Pinto lawsuits began mounting fast against Ford. Says John Versace, executive safety engineer at Ford’s Safety Research Center, “Ulcers are running pretty high among the engineers who worked on the Pinto. Every lawyer in the country seems to want to take their depositions.” (The Safety Research Center is an impressive glass and concrete building standing by itself about a mile from Ford World Headquarters in Dearborn. Looking at it, one imagines its large staff protects consumers from burned and broken limbs. Not so. The Center is the technical support arm of Jack Echold’s 14-person anti-regulatory lobbying team in World Headquarters.)
When the Pinto liability suits began, Ford strategy was to go to a jury. Confident it could hide the Pinto crash tests, Ford thought that juries of solid American registered voters would buy the industry doctrine that drivers, not cars, cause accidents. It didn’t work. It seems that juries are much quicker to see the truth than bureaucracies, a fact that gives one confidence in democracy. Juries began ruling against the company, granting million-dollar awards to plaintiffs.“We’ll never go to a jury again,” says Al Stechter in Ford’s Washington office. “Not in a fire case. Juries are just too sentimental. They see those charred remains and forget the evidence. No sir, we’ll settle.”
Settlement involves less cash, smaller legal fees and less publicity, but it is an indication of the weakness of their case. Nevertheless, Ford has been settling when it is clear that the company can’t pin the blame on the driver of the other car. But, since the company carries $2 million deductible product-liability insurance, these settlements have a direct impact on the bottom line. They must therefore be considered a factor in determining the net operating profit on the Pinto. It’s impossible to get a straight answer from Ford on the profitability of the Pinto and the impact of lawsuit settlements on it—even when you have a curious and mildly irate shareholder call to inquire, as we did. However, financial officer Charles Matthews did admit that the company establishes a reserve for large dollar settlements. He would not divulge the amount of the reserve and had no explanation for its absence from the annual report.