactured from tire molds originating in the US or Europe. (BFUS’ Response to Plaintiffs'

Second Set of Interrogatories Re: FNC, dated July 25, 2001, Question No. 1). All tire mold design

requests for tires produced in Venezuela had to be routed through the US. (Parma 273/20-275/21).

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A BF US mold design drafting request form had to be generated and processed by BF US in order

to procure a tire mold for Venezuela. (BHA1044822-823). The construction (belts and body plies)

for the P235/75R15 tire manufactured in VZ and installed as original equipment on VZ Explorers are

the same as for the same model tire manufactured at Wilson, North Carolina, during the same period.

(BF US Stipulation No. 1). The construction (belts and plies) for the P255/70R16 Wilderness AT

tire manufactured in VZ and installed as original equipment on VZ Explorers are the same as for the

same model tire manufactured at Wilson, North Carolina, and Joliette, Canada, during the same time

period. (BF US Stipulation No. 2).

The production in VZ of locally sourced Wilderness AT tires was closely monitored by BF

US personnel. Bruce Halverson, former manager of Market Quality Engineering for BF US,

conducted periodic adjusted and worn tire surveys for Firestone plants located “South of the Rio

Grande,” including Venezuela. (Halverson 10/24 - 11/7). These audits were performed pursuant to

the terms of a technical assistance agreement between BF US and BFVZ. (Martin 38/18-39/8).

Typically, a team that included individuals from both BF US’ Quality Assurance Department and the

Akron Technical Center performed these surveys. (Halverson 12/6-13/19; 16/14-20). All quality

control audits and tire surveys were performed in accordance with a standard BF US audit/survey

program. Raw data was recorded on BF US laptop computers and was sent to BF US' Quality

Assurance Department in the US for processing and analysis. (Halverson 61/25-63/23). The results

of the audit/surveys were prepared in the US and transmitted to Robert Martin, BF US’ head of

Quality Assurance, as well as distributed to BF US corporate management in Nashville and at the

Akron Technical Center. (Halverson 15/10-13; 18/8-16). These annual reviews provided a method

5 Adjustment data on tires in VZ was sent on a monthly basis to the US. (Abreu 204/4-8). Acentralized adjustment database for the VZ market was maintained in the US by BF US personnel. (Martin174/4-7); (Halverson 49/4-50/14). BF US routinely held “South American strategic meetings” in order toreview quality control issues with respect to manufacturing plants and operations in South America, includingVZ. (BTN 0003631).

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for BF US headquarters in the US to control and monitor the quality of workmanship at its

subsidiaries’ plants in Latin America, and specifically in VZ.5

In fact, BF US has recently expanded its uniform quality assurance monitoring program for

its VZ plants. This uniform monitoring program includes periodic endurance testing, high speed

testing and outdoor testing of South American manufactured tires at BF US’ Acuna and Fort

Stockton testing grounds in the US. (Halverson 71/14-72/4). Batches of tires are sent from the

South American manufacturing plants to the US on a periodic basis in order to test the quality of the

tires. (Halverson 71/14-19). BF US personnel are in charge of the inspection of these VZ

manufactured tires. (Halverson 72/14-74/3). As part of BF US’ “Quality Up” program for improving

manufacturing processes at all plants, BF US’ management in the US prepares quality control goals

to be met by all local plants, and the local plant must respond with a schedule as to when and how

those BF US targets will be met. (Halverson 80/2 -17); (BHA0042394-410). Tires manufactured

in VZ also were sent routinely to US for “skewer testing” as part of BF US' Warehouse Tire

Monitoring System. (BHA0042409); (Halverson 69/24-74/10).

Ironically, despite the prevalence of US manufactured tires in VZ and contrary to the artificial

importance given to this issue by Defendants in their moving papers, Ford US’ Engineering Director

for Worldwide Truck Operations conceded that “the problem in Venezuela would have occurred

whether all the tires would have been imported or whether all the tires would have been locally

manufactured . . . I think the Firestone tires, whether imported from the United States or

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produced in Venezuela, are not robust to the operating conditions that the tire experienced in

Venezuela.” (Baughman (Bailey deposition) 164/4-15) (emphasis added).

Ford US Control of Ford VZ

As a result of a corporate reorganization in October, 1994, known as “Ford 2000,” the Truck

Group in Dearborn, Michigan “became responsible for all truck products anywhere in the world

including Asia, Europe and South America.” (Baughman 26/21-25). Before a Ford vehicle can be

exported anywhere in the world a “program description letter” is issued by Ford US providing

detailed specifications for the range of products that are authorized for introduction into an export

market. (Baughman 28/21-29/3). In addition, Ford US issues an engineering and manufacturing sign

off prior to introduction of a vehicle into an export market. (Baughman 37/5-10). This Ford US

engineering sign-off is required regardless of where a vehicle is assembled; in fact, the level of

engineering scrutiny given by Ford US to vehicles assembled abroad is “considerably higher” than for

US manufactured vehicles. (Baughman 38/11-16). An example of Ford US' Engineering and

Manufacturing Sign Off on a VZ vehicle (the Ford Ranger truck) is found at App. 23.

Ford truck operations are governed by Worldwide Compliance Requirements (WCRs), which

are a “set of Ford Motor Company standards that apply to worldwide operations that define certain

specific requirements with respect to vehicle use worldwide or in specific markets.” (Baughman

71/15-20). In addition to the WCRs, which are general in nature, Ford US promulgates Subsystem

Design Specifications (SDSs) which define very specific design specifications for each vehicle

subsystem. (Baughman 72/3-24). Ford's worldwide requirements prohibit any deviation from either

the WCRs or SDSs without Ford US engineering approval. (Baughman 73/9-17). Ford WCR and

SDS requirements must be met regardless of where a vehicle is assembled. (Baughman 77/12-23).

Ford US has a “parental relationship” with Ford VZ. (Baughman 68/7-14; 166/24-25).

Antonio Da Silva, head of Engineering at Ford VZ, was a “direct report” to Tom Baughman,

Engineering Director for Ford US Truck Operations. (FAAB0852859). Similarly, all other members

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of Ford VZ' Local Vehicle Team reported directly to US personnel. (FAAB2012504-518). In the

words of Mr. Baughman,

I need to explain that organizationally there is a group of engineersthat work in the plant in Valencia, Venezuela, and those people workdirectly for me. So in addition to all of the people that I have locatedin Dearborn and in various locations around the United States I alsohave a small group of about 30 engineers who work at the plant inValencia. And I have a manager who works directly for me whosupervises those people and I make usually an annual trip toVenezuela to review product issues associated with their products,their truck products because their truck products are all NorthAmerican truck products.

(Baughman (Bailey deposition) 155/10-21) (emphasis added).

The degree to which Ford US immersed itself into and controlled the affairs of its VZ

subsidiary is also illustrated in two major agreements entered into by these entities that were binding

at all relevant times and are still in full force. The plain language demonstrates a wholly dependent

relationship in which Ford US helped run virtually all aspects of Ford VZ’s business.

First, in the “Trademark License Agreement” between Ford US and Ford VZ, Ford US grants

a license to use trademarks owned by Ford US in the Venezuelan market, provided that goods

manufactured and services performed by Ford VZ comply with the standards and specifications

submitted by Ford VZ for approval by Ford US. (App.24, ¶1,2). In addition, Ford US retains the

right to receive for its approval all packaging, labels, advertising and other materials on which Ford

US’ trademarks appear in VZ. (Id. at ¶4).

Second, Ford US and Ford VZ entered into a “Technical Assistance Agreement” in 1997.

(App. 25). The stated purpose of this agreement is to ensure that the operations of Ford VZ become

“more integrated with the operations of Ford US.” (Id. at “Considerations”) (emphasis added).

Ford US agrees to render Ford VZ technical assistance in virtually all aspects of operating its

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business, including: Engineering and Product Development, Manufacturing and Quality, Financial

Matters, Sales, Distribution, Marketing, Purchasing, Foreign Legal and Tax Matters, Public and

Employee Relations, Systems Matters, and Environmental Matters. (Id. at ¶2.1(1)-(9)). Subclause

2.4, provides that all technical assistance and information furnished “shall be in the English

language,” explaining why virtually all of the VZ liability documents in this case were authored in

English. (Id. at ¶2.4) (emphasis added). Significantly, Ford US warrants that the technical assistance

provided shall be developed using the “same standards” utilized in the U.S. (Id. at ¶2.3) (emphasis

added).

Tellingly, the Technical Assistance Agreement is governed by the laws of the State of

Michigan and the venue for the Agreements is Dearborn, Michigan. (Id. at ¶19). Thus, it appears

Ford US is perfectly prepared to litigate “Venezuelan” issues in US courts when it suits Ford Motor

Company’s interests.

The degree of Ford US control over Ford VZ with respect to one of the key issues in this

case--the design of the Wilderness AT tires used on VZ Explorers--was succinctly described by Tom

Baughman, Engineering Director for Ford Truck Operations, who was “responsible for engineering

of Ford truck products around the world.” (Baughman (Bailey deposition) 6/7-8). Mr. Baughman

testified that Ford VZ was required to meet all Ford US established design requirements. (Id. at

162/9-21); (see also Maron 149/6-24) (Ford VZ would not release a tire for use in the Explorer

unless the same tire had been authorized by Ford US for use on the same vehicle somewhere else in

the world). Even more importantly, Mr. Baughman conceded that Ford US exercised total control

over Ford VZ with respect to the selection of the Wilderness AT for use on VZ Explorers and that

errors in communication between the two companies resulted in defective tires being put on VZ

Explorers:

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[A:] I think for sure the tire that came from Firestone was not the tirethat Ford of the United States directed Ford of Venezuela to put onthe vehicle. We told them to put on a tire that was equivalent the US15-inch tire or the US 16-inch tire and through the mistakes that weremade on both sides the tires meeting that description did not get ontothe vehicles in Venezuela.

Q: Were the ones that got on the vehicles in Venezuela better thanthe ones in the US or worse?

A: I believe they were worse.

(Baughman (Bailey deposition) 158/21-159/6) (emphasis added).

BF US Control of BFVZ

Ford US’ degree of involvement with its subsidiary is rivaled only by BF US’ dominion over

BFVZ. BFVZ President, Jorge Gonzalez, was a direct report to BF US CEO, Ono. (Gonzalez

22/16-21); (BMD0043502). BF US’ September 2000 organizational chart shows BFVZ as part of

the “organization of Bridgestone/Firestone, Inc.” (BTN0027405). A separate undated organizational

chart lists BFVZ as one of 21 “BF US Operating Companies.” (BMD0043502). The actual day to

day control exercised by BF US over its subsidiary is evident in three agreements that delegated

virtually all power over BFVZ’ affairs to BF US.

In 1991, BF US (described in these agreements as “BFS”) and BFVZ entered into a “Revised

Technology License and Technical Assistance Agreement” (hereinafter “RTLTA”). (App. 26). BF

US was given the right to assign one qualified technician to each of BFVZ’s manufacturing facilities

to render technical assistance and assist BFVZ in controlling the quality of products. (Id. at ¶2.1).

In addition, BF US, at the request of BFVZ, recommends qualified persons to assist BFVZ in various

areas, including: Financial, Production, Sales, Engineering, Chemistry and Quality Control. (Id. at

¶2.2). In addition, BFVZ is given the right, for “reasonable times and for reasonable intervals,” to

send a number of technical personnel from its staff to BF US’ general offices and research center in

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Akron to receive advice and instruction in commercial production of products and in quality control

management. (Id. at ¶3.1).

BF US granted BFVZ an exclusive license under its patents and know-how to manufacture

products utilizing BF US’ technology. (Id. at ¶1.2). BFVZ is entitled to receive all new tread designs

and mold drawings for products manufactured under BF US patents and/or trademarks, which

drawings and molds shall remain the property of BF US. (Id. at ¶1.4). All of the technology shared

by BF US with BFVZ under the RTLTA remains the sole and exclusive property of BF US or

Bridgestone. (Id. at ¶5.1).

In addition, BF US and BFVZ entered into a “Revised Trademark License Agreement.”

(App. 27). In its introduction, this contract specifically states that BFVZ is “primarily engaged in the

manufacture and sale of tires and tubes and related products using technology supplied by BFS.” (Id.

at second “Whereas” clause). In the section titled “Quality of Products,” the contract specifies that

BFVZ shall manufacture its products from raw materials furnished by suppliers selected by BF US,

in accordance with material and manufacturing specifications and formulae approved by BF US in

writing, and with designs, including tread designs, approved by BF US in writing. (Id. at ¶3.1)

(emphasis added). BF US and/or Bridgestone Corporation representatives have the right to inspect

products to which trademarks are proposed to be used by BFVZ, as well as inspecting the methods

of manufacture on the premise of BFVZ “in order to ensure adequate quality control.” (Id. at

¶3.2) (emphasis added).

Additionally, in the event that BF US notifies BFVZ that any of its products failed to comply

with BF US’ standards or specifications, BFVZ must correct such non-compliance “in accordance

with BFS’s instructions.” (Id. at ¶3.5) (emphasis added).

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Finally, BF US and BFVZ entered into a “Trademark Sub-License Agreement.” (App. 28).

In exchange for a fee, BFVZ is granted a license to use certain BF US trademarks. (Id. at Article 3).

However, Bridgestone “and its representatives, specifically BFS,” retained the right to inspect tire

products utilizing Bridgestone trademarks, as well as inspecting the methods of manufacture, in order

to assure adequate quality control. (Id. at ¶5.1). Again, should BF US ever notify BFVZ that its

products fail to comply with such BF US quality control standards or specifications, BFVZ is required

to correct such non-compliance or to cease manufacturing the product. (Id. at ¶5.3).

These three current and binding agreements between BF US and BFVZ contain choice-of-law

provisions providing for application of either Ohio or Tennessee law. Two of these Agreements

require disputes to be arbitrated in English in New York. Thus, like Ford US, BF US has insisted

on a US forum for all disputes regarding its business operations in VZ, up until this case!

All Aspects of Ford and Firestone’s Response tothe Tread Separation Rollover Accidents in VZWere Coordinated and Controlled From the US

From the beginning and to this day, BF US and Ford US personnel have spearheaded,

controlled, directed and manipulated all aspects of the response to reports of Firestone tread

separation/Explorer rollover accidents in Venezuela. The picture that emerges from six months of

combined FNC and liability discovery clearly portrays a US nerve center that not only directed the

actions of the VZ subsidiaries (and in other parts of the world where these same problems manifested

themselves), but also – at critical junctures – withheld material information regarding the full extent

of the problem, committed egregious errors of judgment which compounded Defendants’ original

design negligence and – most disturbingly – delayed taking preventive or corrective actions as a result

of Ford and Firestone's financial self-interest and fear of provoking a regulatory response in the US.

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There is no separate Venezuelan liability story. The manner in which both Ford US and BF

US responded to the mounting deaths and injuries in VZ is completely intertwined with both

companies’ responses to similar issues in the Middle East, Malaysia, Thailand and the US. Not only

did the US executives of both companies direct and control what went on in VZ, but also their

involvement in and knowledge of mounting problems overseas is the best evidence of Ford and

Firestone’s reckless indifference and cavalier disregard for the safety of VZ, Colombian and US

consumers. As the evidence of a serious vehicle/tire problem poured in from all over the world, both

companies tried first to deny the problem, next to blame it on consumers and ultimately to prevent

knowledge of the problem from reaching US regulators. Thus, the facts surrounding Ford and

Firestone’s response to the tread separation/rollover accidents in VZ not only begins and ends in the

US, they are part and parcel of the US liability story.

1. The first reports of tread separation problems resulting in vehicle rollover accidents

in VZ were received in late summer/early fall 1998. (WWX23059-60). Almost immediately, Ford

VZ started sending tire failure information to Ford US. (Da Silva 115/20-116/6).

2. On November 18, 1998, BFVZ and Ford VZ met to discuss these issues. From the

beginning, Ford VZ and BFVZ officials looked to the US for guidance and technical support. Among

the actions agreed to at this early meeting was the development of an Explorer ride handling test

utilizing a driver expert from the US, and the addition of a cap ply to the design of the Wilderness AT

tires in order to raise their speed rating. (BBAO0033-34).

3. From the beginning, Ford VZ officials requested the involvement of BF US in the

proposed design changes to Explorer tires. (Da Silva 179/21-181/15) (“We got Firestone in the

United States involved to analyze defects, look for the root cause of the problem and to find the final

solution to the problem.”). Ford VZ was relying on BF US to correct the tread separation problems

6At the same time they were receiving tires from VZ, BF US Akron Technical Center was also testingtires showing signs of tread separation sent to them by the Ford distributor in Saudi Arabia. (BCG001701-03).

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on VZ Explorers. (Da Silva 181/1-5). Ford VZ also looked to Ford US as the “focal point” for all

engineering investigation about the tread separation/rollover accidents in VZ. (Da Silva 216/11-

218/6) (“The responsible party for the design of the vehicle in the United States is Ford United

States. They are the ones who designed it. Therefore, any questions regarding the design must

be posed to them. . . If you are referring to the engineering investigation regarding the vehicle was

focused there, that is correct, because in Venezuela there is no designing, nor is there a capability

to investigate the design of the vehicles.”) (emphasis added).

4. The redesign of the VZ Wilderness AT tire was performed in the US by BF US.

(Abreu 344/7-9) (“We don’t design in VZ”) (emphasis added). The project was assigned to Daryl

Parma in BF US’ Latin American Tire Development Department. (Parma 41/14-16; 251/22-252/1).

Other BF US engineers in the same department were involved. (Parma 35/20-36/2). Parma reported

on this project to his superior, Bill Lyle, BF US Section Manager for Latin American Tire

Engineering. (Parma 69/9-11). Once the design was completed in the US, several tests of the new

design were performed at BF US’ Akron Technical Center. (BCG0004123-131); (BCG0004228-30).

The design review process followed BF US QS9000 standard procedure established in the US.

(Parma 267/16-268/2). Most importantly, all of the proposed design changes were approved by BF

US personnel. (BHA0047823-28); (BHA0042442-44); (BHA1027666-701); (Abreu 134/20-21)

(“all those changes were proposed and approved by the United States”); (Abreu 348/24-350/24).

5. Following the meeting in Venezuela in November 1998, tests were performed in VZ

on tires which showed signs of tread separation. Any tire that showed signs of tread separation was

immediately sent to BF US’ Akron Technical Center for further testing and analysis.6 (BCAK1666-

7 Luis Abreu, Manager of Technical Services at BFVZ, acknowledges he sent tires back to BF US forforensic analysis because neither he nor anyone at BFVZ possessed the necessary professional qualificationsto perform the analysis. (Abreu 221/15-222/8). He told this to Ford VZ, which then requested that the tiresbe sent to the US for testing. (Abreu 226/8-20) (“I told [Ford VZ] that I didn’t and whenever there was a doubtthey would tell me, ‘look, let’s send them to the United States’, and we would send them.”). Ford VZ utilizedFord US for all root cause tire analysis. (Maron 305/19-22).

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67); (Abreu 78/10-79/10).7 In fact, at one point, BF US issued a directive that any failed tire they

could get their hands on from VZ should be sent to Akron for forensic analysis. (Martin 187/19-24).

6. The first Firestone tires that began to fail on VZ Explorers were US manufactured

tires. These tires were sent to BF US’ Akron Technical Center for forensic evaluation. (BCAK1632-

1633); (Abreu 83/17-84/1). In 1999, BF US also requested that BFVZ send them new tires from the

same manufacturing runs so that they could also be tested in the US. (Abreu 146/23-148/17); (Duvall

199/21-200/3); (Martin 157/6-158/4). At the time they learned of tire tread separation issues in VZ,

BF US was already aware of rollover accidents involving Explorer vehicles and Firestone tires in the

Gulf Coast Countries (GCC). (BF US’ Response to Plaintiffs' Request for Admissions Re: FNC,

filed October 16, 2001, No.1).

7. At a January 7, 1999 meeting, BFVZ and Ford VZ officials discussed the possibility

of a recall of all US manufactured tires introduced into the Venezuelan market (App. 29). Ironically,

at the time, BFVZ and Ford VZ personnel felt that the majority of the tread separation issues in VZ

involved US manufactured tires which they believed were inferior because the US manufactured tires

utilized nylon instead of a polyester ply material. (Id.). Ford VZ’ internal documents listed this

difference in material as the only difference between the US manufactured and VZ manufactured

Wilderness AT tires. (Id.).

8. At a meeting on January 12, 1999, BFVZ and Ford VZ officials discussed various

means of raising the speed rating on the Wilderness AT tires in VZ, including the addition of an

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additional cap ply. The notes of this meeting indicate that Ford VZ officials said they would have to

ask their headquarters in the US whether the approval of this change had to be validated by Ford US.

(BMD0040493-94).

9. At the same time that Ford and Firestone officials in VZ were meeting, US personnel

were conducting high speed bench tests on tires from VZ Explorers. (BCG0017572). The testing

was requested by R. Duvall, BF US Manager, Design Quality Engineering, and arranged by G. A.

Rasor, Sr. Project Engineer Test Technology, Design Quality Engineering. The testing was done at

BF US’ Akron Technical Center. (BF US’ Supplemental Response to Plaintiffs’ Interrogatories Re:

FNC, filed 6/15/01, Question No. 47). Forensic testing of Explorer tires from Venezuela conducted

in the US by BF US employees continued through the first quarter of 1999. (BBAH3998-99).

10. On January 22, 1999, BF US employee Dennis Candido authored a key memo that

recommended the use of Firestone's European H-rated Wilderness tire as the “best application choice

of our three existing specs” approved for use on the Ford Explorer for “the Middle East and for

countries prone to heat induced separations.” (Candido 161/13-164/20). Mr. Candido’s memo

specifically discussed the use of these tires in VZ. (BCG0017573). Candido's recommendations

regarding the H-rated tire were not shared with BFVZ or Ford VZ officials. (Da Silva 240/25-

244/2); (Abreu 177/11-17); (Gonzalez 150/14-151/2); (Maron 369/15-371/10).

11. By late January, 1999, BF US’ Quality Control department was requesting BFVZ

employees to compile and report to the US all adjustment data for P255 and P235 Wilderness AT

tires in VZ. (BCG0017576-78). The resulting report indicated that over 25% of the tires in VZ that

showed signs of tread separation were US manufactured tires, and that the actual percentage of US

manufactured tires experiencing tread separation problems in VZ was even higher because some of

the US manufactured tires were listed in the adjustment data under international serial codes. (Id.).

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In the opinion of BF US’ Senior Quality Control executive, 1/3 of the tires reporting tread or belt

separations in VZ were US manufactured tires. (Martin 177/7-13).

12. As BF US forensic analysis reports on tires shipped from VZ and Saudi Arabia began

to be received, Ford US employees noted that BF US’ forensic analysis reports on the tread

separation issues were “claiming in all cases that this is a repair issue of customer driving the vehicle

in an under inflated situation and that causes the tread to separate from the belts.” (BAAT2007).

Ford US employees speculated that it was possible that “Firestone is not telling us the whole story

to protect them from a recall or lawsuit.” (Id.) (emphasis added). Ford US internal documents

also show that Ford US simultaneously was considering changing to the European H-rated tire on

Ford Explorers and Mountaineers in the United States. (BAAT2007-13).

13. Through the first quarter of 1999, Ford US and BF US officials continued to meet in

the US to address tread separation issues in the Middle East. (BCG0018271); (BCG0017554-55).

No Ford VZ or BFVZ representatives were apprised of these meetings. (Maron 376/22-377/10;

393/2-394/2). Meanwhile, BFVZ officials continued to inspect tires that showed signs of tread

separation on VZ Explorers. Any tire showing signs of tread separation was forwarded to BF US’

Akron Technical Center for forensic analysis. (BBAH3378-81).

14. In January 1999, Robert Martin, BF US’ most senior quality control employee,

personally wrote to BFVZ reporting on the results of forensic analysis conducted on a tire removed

from a VZ Explorer. (BCG0017579). The referenced forensic testing was conducted at BF US’

Akron Technical Center by BF US employees R. Duvall and Gene Beckwith. (BF US’ Response to

Plaintiffs’ Second Set of Interrogatories Re: FNC, filed 7/25/01, Question No. 56). At least six

individuals from BF US were involved in this testing. (Duvall 200/21-201/5).

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15. In February 1999, John Garthwaite, National Service Director for Al Jazirah vehicles

in Saudi Arabia, notified BF US of his belief that there was an inherent problem in the bonding of the

tread to the casing of the P255 Wilderness AT tire. The letter called for Firestone’s “urgent attention

to this potentially hazardous problem.” (FAAN0060912-13). Throughout the first quarter of 1999,

Garthwaite continued to write increasingly alarming letters accusing Firestone of building a

“smokescreen” for the tread separation issue, referring to the tread separation issues in the Middle

East as “an epidemic.” (BCG0017558-559); (FAAB0294562).

16. In March 1999, Robert Martin (BF US) referred to the proposal to replace the

Wilderness AT tires on Ford Explorers in the Middle East market with H speed rated tires as “a good

engineering choice” because “we are probably dealing with continuous high speeds, perhaps a lack

of maintenance and elevated running temperatures.” (BNH0000820). Even though these same

conditions existed in VZ, BFVZ officials were not advised of Mr. Garthwaite's communications or

Mr. Martin’s recommendations.

17. By March 1999, BF US and Ford US began discussing a campaign to replace the P255

Wilderness AT tires on Ford Explorers in Saudi Arabia. BF US expressed reservations with any

customer notification program due to “related complications that it could create in North America.”

(BCG0018296-297). Simultaneously, BF US’ Quality Control department began looking at

adjustment data for P255/70R 16 Wilderness AT tires in the US, specifically in the New

Jersey/Chicago regions. (BCG0017744-745).

18. In a March 12, 1999 memo, Ford US confirmed that BF US employee John Behr had

reaffirmed that an H-rated tire was the most resistant to damage from under inflated operation.

(BCAO 0501-2). Although this condition had been described as a common operating characteristic

in VZ, no Ford or Firestone employee in VZ was notified of this third recommendation from a BF

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US official suggesting a switch to an H-rated tire. (Maron 369/15-370/4; 371/3-10; 376/8-21; 394/4-

12).

19. In March 1999, BF US’ Office of General Counsel (“OGC”) expressed “major

reservations about the plan to notify customers and offer them an option [replacement tire]. First,

they feel that the US DOT will have to be notified of the program since the same product is sold in

the US.” (BCAO0501-502).

20. In March of 1999, BF US employees conducted an adjusted and worn tire survey in

VZ. The results of the survey demonstrated an increase in the level of belt separations and belt edge

separations on light passenger truck tires in VZ. The report indicated that 71% of the light truck tires

inspected showed signs of belt edge separation. (BHA0042394-410). The results of VZ tested worn

tire survey were shared with the highest level of BF US management including BF US CEO, Mr.

Ono. (Id.). The results were not shared with Ford VZ. (Maron 395/19-396/5).

21. In early April 1999, Ford VZ employee Carlos Maron contacted Ford US engineer,

Alan Rauner, notifying him of “field concerns with Ford Explorer tires in VZ.” (BCG0018298-99).

Mr. Maron notified Mr. Rauner that Ford VZ was planning on replacing the shock absorbers on Ford

Explorer vehicles due to “unstability [sic] at high speed” and requested Mr. Rauner’s assistance with

respect to the “tire explosion” issue. (Id). Mr. Maron notified Mr. Rauner that “accidents occur

when a tire explodes for apparently no reason and the vehicle rolls over.” (Id.). Mr. Maron reported

that “it is normal in VZ to have sustained high speeds for relatively long times at outside temps at

around 100 to 110 Fahrenheit degrees.” (Id.). Mr. Maron specifically requested Mr. Rauner’s

recommendation regarding the use of the European H-rated and/or Australian special service tire in

the VZ market. (Id.). Mr. Maron requested Ford US to recommend a tire with “a more robust

design.” (Maron 81/2-17). Mr. Rauner advised Mr. Maron that neither the H-rated nor the

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Australian special service tire would be a good alternative. (Id.). Mr. Rauner did not share with Mr.

Maron the opinions already received from BF US (Dennis Candido, John Behr and Robert Martin)

recommending the switch to an H-rated tire as a means of addressing high speed, low inflation

pressure operating conditions in hot climates. (Maron 369/15-370/4; 371/3-10; 376/8-21; 394/4-12).

22. The same day that Mr. Rauner responded to Mr. Maron’s request for a recommended

tire for the VZ market, Ford US requested BF US to run comparative testing in high speed, low

inflation pressure operating conditions of the P255 specs for North America, the European H-rated

tire and the Australian special service tire. (BNH0001568).

23. In an e-mail dated 4/8/99, Carlos Maron notified Alan Rauner that typical operating

conditions in VZ include high speeds and extremely hot temperatures and again requested his

recommendation for a more suitable tire. (BAAE4461-63). Despite the fact that similar operating

conditions had been noted in the Middle East and BF US had recommended the H-rated tire for use

“in the Middle East and other countries prone to heat induced separation,” none of this information

was shared with Ford VZ. (Maron 369/15-370/4; 371/3-10; 376/8-21; 394/4-12).

24. In an e-mail exchange on April 7th and 8th, 1999, Alan Rauner notified Ford VZ that

the inflation pressure that had been recommended in VZ for the P255/70R16 tire (28 psi) was less

than the inflation pressure at which the tire had been certified for safe operation (30 psi).

(BAAE4461-63). In VZ, the P255/70R16 tire had been recommended at a 28 psi inflation pressure

“in order to reduce bouncing concerns” with the Explorer vehicle. (BCG0018298); (Da Silva 188/23)

(the Explorer’s “back end was bouncing a lot”). Ford US notified Ford VZ that it was an error “to

assume that a tire is ok to run at a lower pressure because a different tire has a lower pressure.”

(BAAE4461-63). Ford VZ emphasized that Ford US’ engineering personnel in Louisville, Kentucky

were consulted in setting the recommended tire pressure and advised Ford VZ that the design

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pressure for the vehicle was 26 psi. (Da Silva 188/24-189/3) (“we consulted with the people in

Louisville, the PVT in Louisville...And they told us that the pressure recommended for the Explorer

was 26 pounds and that was the design pressure”). Not until April, 1999 was Ford VZ advised by

Ford US that the 16" Wilderness AT tire had only been certified at 30 psi instead of the 26 psi which

Ford VZ had been advised was the design pressure. (Da Silva 286/22-287/21). Ford VZ contends

it was following a “design instruction” from Ford US technicians in Louisville in setting the lower –

incorrect – tire pressure. (Da Silva 199/17). Ford VZ knew that a lower inflation pressure caused

a tire to run “hotter” and, therefore, made it more susceptible to tread separation. (Maron 113/13-

23). On May 1, 1999, the recommended tire inflation pressure for VZ Explorers was raised to meet

the US standard and a different shock absorber system implemented on new Explorers. (BAAE

1652-60, 1656). No corrective measures were taken with respect to Explorers already in service.

(Maron 230/14-232/20).

25. Beginning in April of 1999, Ford US and Ford VZ employees began to formally

coordinate their response to the tire and vehicle stability concerns for Ford Explorers in VZ. Eva

Hsueh of Ford US was identified as the “focal point” for all requests for engineering investigations

related to the Ford Explorer in VZ. (App. 30). The discussions with Ford US centered on both a

tire and a vehicle handling/stability problem. (Da Silva 229/12-230/3; 234/1-235/2); (Maron 140/18-

141/22; 201/9-21) (from the beginning discussed with Ford US both a tire and vehicle stability

problem). Follow-up responsibilities were divided up between Ford VZ and Ford US employees.

Ford US assumed lead responsibility for all testing and design evaluation and development.

(BAAE1610). Other critical participants in this process were Ford US employees Joe Kuznicki, Alan

Rauner and Bill Smith. (Id.). From this point forward, Ford US engineering personnel “were in

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charge of the investigation directing what needed to be done and how to do it . . .” (Da Silva 385/1-

5) (emphasis added).

26. On April 15, 1999, Ford US employees notified Ford VZ that they were “currently

testing tires to better reflect your market conditions and usage. . . The data will allow us to better

understand the impact of reduced tire pressure and high temperature operations to allow us to

provide the better suitable tires for your market.” (FAAB0279724-730, 0279725) (emphasis

added). All of this testing occurred in the United States. (Da Silva 224/2-10; 227/1-9). The next

day, Ford US requested BF US, and not BFVZ, to send samples of the P235 and P255 R speed rated

tires off of VZ Explorers, for high speed testing in the US. (BMD0020822).

27. On May 6, 1999, Ford VZ advised Ford US that they had conducted ride/handling

tests on the Explorer using a modified suspension system, which significantly improved vehicle

handling. (BAAE1624); (Maron 163/9-164/18). Ford VZ advised Ford US that the revised

suspension system “will save lives, but we don’t want to create a bigger issue.” (Id.) (emphasis

added). Specifically, Ford VZ advised Ford US that by implementing the stiffer suspension system

tread separation/rollover accidents could be prevented. (Id.) (“in the case of a tire explosion, the

driver could have a great probability of surviving by being able to control the vehicle and not rolling

over”); (Maron 164/22-165/7).

28. Through late April 1999 and early May 1999, Ford US engineering personnel

commented on the proposed suspension system change to VZ Explorers. (App. 31 at 2).

(FAAB0279724-30). The proposed change required Ford US engineering approval. (Da Silva

439/1-14). Ford US employees provided the vehicle dynamics evaluation requirements for the

proposed changes. (App. 31). On May 25, 1999, Ford US engineer Joe Kuznicki confirmed that

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he had performed ride/handling tests on the 2-door Explorer using the new proposed suspension

system for VZ and deemed the configuration “acceptable.” (BAAE1625).

29. Through the Spring of 1999, Ford US tracked tread separation issues on Firestone

tires in VZ and in the Middle East as part of its internal US quality control monitoring system. Alan

Rauner (Ford US) was identified as the lead individual in charge of following up on the quality

control issues in both these overseas markets. (FAAB0866244-50, 0866244).

30. In May 1999, BF US conducted comparative testing of the Australian Special Service,

European H-rated and North American Wilderness AT tires, which had been requested by Ford US.

(BF US Stipulation No. 7). The testing was conducted by technicians in BF US’ Akron Technical

Center. (BF US Response to Plaintiffs' FNC Interrogatories, filed 6/15/01, Question No. 52). All

of the technicians involved in this testing and all of the test documentation are located in the US. (BF

US Stipulation Nos. 8 and 9). Consistent with the opinions previously expressed by BF US

employees, Candido, Behr and Martin, the tests confirmed that the H-rated tire could best withstand

high speed low inflation operation. (BCG0017581-83); (Rauner 275/16-276/7). These results were

shared by BF US with Ford US. (BF US Stipulation No. 10). The May 1999 test results “were not

shared with any BFVZ employees.” (BF US Stipulation No. 10); (Gonzalez 145/19-147/18; 150/24-

151/2) (“We were not aware of the testing that was going on.”). The test results were not shared

with Ford VZ. (Maron 377/21-378/9).

31. Despite the earlier expert opinions received from BF US personnel recommending

the European H-rated tire and after receiving from BF US a comparative testing report confirming

these opinions, on May 7, 1999, Alan Rauner (Ford US) unilaterally concluded that he would NOT

recommend the use of the Australian Special Service or H-rated tires in Venezuela. Mr. Rauner did

not copy anyone at Ford VZ or BFVZ with his memo. (BCG0018302); (Gonzalez at 113/8-114/9).

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32. In a May 13, 1999 memo, Alan Rauner reported to senior Ford US officials “we are

having numerous tread separations in extremely hot climates like GCC, VZ and Malaysia. All these

countries except Malaysia have unlimited speed limits . . . The [Ford US] CCRG wants to know what

we need to do (as a company) to protect for these failures in these export countries in the future.”

(BAAE1974-76, 1975).

33. Internal Ford US documents indicate that US officials were investigating a potential

recall involving Ford Explorers in Venezuela as early as May 1999. (BAAE1601-02);

(BAAT2806).

34. On May 19, 1999, Ford VZ officials notified Ford US officials that the tread

separation/rollover issue had become “critical” in certain areas of Venezuela. (FAAB2276252-53).

35. By late May 1999, Ford US also was advised of tread separation problems with

Explorer vehicles in Malaysia. Ford US’ CCRG was notified that the problem was evident in

“Malaysia, GCC and Venezuela” and could also involve Thailand. (BAAT2806).

36. In June 1999, the speed rating of tires placed on new VZ Explorers was raised to

comply with US standards. (BAAE 1652-60, 1656). No change was made to Explorers already in

service. (Maron 230/14-232/20).

37. In June 1999, a team from BF US and Ford US traveled to Saudi Arabia to conduct

a Middle East Tire Survey. (BCG0017410-11). BF US did not share the results of its GCC tire

survey with BFVZ management. (Gonzalez 98/3-8; 152/18-153/4; 257/3-5; 258/1-16).

38. On June 7-14, 1999, a team of engineers from Ford US, including Joe Kuznicki and

Bill Smith, were sent to VZ to participate in testing and fine tuning of a proposed new suspension

system for VZ Explorers. (Maron 119/25-122/10).

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39. Throughout May and June ‘99, Ford US technical personnel exchanged opinions

regarding the causes of tread separation issues in the “GCC, Venezuelan and Malaysian markets” and

discussed recommendations for a replacement tire. (BAAE1974-76).

40. In July 1999, Ford US and BF US coordinated a second round of high speed/low

inflation pressure testing of Wilderness AT tires, including testing of VZ assembled Wilderness AT

tires. This testing, conducted at BF US' Akron Technical Center, compared the performance of the

VZ tires with tires from all over the world, including those manufactured by other tire companies.

(BCG0018335-36); (FAAB145538); (Rauner 348/7-349/15; 354/24-355/5). The VZ Wilderness

AT tires fared worst in the world. (FAAB145538); (Rauner 354/15-22) (“Of the tires tested the

bottom two tires from Venezuela [15" and 16" models] had the lowest performance”). All of the

technicians involved with this testing and all test documentation are located in the United States. (BF

US Stipulations Nos. 11 and 12). The July 1999 testing performed in the US is the only known

comparative high speed, low inflation testing of US and VZ manufactured Firestone tires. (BF US

Stipulation No. 13) (emphasis added). The testing was shared between BF US and Ford US.

(BCG0018335). Unbelievably, this critical test information was not shared with any executives of

Ford or Firestone in VZ. (BF US Stipulation No. 44); (Rauner 355/10-11) (“I don’t recall sharing

this information with anyone in Venezuela.”); (Maron 381/15-383/22; 394/23-395/18).

41. By July 1999, Ford had already prepared a Field Service Evaluation Paper (also known

as a “14D”), seeking approval from Ford US for a tire replacement program on Explorer vehicles in

the Middle East. (FAAB1437812-817).

42. On July 26, 1999, Ford VZ official, Oscar Romero, authored a memo calling for a

recall of all Firestone tires on Ford Explorer vehicles in VZ. Mr. Romero's memo called the

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proposed tire recall “a safety issue” and noted that there was a “relatively high [probability] that

these vehicles eventually will have some sort of tire failure.” (WWX23054-58) (emphasis added).

43. On July 27, 1999, Ford US’ Field Review Committee approved an owner notification

program to replace Wilderness AT tires on Explorers in Saudi Arabia. Despite earlier Ford US

memos discussing a tire recall in VZ, referring collectively to the problems in the Middle East and

VZ, and the alarming memos authored by Ford VZ employees on April 6th, 8th and on July 26th, no

field action for VZ was approved. (BAAC 0235-0246).

44. In August ‘99, BF US personnel traveled to VZ in order to conduct a special tire

survey. (BCG0017460-69). The survey was coordinated by BF US Technical Department. (Martin

43/3-9). Heading this team was Bruce Halverson, who also participated in the Saudi tire survey.

(Abreu 321/5-13; 18-25); (Halverson 127/9-18; 131/9-14). Accompanying Mr. Halverson was BF

US Tire Engineer Roger Marble. (Marble 65/22-66/1). The report of this survey was prepared in

the US and shared with senior BF US management. (Halverson 18/8-19/24; 131/24-132/2); (Marble

86/19-23). The background sheets on which the survey information was recorded are kept in the US.

(Halverson 134/10-16). No one from VZ had any input into preparing this report. (Abreu 357/1-

358/1). BF US personnel, including Mr. Mitzner and Mr. Beckwith, reviewed the VZ survey results

and made specific recommendations in response. (Halverson 68/7-18; 69/24-70/4). 31 of the 132

(nearly 1 in 4) tires inspected showed signs of tread separation. (BNH0000741-753, 750).

Recommendations called for “investigating with the Technicians and Development Engineers of Ford

Detroit and BF US Akron in Nashville” the “possibility of changing tread compound to improve

traction and ride/handling in dry and wet pavement.” (BNH0000741-753, 752).

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45. After the Venezuela tire survey report was received, all aspects of BFVZ’ response

to the tread separation problem were coordinated from the United States. As BFVZ President

Gonzalez conceded in deposition:

Q. . . . After Mr. Halverson came to VZ, all of a sudden everything that you would giveto Ford was being run by Mr. Martin [BF US Vice President, Robert Martin] and in-house counsel. Right?

A. Right. (Gonzalez 167/11-16).

46. After receiving BF US’ Venezuelan Tire Survey report, Ford VZ officials implored

Ford US to take immediate action. Ford VZ did not believe that the conclusions of BF US’ survey

were credible. (Maron 509/6-510/21). In an August 11th memo, Carlos Maron wrote to Ford US

advising that “the issues we discussed weeks ago with Explorer tire failure continues. Tires blow out

at high speeds . . . accidents continue occurring, the rumor is on the street already and the media

could get aware anytime . . . We are not to stand this situation any more. We want to do a

campaign of change of tires to 100% Explorers in Service. The problem is that we don't know which

tire to install because we don't know the cause of failure. We need your help . . .” (BAAE1600)

(emphasis added). Maron’s memo specifically asked “is there any sign that this issue exists in the

U.S. or other markets.” (Id.). At this time, Ford VZ officials were not aware that a few weeks earlier

Ford US authorized the replacement of all Wilderness AT tires in the Saudi market, nor that these

same problems had manifested themselves in other parts of the world. (Maron 364/3-366/3; 324/8-

25). Not until August 12, 1999--at least eight months after the requests for assistance from VZ--did

Ford US officials notify Ford VZ officials that the Wilderness AT tires were experiencing the same

problems in Saudi Arabia. (BAAE 1596); (Da Silva 128/2-12; 129/23-130/6; 132/6-16).

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47. On August 12, 1999, Ford VZ employee Carlos Maron notified Ford US that “the fact

is that we have several customers dead from accidents every week and Explorer is the only

vehicle in Venezuela experiencing this problem.” (FAAB0852146-148, 146) (emphasis added).

48. On August 19, 1999, after receiving the urgent e-mails from Ford VZ officials, Alan

Rauner communicated with BF US officials advising that “the whole Venezuelan thing is blowing

up and a 14D has been requested.” (BAAE 1612) (emphasis added).

49. On August 20, 1999, Ford US put together a “Tire Safety Margin” chart for Explorer

vehicles in the US, the GCC and in VZ. (BAAE 1609). The calculations performed by Ford US

indicated that the maximum speed of the VZ Explorers exceeded the maximum capacity of the

Wilderness AT tires originally released on VZ Explorers, resulting in a negative tire safety margin.

(Id.); (Rauner 389/1-18). Contemporaneous Ford US internal documents concede that the tire

originally released on VZ Explorers “does not meet the speed capability of the vehicle.” (BCAC

1356-61, 1361) (emphasis added). This critical information was provided to Ford US’ CCRG;

unbelievably, the same information was not provided to Ford VZ. (Rauner 392/2-21); (Da Silva

271/15-277/10); (Abreu 287/8-23). This omission is even more disturbing given the fact that Mr.

Rauner conceded that it would be illegal to release a tire on a vehicle in the US with a negative tire

safety margin. (Rauner 389/12-18) (“It’s something we wouldn’t or couldn’t do in this country.”);

(Rauner 406/12-14). Curiously, Mr. Rauner’s “Tire Safety Margin” chart was revised on September

1, 1999 to delete any reference to the negative tire safety margin in VZ! (FAAB0293739).

50. Beginning in August ‘99, BFVZ President Jorge Gonzalez became personally involved

in dealing with the VZ tread separation issues. Mr. Gonzalez looked to BF US and its OGC for

guidance as to all communications with Ford VZ and reported directly to them. (BCG0017618);

(BCG0017594-615); (BCG0017645-676).

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51. On August 18th a special export tire validation test for the Venezuelan market, to be

developed by Ford US, was requested. (BCG0018344-45). On the same day, Daryl Parma , BF US

engineer, suggested an alternative design for the Wilderness AT tire which was intended to be used

on the 2001 Ford Explorer in VZ. (Id.). The next day, Goodyear US personnel were asked by Ford

US to suggest a replacement tire for VZ Explorers. (BAAE1613).

52. On August 20, 1999, upon learning of the Middle East tire recall, Ford VZ contacted

Ford US requesting information regarding how the recall costs were being handled in Saudi Arabia,

stating “here in Venezuela we have exactly the same issue on the Explorer, we will be changing to

Goodyear by next week.” (BCAN0388-91, 0389) (emphasis added). For the reasons set forth below,

the tire substitution program scheduled for “next week” was not authorized by Ford US until NINE

months later; meanwhile, lives continued to be lost in VZ.

53. In early August 1999, Ford VZ reiterated to Ford US their continued desire to remove

all Wilderness AT tires from VZ Explorers in service. (Caballero 77/2-19); (Maron 322/8-15). This

recommendation was discussed with senior Ford US executives. (Caballero 364/1-16). Ford US

instructed Ford VZ to prepare a Field Service Evaluation Paper, proposing a tire recall for VZ

(Caballero 368/20 - 369/2); Ford VZ was instructed to follow the “standard corporate procedure

used by Ford Motor Company worldwide.” (Caballero 170/5-9).

54. Some time thereafter, Ford VZ prepared a Field Service Evaluation Paper “from

scratch” and sent it to Ford US’ OGC and other Ford US personnel for review. (Caballero 176/1-

177/19; 178/12-179/15). Ford US’ OGC sent back an edited copy. (Caballero 180/8-181/14). Four

or five more drafts of the same document were prepared, sent to Ford US, discussed with Ford US

and edited by Ford US before the final draft was prepared. (Caballero 370/19-371/12). The original

draft of this critical document, outlining Ford VZ’ unedited evaluation of the Wilderness AT tread

8 Ford US’ CCRG performs a screening function to analyze product safety concerns. (Ford USStipulation No. 11). Ford US' CCRG held three meetings (8/26, 9/30 and 10/7/99) at which the Firestone treadseparation issues in VZ were discussed. (Ford US Stipulation 18, 20, 22). The CCRG makes the initialdetermination as to whether a product safety concern should be immediately referred to Ford US’ TechnicalReview Committee or Ford US’ Field Review Committee for remedial actions, investigated further, monitoredor closed. (Ford US Stipulation No. 12). If the CCRG concludes that further inquiry is needed, it orders aninvestigation through the preparation of a Field Service Evaluation Paper (14D). (Ford US Stipulation No.13). The findings of the investigation as documented in the Field Service Evaluation Paper are usually thenpresented to the Technical Review Committee, which is responsible for validating the facts supporting arecommended remedial action as well as the underlying reason justifying the proposed action. (Ford USStipulation Nos. 14-15). The Technical Review Committee is responsible for formally recommending anyproposed recall action to the Ford US Field Review Committee. (Ford US Stipulation No. 16). In order forthe remedial actions proposed in a Form 14D to be implemented, the Field Review Committee must formallyapprove the recommended action. (Ford Stipulation No. 17). All meetings of these critical fact finding anddecision making committees of Ford US were held in Dearborn, MI. Ford VZ did not have the authority tochange the tire on VZ Explorers without the approval of Ford. (Da Silva 440/14-441/1); (Caballero 372/9-17).

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separation problem, was “erased.” (Caballero 176/23-177/2). Ford VZ officials were instructed

by Ford US to include in the draft Field Service Evaluation Paper language attributing the VZ tire

recall to “unique customer usage and conditions in VZ.” (Caballero 331/23-332/11). Similarly, Ford

US personnel edited out a recommendation regarding implementation of a low tire pressure warning

system on Explorer vehicles. (Caballero 294/6-297/3; 305/19-22). Ford VZ officials were required

to accept and adopt all edits made by Ford US. (Caballero 333/7-13).

55. On August 26, 1999, Ford US’ CCRG opened a file for the Ford Explorer tire issue

in Venezuela.8 (BCAC1356-1361).

56. On August 26, 1999, the Field Service Evaluation Paper (14D) for the tread separation

issue in VZ was first discussed by Ford’s CCRG. All (9 in number) of the employees who attended

this CCRG meeting were Ford US employees. (Ford US Stipulation Nos. 18, 19) (emphasis added

and number supplied).

57. On August 27, 1999, a Ford US memo stated that there were only two options being

evaluated for VZ: one was to retrofit all vehicles with S-rated tires, and the other to retrofit vehicles

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with the Goodyear tires utilized in the Middle East. (BCAC 1455-1458, 1456). Though this memo

is dated 8/19/99, no corrective action was taken in VZ for another NINE months.

58. Through August of 1999, Ford VZ continued to correspond with Ford US requesting

advice regarding the suitability of Goodyear tires as replacement tires on VZ Explorers. Ford US

made contact with Goodyear engineering reps in Akron and, based on these contacts, recommended

that the VZ market use a P255/70R16 Wrangler RT/S tire as the replacement tire on VZ Explorers.

(BBAK 0464-66, 64); (Rauner 380/18-381/17; 382/4-8).

59. Beginning in early September 1999, Ford US executives became intimately involved

in developing a “joint strategy” for approaching BF US in order to work out a financial contribution

from Firestone for the projected cost of replacing all Firestone tires on VZ Explorers. All aspects of

the negotiations for the replacement tires for VZ Explorers were coordinated by Ford US. (BBAG

0972-73). Ford US internal e-mails indicate that BFVZ communicated to Ford VZ that their top

management in the US would become involved “when we present them with our position. It is likely

that they will contact you [(Lisa Klein) of Ford US] or even Carlos Mazzorin [of Ford US].” (Id.).

60. In early September 1999, Ford VZ contacted Ford US to ascertain “corporate

procedure” for handling a tire recall in VZ. (Caballero 345/21-346/10). Ford VZ executives

requested “more info regarding the tire recall in GCC.” (BBAK0115-17). Ford VZ suggested

utilizing the newspaper as a means of getting out owner notification. Ford US responded by stating

that Ford US’ Worldwide Direct Marketing Organization department would direct all aspects of any

owner notification letter in VZ. (Id.). Ford US instructed Ford VZ “you definitely don't want to put

it [news of tire recall] in the papers.” (Id.). On the same day, there were a number of e-mails

exchanged between Ford VZ and Ford US OGC personnel. Ford US has claimed an attorney-client

privilege as to the contents of these communications. (BBAK0122).

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61. On September 30, 1999, Ford US’ CCRG met for a second time to discuss the

Firestone tread separation issues in VZ. All (16 in number) of the employees who attended this

critical fact finding and decision making meeting were Ford US employees. (Ford Stipulation Nos.

20-21) (emphasis added and number supplied).

62. On October 7, 1999, Ford US CCRG met for a third time to discuss the Firestone

tread separation issue in VZ. All (10 in number) of the employees who attended this CCRG meeting

were Ford US employees. (Ford Stipulation No. 22) (emphasis added and number supplied). By this

date the CCRG had labeled the situation in VZ as a “potential ONP [owner notification program].”

(BCAC1356-61, 1361); (BNH0001066-79).

63. On October 28, 1999, Ford VZ and BFVZ executives met. At this meeting, Ford VZ

announced to BFVZ that they would be replacing with Goodyear tires all Firestone tires on VZ

Explorers. Ford VZ requested BFVZ to share in the cost of the campaign. Notes of the meeting

indicate that Ford VZ's executives indicated that they had “just received the green light from

Dearborn to go ahead with the campaign.” (BCG0018367-68, 18367) (emphasis added). In

response, BFVZ President Gonzalez advised Ford Venezuela executives that he would have to bring

this matter to the attention of “home office management” in Nashville. (Id. at 18367) (emphasis

added). Mr. Gonzalez authored a memo to senior BF US executives in the US, including the CEO

Mr. Ono, Sr. VP for Quality Assurance, Robert Martin, and OGC lawyers asking for their guidance

and instructions regarding how to handle the situation in VZ (Id.).

64. Ford VZ executives also reported to Ford US with respect to negotiations with BFVZ

on a cost-sharing formula for the proposed VZ recall campaign. Ford VZ’ memo confirms that Jorge

Gonzalez, BFVZ President, stated that he would have to “consult with his headquarters in

Nashville” in order to decide whether BFVZ would help to fund part of the recall campaign.

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(BCAO0525-26) (emphasis added). The internal memo reflects that Mr. Gonzalez stated that he

would recommend to his “headquarters in Nashville” to look for a settlement. (Id.) (emphasis

added). Finally, the memo states that BFVZ President Mr. Gonzalez expressed that, to his US

bosses, “the worst fear is that this issue in Venezuela could somehow involve the US market.”

(Id.) (emphasis added). Other internal documents dated the same day demonstrate that Ford OGC

lawyers were reviewing legal issues with respect to proposed VZ recall campaign. (BCAN0019-20).

65. In October 1999, BF US executives traveled to VZ to conduct yet another tire survey.

(BF US Stipulation No. 4). This was the third adjusted worn tire survey done in VZ by BF US

personnel during the year 1999. (Halverson 90/4-20; 140/4-9). Halverson was accompanied by Mr.

Hoetzel of BF US; no BFVZ personnel participated in this survey. (Halverson 143/2-19); (Abreu

361/1-364/7). Raw survey data was recorded in BF US laptop computers and returned to the US

for analysis. (Halverson 143/16-144/1; 146/3-11). The survey results were presented to BF US’

head of Quality Assurance, Robert Martin. (Halverson 146/6-13). 70% of the 16" Wilderness AT

tires inspected during this survey were manufactured at BF US' North American plants in Joliette,

Canada and Wilson, NC; of these, 56% of the tires showed signs of tread belt edge separation.

(BCG0017584-89); (Halverson 144/2-10). The original report and all backup information regarding

this tire survey are located in the US. (BF US Stipulation No. 5). The BF US tire survey results

were not shared with Ford VZ. (Maron 396/7-20).

66. In addition to asking for approval from Ford US for their plans to replace all

Wilderness AT tires on Ford Explorer vehicles in VZ, Ford VZ also sought Ford US’ approval for

a proposed change to the suspension system of all Explorers in service in VZ. (FAAB2510979-

11000); (Da Silva 439/1-14); (Caballero 407/2 - 408/8). A second Field Service Evaluation Paper

(14D) prepared by Ford VZ, addressing the proposed shock absorber change, and submitted for Ford

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US’ approval, noted over 50 rollover accidents in VZ and stated that “the root cause was

determined to be shock absorber design being too soft for the driving characteristics and road

conditions that can be found in VZ. . . . The Explorer being taller and less wider than other

trucks producing the elevation of its center of gravity what will make it more sensible to

rollover during hard shift . . . Another critical situation is when the truck takes a curve at high

speed and bounce due to road irregularities, the car loses gripping as a result of excessive bouncing

what became an uncertain condition for the driver who brakes and loses the vehicle control.” (Id. at

2510981-82) (emphasis added). The same 14D document attributes 40% of the responsibility for

the 50 rollover accidents in VZ to the Explorer’s suspension performance. (Id. at 2510998). “A

different design of suspension than the one used on the US trucks should be considered when

designing the suspension for the VZ and South American market that will better comply with the

driving characteristics and road conditions that can be found in VZ.” (Id. at 2511000). Ford VZ

submitted the shock absorber Field Service Evaluation Paper to Ford US’ OGC, the CCRG and to

senior Ford US officials. (WWX2 3062); (Caballero 407/2 - 408/8). Mysteriously, all drafts of this

key document criticizing the design stability of the Explorer vehicle have vanished from Ford US files.

The factual issues, testimony and documentary evidence regarding the unexplained disappearance in

the US of this critical liability document have been extensively briefed by Plaintiffs in our Response

to Ford’s Motion to Seal Q&A Document, MDL Docket entries 1589, 1590, and 1740. Plaintiffs

incorporate by reference the extensive factual record presented in these prior pleadings. Even though

Ford US has denied knowledge of this document, according to Ford VZ personnel, Ford US

conducted extensive testing in the US of the proposed vehicle suspension change in order to disprove

the theory and override the recommendation by the Ford VZ engineers. (Caballero 482/8 - 486/3).

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67. An internal Ford US memo dated November 23, 1999, explicitly states that “[f]ield

actions [in the VZ market] are predicated on direction by the Field Review Committee (FRC). The

FRC is scheduled to meet within the next two weeks to provide a recommendation.” (BCAO0227-

229, 227). Ford US’ control over the proposed actions of Ford VZ is underscored in the same memo

authored by Lisa Klein to Carlos Mazzorin, head of Ford automotive operations purchasing

worldwide. Ms. Klein wrote that “The Ford VZ Executive Committee continues to push for a

‘Product Improvement Campaign’ which will notify all the effected customers in VZ to replace their

tires with Goodyear tires free of charge . . . Ford’s Field Review Committee (FRC) must approve

VZ’s field actions. Discussions are taking place between Ford and Firestone’s General Counsel. The

FRC meeting is being set up in the next two weeks based on input from the General Counsel

discussions. We have asked that Purchasing be invited to the FRC meeting. Ford VZ is not

authorized to proceed with their ‘Product Improvement Campaign’ prior to receiving approval from

the FRC.” (BCAO0227-229, 228) (emphasis added). Ford US' Field Review Committee's

consideration of a VZ owner notification program, first requested in August 1999, and which Ms.

Klein predicted would take place “in two weeks”, did not occur for another six months – meanwhile

injuries and deaths in VZ continued to mount.

68. Through November 1999, Ford US continued to deal with Ford’s tire tread separation

and rollover accidents in Malaysia and Thailand, preparing a Ford US Field Service Evaluation Paper

for Malaysia and Thailand tire recall in December 1999. (FAAB0870171-173); (FAAB1437840-

846).

69. In December of 1999, BFVZ advised Ford VZ that Firestone would not help fund the

proposed VZ recall campaign. BFVZ President Gonzalez reported to BF US CEO Ono, BF US

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President Shibata and other senior BF US executives, and to BF US OGC with respect to all

communications with BFVZ. (BCG0018386).

70. In late 1999 and early 2000, Ford VZ authored and sent to the US an “Explorer DNP”

document. The document noted that “word of mouth in several newspaper articles, editorials and

radio talk shows have been effecting Explorer image [in VZ]” and that the proposed VZ tire recall

and shock absorber substitution program was “on hold for FRC (Field Review Comm.) approval of

local DNP,” urgently emphasizing that “the DNP process needs to be accelerated so that the issue

can be contained.” (BCAB 1857).

71. A January 4, 2000 memo, authored by John Behr (BF US), and a January 5, 2000

memo authored by Robert Martin (BF US), demonstrate that Ford US executives Sullivan and

Coundouriotis were intimately involved in discussions with senior BF US executives regarding the

extent of the proposed tire recall in VZ. (BCG0018398); (BCG0018390).

72. A January 6, 2000 memo authored by Alan Rauner states “I have searched every

known Ford database for tire failures because of this tread separation recall we are doing in GCC,

VZ, Malaysia and Thailand. The lawyers wanted to see if the US has had similar failures.”

(EXPX0037258-0037260).

73. Through January, 2000, senior BF US and Ford US executives met to discuss the

tire/shock absorber recall in VZ without the participation of anyone from BFVZ or Ford VZ.

(BCG0018393-94); (BCG0018395). The notes of these meetings indicate that the root cause of the

rollover accidents was both a vehicle and tire problem. (BCG0018396-97) (“the vehicles need to be

speed limited with a special service tire (ROW) to help the problem”). The meeting notes also

document that US officials of both companies delayed taking any protective actions in the US for fear

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that “an action in VZ would likely result in an action in North America.” (Id. at 18397)

(emphasis added).

74. On Jan. 27, 2000, Ford’s Field Review Committee approved a tire replacement

campaign for Ford Explorer vehicles in Malaysia and Thailand. (BAAC0247-256). Despite the fact

that tread separation problems in VZ were among the first reports received worldwide, tire

replacement campaigns were authorized by Ford US Field Review Committee in the GCC in August,

1999, in Malaysia and Thailand in February 2000, but delayed in VZ until May 2000. (BBAK1927);

(BCAC1455-56); (BAAC0247-256).

75. On February 7 and 10, 2000, KHOUTV, a CBS affiliate station in Houston, breaks

the story of a significant number of deaths and lawsuits involving Firestone tires on Ford Explorers.

76. On Feb. 24, 2000, Ford announced an owner notification program 00B35 involving

the replacement of Firestone tires on Ford Explorer vehicles in Thailand and Malaysia. Ford US

executive, Jorge Coundouriotis, commenting on the e-mail notification of the recall program states

“These countries are new for me. However, the issue is not new. It is the same issue that has

occurred already in GCC and VZ. I will add to list for negotiation with Firestone. Negotiations

may need to be elevated because I seem to have reached the end of the rope with them–we keep

getting ‘no’ as the answer.” (FAAB2275311-312, 311) (emphasis added). This memo concedes that

Ford US officials were controlling all negotiations with Firestone with respect to the reimbursement

of recall costs not only in Malaysia, Thailand and the GCC, but also VZ.

77. On March 6, 2000, NHTSA opened a preliminary inquiry based on the KHOUTV

investigative reports.

78. In March 2000, BF US conducted its quality control audit of the BFVZ’s tire

manufacturing plant. The audit was conducted pursuant to US standard audit procedures with the

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participation of various BF US personnel. (Halverson 160/4-161/7). All data was collected using

standard BF US procedures and on BF US laptop computers. (Halverson 60/21-63/23).

79. In March 2000, Ford VZ contacted Ford US executives Sullivan and Coundouriotis

asking for their urgent attention advising them that “the tire situation has worstened [sic]

dramatically. I need your support, perhaps Carlos [Mazzorin] [Ford US] involvement.”

(BBAG1012-13) (emphasis added). The response dated March 13, 2000 from Coundouriotis advised

Ford VZ and senior Ford US officials that “Firestone continues to refuse to participate in any

campaign on this issue whatever its nature. They do not accept any responsibility for the rollovers

and continue to see the accidents as related to the vehicle instability rather than tires blowing up.”

(Id.). The continued obstinance of BF US and Ford US insistence on a financial contribution from

their tire supplier continued to delay the VZ recall campaign.

80. Following the urgent concerns expressed by Ford VZ, a video conference from the

US involving “15 to 20 Ford people from Dearborn”, 4 Ford VZ employees (via tele-conference) and

several BF US personnel was held on March 27, 2000. (BCG0018403). The minutes of that

meeting, authored by John Behr (BF US), indicate the degree to which US executives continued to

control all decision-making with respect to the situation in VZ. Patrick Berryman, of Ford US, is

quoted as having requested BF US’ consent to a survey in VZ to determine if the Bridgestone brand

is “ok” to use as the replacement tire on Explorer vehicles. (BCG0018401-3). The memo also

indicates that the root cause of the tire tread separation rollover accidents was “a function of tire,

speed and temperature.” (Id.). No BFVZ personnel were present for this discussion. (BCG0018401-

402); (BCG0018403). Jorge Gonzalez, BFVZ president, was advised of the March 27th US meeting

only after the fact by John Behr of BF US in an e-mail the next day. In that e-mail, Mr. Behr advised

Mr. Gonzalez that “the situation in VZ is getting worse. The Ford engineers in Dearborn have told

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us that the FOV people no longer believe anything our people say. We must try to rectify this

situation.” (BMD0019509-10). Mr. Behr’s e-mail further corroborates that negotiations with respect

to the sharing of financial responsibility for the recall campaign were being handled from the US

stating “we have been asked again by Ford Purchasing to help finance their customer service program

in VZ. On April 18th, I will be meeting with the Ford Purchasing Manager in Dearborn where I will

be asked to discuss the financial situation.” (Id.).

81. Following the contacts made in the US between Ford and Firestone executives, BFVZ,

on May 4, 2000, made a written proposal to Ford VZ to provide tires to be produced by BF US in

its North American plants at a reduced cost for use in connection with the proposed VZ tire

replacement program. (BAAE1648-9). Significantly, the document states that the substitution of

the Wilderness AT tire on the VZ Explorers will require the approval of both BF US and Ford US.

The letter states “immediately upon acceptance of this proposal, Bridgestone Firestone USA will

request approval from Ford USA to use this tire in VZ.” (Id.). BFVZ’s proposal was rejected

based on the fact that Firestone’s offer was conditioned on the tires being fitted only on Explorer

vehicles “on which the suspension has been modified.” (Id.).

82. After Ford VZ rejected Firestone’s May 4th proposal, BFVZ requested that BF US’

management “let Ford Dearborn know of the position adopted by Ford VZ.” (BNH001725-30, 1726,

and 1727). In fact, BFVZ requested that BF US executives go over the heads of senior Ford VZ

executives by appealing directly to Ford US executives. (Id.).

83. A May 9, 2000 Ford VZ memo, addressing the breakdown in communication between

Ford and Firestone executives in VZ, indicates that BFVZ officials advised Ford VZ officials that they

were shocked by Ford VZ’s rejection of Firestone’s proposal since the terms of the proposal to

supply tires for the recall program in VZ “had already been accepted by Judy Sullivan from Ford

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USA.” (BCG0018461-2). The same memo acknowledges that any business terms proposed by Ford

VZ other than the proposals contained in the May 4th letter had to be approved by BF US. (Id.).

84. On May 15, 2000, Ford VZ notified Ford US that “things here are getting very

critical and radical actions will have to be taken. This weekend another case came on the

newspaper, fatal consequences.” (BAAE1651) (emphasis added). Ford VZ asked Ford US to share

the results of all technical investigations being conducted in connection with the pending NHTSA

investigation, asking “are there are any results that we can use in our favor.” (Id.). Finally, Ford VZ

requested Ford US to authorize “tire, suspension and drive train experts to come to VZ and help us

on this.” (Id.). The memo also reflects that Ford US’ OGC was involved in the planning of the VZ

tire recall. (Id.). Other Ford US personnel were involved as well. (BBAK1706).

85. The Ford US Technical Review and Field Review Committee consideration of the VZ

tire recall was finally scheduled on May 17, 2000. (BAAT0719). The notice for those meetings

reflects that the vast majority of the participants in these critical decision making meetings were Ford

US employees. 143 of the 148 (or 97%) of the “required attendees” to these meetings were Ford

US executives. Only 5 Ford VZ executives were listed as required attendees. (BAAT1396-7).

86. Ford US’ Field Review Committee approved a tire replacement campaign in VZ on

May 17, 2000. Ford US executives, Tom Baughman, Ford US Vehicle Center Engineering Director,

and Andrew Vandacaye (on behalf of Dale Claude Pierre, Vehicle Line Director) signed authorizing

the field campaign. (BBAH1637-46). The recommendation and approval to use a Goodyear tire as

the replacement tire for VZ Explorers also came from the Engineering Director of Ford US’ Truck

Vehicle Center. (Da Silva 366/14-19).

87. The day after Ford US authorized the recall campaign in VZ, a high level meeting

between Ford US and BF US personnel was held in the US to discuss the proposed field action in

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VZ. (BCG0018463-4). The notes of this meeting do not reflect the presence of any VZ personnel

from either company. (Id.).

88. The processing of the tire recall in VZ was handled by Ford US’ Recall department

in the US. (BCAO0442). All actions, all logistics, “everything from that point forward had to be run

through the recall department in the US.” (Caballero 379/5-380/6).

89. The owner notification program letter sent to all Ford dealers in VZ advising of the

tire recall, and labeled a “Ford Motor Co. Script,” was authored by Ann O’Neill, Director of Vehicle

Services and Programs for Ford US Customer Service Division. (BHAC0036-45) (emphasis added).

Ms. O’Neill also authored the owner notification letter to be sent to all Ford Explorer owners in VZ.

Significantly, the letter was authored in the US, in English. (BCG0018418-20).

90. At the direct request of Mr. Ono, CEO of BF US, a copy of the letter that Ford

intended to send to VZ customers was sent by Ford US’ OGC to BF US’ OGC for their review and

approval. (BCG0018414-417); (Gonzalez 383/3-384/1).

91. On May 31, 2000, senior Ford US and BF US executives along with Firestone and

Ford executives from VZ met at Ford's World Headquarters in Dearborn, MI, to coordinate Firestone

and Ford's response to worldwide media and customer inquiries in VZ regarding the tire recall

campaign in VZ and to discuss the issuance of the owner notification and dealer letter in VZ.

(BCG0018465); (Klein 20/1-19; 21/11-14; 317/9-318/18). At this meeting, BF US expressed

concerns about contacting VZ customers directly and wanted the tire recall done through Ford

dealers. (Klein 23/24-24/9). Art Stuart, BF US President of Original Equipment Tire Sales,

expressed the concern that if customers in VZ were notified directly “it would compromise

Firestone's ability in litigation . . . as this process moved forward in Venezuela.” (Klein 111/13-

112/6) (emphasis added).

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92. Through May and June 2000, Ford VZ corresponded with Ford US with respect to

coordinating their “investigation on Wilderness AT tires.” (FAAB0169778). Ford US executives,

Nick Kazan, Tom Baughman and John Shelton, were notified by Ford VZ that the “highest incidence”

of tire explosions were occurring in rear Explorer tires. Testing performed on Explorer rear tires

showed a maximum operating temperature of 134° F. at the right rear tire (due to design proximity

to vehicle’s exhaust) and a temperature differential between the right rear and left rear tires of 70°

F. (Id.); (Da Silva 80/23-85/5). Comparative testing of the Explorer with other Ford vehicles

showed that this dramatic temperature differential was unique to the Ford Explorer. (Id.). This key

internal memo concedes that “if somebody outside does the same [test] it might be used against us

and in favor of Firestone, and I need any evidence available to defend our product.” (Id.). Ford VZ

executives requested the assistance of Ford US engineers in order to rebut the growing evidence that

a design defect in the Explorer was contributing to the tire separation problems with rear tires on the

Explorer vehicles. (Id.). Ford US executive Nick Kazan responded to this memo advising Ford VZ

not to worry, saying “it’s not a problem.” (Da Silva 101/8-102/10; 103/8-104/15).

93. In June 2000, Lisa Klein (Ford US) corresponded with Art Stuart, President of

Original Equipment Sales for BF US, complaining about the actions of BFVZ in connection with the

ongoing owner notification program in VZ. Ms. Klein complained that the actions of BFVZ “clearly

are not aligned with a joint communication strategy.” (BBAL3282). The memo complains that the

public comments being made by BFVZ employees in connection with the VZ tire recall were “not in

alignment with the agreements that Mr. Nasser and Mr. Ono had in working together on a

communication strategy in order to minimize negative media exposure.” (Id.). This memo illustrates

the degree to which Ford US and BF US--at their highest levels--continued to control all aspects of

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the VZ recall campaign in order to prevent the situation in VZ from having negative consequences

on US business and the pending NHTSA investigation.

94. Beginning in August 2000, the US public relations firm of Fleishman-Hillard, Inc.,

became involved in handling press inquiries and public relations for issues arising out of the VZ tire

recall. (App. 32). Prior to that press relations in VZ were being coordinated in-house by Ford US.

(BHN0001693); (BHN0001734).

95. In August 2000, BF US employees conducted yet another tire survey in VZ. (BF US

Stipulation No. 16). This was the fifth tire survey conducted by BF US in VZ in the preceding 18

months. (Halverson depo 90/4-91/8). The survey “report” was prepared by BF US tire engineer,

Roger Marble. (Marble 336/2-4). This survey found that 86% of the P255/70R16 tires

manufactured in BF US' Wilson, NC, plant contained an area of belt separation greater than 4

millimeters when cut open. (BHA0048237-8); (Marble 369/17-23). This survey found that 80% of

the P235/75R15 tires manufactured at BF US' Wilson, NC, and Joliette, Canada, plants contained

comparable signs of belt separation. (BHA0048237-38); (Marble 354/22-355/2). The percentage

of US manufactured tires installed on VZ Explorers which showed signs of an area of separation

greater than 4 millimeters was greater than the comparable rate for any VZ manufactured tire models

examined in this survey. (BHA0048237-38). The level of early belt separations noted in this report

was deemed “not acceptable” and “undesirable” by BF US’ own tire engineer. (Marble 372/18-

373/18) (emphasis added). The original report and all back-up documentation regarding this tire

survey are located in the United States. (BF US Stipulation No. 6).

96. As the implications of the tread separation/rollover problem grew, not only BF US

executives in the US, but also senior executives of Bridgestone Corporation in Japan became involved

in addressing a “joint communication strategy” for handling the situation in VZ. In a letter dated

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September 14, 2000, Ford US requested a meeting with the President/Chairman of the Board of

Bridgestone Corporation in Japan in order to discuss “the future relationship between Ford and

Bridgestone/Firestone.” (BBAO0733-734). In this letter, Ford US specifically complained of “recent

Firestone VZ media releases inaccurately portraying the Explorer.” (Id.). Ford US proposed “an

agreement to mutually curtail any advertisements or press releases unnecessarily disparaging of the

other company or its products. This agreement would apply to the US, VZ, and all other markets.”

(Id.).

97. Beginning in September 2000, BF US, Ford US and Bridgestone executives began

meeting in the US on a weekly basis to coordinate strategy with respect to the Wilderness AT tread

separation/Explorer rollover problem. These meetings, held without the participation of any

Firestone or Ford executives from VZ, continued to monitor all aspects of tire recall issues

worldwide, including in VZ. (BBAN0314-0315). An undated “Crisis Management Organizational

Chart” prepared by BF US indicates that crisis management issues related to VZ were coordinated

by BF US employees. (BTN0027404).

98. In November 2000, BF US employees conducted a sixth tire survey in VZ.

(Halverson 165/6-169/4); (Marble 160/1-24). The data gathered during this survey was used as part

of Firestone’s root cause analysis of the Wilderness AT tire failures. (Marble 182/22-24). BF US

examined some 100 to 200 tires while in VZ. (Marble 168/8-10). The survey data was collected

electronically on BF US laptop computers, using the standard BF US survey program, and provided

to Mr. Ohashi, a BF US employee at the Akron Technical Center. (Marble 165/13-15); (Halverson

166/20-24; 168/15-25). BF US personnel prepared a report based on the raw data and sent it to

Nashville. (Halverson 166/25-167/2). The information from VZ tires was subsumed into the US root

cause analysis report prepared by BF US. (Marble 182/22-24). All of the individuals most

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knowledgeable and evidence relating to BF US’ root cause investigation are to be found in the US.

99. Similarly, all of the Ford root cause investigation is to be found in the US. In fact, the

engineering expert offered by Ford to testify before the VZ General Assembly with respect to tread

separation issues involving the Explorer vehicle is from the US. (App. 33 at ¶5). All of the root

cause technical information offered by Ford in its submissions to the VZ General Assembly was

generated by US experts. Figuring most prominently in these presentations are Tim Davis and Ernie

Grush, both Ford US executives, as well as K. Mormon, S. Y. Hsu, and R. Marlow, all from the US.

(App. 34 at p. 52-end). Finally, both Ford and Firestone flew the entire investigative committee of

the VZ National Assembly to their US headquarters at Ford and Firestone’s expense in order to give

them a briefing on their root cause investigations involving US company employees and US technical

experts. (App. 35).

100. Following the tire recall in VZ and the GCC, Ford US developed worldwide tire

selection requirements for export markets, including VZ. Beginning with the 2002 model year, truck

programs under 8,500 lbs. GVW (Gross Vehicle Weight) and passenger cars sold for use in certain

countries or markets, regardless of where the vehicles are assembled, should either (1) use a tire with

a minimum high speed rating of H or have a maximum vehicle speed limited to 18 mph (30

kilometers per hour) below tire speed rating. These requirements apply to all of South America,

including VZ. (EXPX0036443). These new mandatory tire standards were written in the US without

the participation of any Ford VZ personnel. (Baughman 81/1-82/17). Unfortunately, this tragic

admission of the underlying tire/vehicle problem came too late for the dead and injured Plaintiffs

whose cases are pending before this Court.

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WE HEREBY CERTIFY that a true and correct copy of the foregoing was served by Federal

Express to all counsel listed on the attached service list this 19th day of October, 2001.

Respectfully submitted,

COLSON HICKS EIDSON255 Aragon Avenue, 2nd FloorCoral Gables, FL 33134(305) 376-7400

- and -

PODHURST, ORSECK, JOSEFSBERG,EATON, MEADOW, OLIN & PERWIN, P.A.25 West Flagler Street, Suite 800Miami, Florida 33130(305) 358-2800 / Fax (305) 358-2382info@podhurst.com

By___________________________________ Victor M. Diaz, Jr.

Fla. Bar No. 503800Xavier MartinezFla. Bar No. 0059498

529P6616.WPD

Liaison Counsel for PI/WD Plaintffs

William E. Winingham, Esq.Wilson, Kehoe & WininghamP. O. Box 1317Indianapolis, IN 46206

Liaison Counsel for Class Plaintiffs

Irwin B. Levin, Esq.Cohen & Malad, P.C.136 N. Delaware Street, #300Indianapolis, Indiana 46204-2529

Liaison Counsel for Ford Motor Co.

Randall R. Riggs, Esq.Locke Reynolds, LLP201 No. Illinois Street, #1000P. O. Box 44961Indianapolis, IN 46244-0961

Liaison Counsel for Media Intervenors

Daniel P. Byron, Esq.McHale, Cook & Welch, PC320 N. Meridian St., #1100Indianapolis, IN 46204

Liaison Counsel for Bridgestone/Firestone, Inc.

Mark J.R. Merkle, Esq.Krieg Devault Alexander & Capehart, LLPOne Indiana Square, Ste. 2800Indianapolis, IN 46204-2017

Liaison Counsel for Bridgestone Corporation

Thomas G. Stayton, Esq.Ellen E. Boshkoff, Esq.Baker & Daniels300 N. Meridian St., Ste. 2700Indianapolis, IN 46204

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APPENDIX A

Colombian Cases:IP00-5083-C-B/S; IP00-5089-C-B/SIP00-5090-C-B/S; IP00-5091-C-B/SIP00-5098-C-B/S; IP00-5099-C-B/S

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APPENDIX B

Venezuelan Cases:IP00-5011-C-B/S; IP00-5013-C-B/S;IP00-5080-C-B/S; IP00-5081-C-B/S;IP00-5082-C-B/S; IP00-5084-C-B/S;IP00-5085-C-B/S; IP00-5086-C-B/S;IP00-5087-C-B/S; IP00-5088-C-B/S;IP00-5092-C-B/S; IP00-5093-C-B/S;IP00-5094-C-B/S; IP00-5095-C-B/S; IP00-5096-C-B/S; IP00-5097-C-B/S; IP00-5100-C-B/S; IP00-5101-C-B/S; IP00-5102-C-B/S; IP00-5103-C-B/S; IP00-5104-C-B/S; IP00-5105-C-B/S; IP00-5106-C-B/S; IP00-5107-C-B/S; IP00-5108-C-B/S; IP00-5109-C-B/S; IP00-5110-C-B/S; IP00-5111-C-B/S; IP00-5112-C-B/S; IP00-5113-C-B/S; IP00-5114-C-B/S; IP00-5115-C-B/S; IP00-5116-C-B/S; IP00-5117-C-B/S; IP00-5118-C-B/S; IP00-5119-C-B/S; IP00-5120-C-B/S; IP01-5174-C-B/S;IP01-5175-C-B/S; IP01-5176-C-B/S;IP01-5177-C-B/S; IP01-5178-C-B/S;IP01-5180-C-B/S; IP01-5181-C-B/S;IP01-5182-C-B/S; IP01-5183-C-B/S;IP01-5184-C-B/S; IP01-5185-C-B/S;IP01-5186-C-B/S; IP01-5187-C-B/S;IP01-5188-C-B/S; IP01-5189-C-B/S;IP01-5190-C-B/S; IP01-5191-C-B/S;IP01-5192-C-B/S; IP01-5193-C-B/S;IP01-5194-C-B/S; IP01-5195-C-B/S;IP01-5219-C-B/S; IP01-5220-C-B/S;IP01-5221-C-B/S; IP01-5222-C-B/S;IP01-5223-C-B/S; IP01-5224-C-B/S;IP01-5225-C-B/S; IP01-5231-C-B/S;IP01-5232-C-B/S;