Adjustment Documents Are Admissible as Admissions Against Interest and as Evidence of Manufacturing Defects
 
March 1, 2000
 

In a surprising decision to manufacturers, a new Georgia decision held that adjustment documents, reflecting product returns, are evidence of manufacturing defects and are admissions against interest made by the manufacturer. A recent Georgia decision held that adjustment records are admissible as admissions against interest as evidence of liability, and are relevant and material to show the causation of tire problems and the frequency of manufacturing defects. The case, Crosby v. Cooper Tire & Rubber Company, 240 Ga. App. 857, 1999 Ga. App. LEXIS 1427 (1999), involved, among other things, allegations of negligent design, negligent manufacture, and failure to warn in connection with a tire which allegedly blew out, causing Crosby’s vehicle to roll over, killing one person and injuring two others. The tire manufacturer prevailed at trial and the plaintiff appealed.

One of the plaintiff’s contentions on appeal was that the trial court erred in finding that the tire company’s adjustment records were hearsay, and were not admissible. The Georgia Court of Appeals found that not only were they admissible as admissions against interest, they were relevant and material to show: causation; possible customer fault, such as impact damage, under-inflation or over-inflation; road hazard damage; manfacturing defects (such as a problem with workmanship or materials); and the frequency of manufacturing defects. The court further held that this evidence of "prior similar manufacturing defects" would be admissible to show "defects, notice, prior knowledge and causation and for purposes of punitive damages." The Court of Appeals was not persuaded by Cooper Tire’s argument that the adjustment documents at issue at best reflect the condition of the tire, not causation, and probably reflect the manufacturer’s or dealer’s effort to compete in a competitive market by ensuring customer satisfaction.

The evidence before the trial court, which excluded the adjustment data, included testimony by former tire engineers (employed by the plaintiff) that manufacturers will adjust returned tires even if they are found to be defect-free, according to Cooper Tire’s application for certiorari to the Georgia Supreme Court. The plaintiff’s tire engineer did not deny that manufacturers would consider consumer satisfaction in the adjustment process, and admitted that the mere fact of a separation is not proof of a manufacturing defect. Another of the plaintiff’s experts admitted that the average tire retailer, to whom the tires are normally returned, is "pretty thin" in his knowledge, and could not determine the reason for a separation in most cases. He also admitted that "some manufacturers grant adjustments just to keep the customer happy," and that his former employer, a tire manufacturer, would adjust tires even if the tire which was returned had been "blatantly abused." Furthermore, the head of consumer relations for Cooper Tire testified that returned tires are almost never seen by anyone qualified to determine causality. He testified that the technician who codes the condition of the tire inspects it for about 60 to 90 seconds, and that the decision to adjust the tire is made by someone at Cooper Tire who does not even see the tire. According to Cooper Tire’s counsel, there was no evidence offered to dispute this testimony.

Despite the fact that the plaintiff’s expert had admitted that the cause of a tire failure cannot be determined without an examination of the tire by a qualified expert, the Court of Appeals reversed the trial court’s ruling and held that the adjustment data was relevant and material to the determination of whether a tire failure was caused by the customer or by a failure of the workmanship or materials. In essence, the court is leaving to the jury the determination of causation, based upon the jury’s review of adjustment documentation. Those manufacturers and retailers whose policies are to accept returned merchandise without question should tread carefully in Georgia for the time being. Cooper Tire’s application for certiorari to the Georgia Supreme Court is pending.