VideoOn the eve of a high-profile trial last winter involving Ford Motor Co., Bridgestone/ Firestone Inc., and a woman paralyzed in an accident involving a Ford Explorer and defective Firestone tires, the case was abruptly settled. The terms of the settlement were not disclosed, except for one crucial element. On January 7, Ford and Firestone officials visited Donna Bailey in her Houston hospital room and gave her the one thing she demanded before she would settle out of court: a videotaped apology, which was subsequently broadcast on national television.
The apology was highly unusual for Ford, if not for Firestone, a subsidiary of Japanese tire maker Bridgestone. Unlike their counterparts in Japan, U.S. companies are loath to extend such gestures in liability cases. Part of the reason is cultural. "In Japan, there's a tradition of apologizing," says Marilynn Rosenthal, who has authored or edited books that deal with medical malpractice issues, and is director of the University of Michigan Forum on Health Policy. "But in America we have a tradition of not wanting to get knocked down."
Another reason U.S. companies look askance at such acts of contrition has to do with the prevailing legal system. Simply put, they fear that apologizing for negligence amounts to an admission of guilt, opening the legal floodgates to copycat suits.
That fear is not entirely unjustified. Most states allow apologies to be entered as evidence if they've been offered outside of settlement negotiations. But those that are negotiated are not admissible as evidence of liability in subsequent court cases. Meanwhile, Massachusetts and California have created laws that protect "benevolent gestures," such as expressions of remorse or regret, from use as evidence of liability in both current and subsequent cases. Other states are considering adopting similar laws.
As a result, attorneys who specialize in this area say companies are starting to rethink their approach to apologizing in liability cases (although none of the companies contacted by CFO would admit to doing so). But lawyers contend that an increasing number of corporate clients are starting to conclude, at least in some cases, that apologies can be an effective way to settle or mitigate the impact of negligence lawsuits and potentially staggering judgments.
BROKEN BONDS
Obviously, a company should vigorously defend any case in which it bears no responsibility. Often, determining who is responsible can take months, as it did with the Firestone-Ford case. But once negligence has been established, a speedy apology can be effective in reducing settlement amounts, say experts. This is especially true in cases where there is a preestablished bond between the plaintiffs and defendants, as in employment discrimination or malpractice situations. When harm occurs in these cases, there is a sense that a bond has been broken, so court awards based on intangible losses such as pain and suffering can run very high, says Daniel Shuman, an attorney and a professor at the Dedman School of Law at Southern Methodist University. And Shuman insists that apologies go a long way toward restoring that lost sense of trust.
He isn't alone. "An apology can work wonders" in employment discrimination cases, "particularly if it comes early on," says Kenneth R. Feinberg, founder of The Feinberg Group LLP, a Washington, D.C.- based law firm that specializes in mediation and other forms of alternative dispute resolution. He points to one case in which a company laid off 450 workers, many of them older employees who were unwilling to relocate to a new facility. The workers filed an age- discrimination lawsuit. When the case went to mediation, the company sent its vice president of human resources to the meeting with a settlement check, but without lawyers.
Says Feinberg: "He said to the plaintiffs' lawyers and representative employees, 'We're sorry. We had to do it. We feel like it was a break with family.' If he hadn't done that, the case would have ended in protracted litigation. It ended up settling for a modest amount of money and a written apology, and the [plaintiffs] went away."
WHAT VICTIMS WANT
Studies indicate that besides compensation for tangible damages such as medical expenses, most victims of negligence want three things, says Rosenthal: a sense that their complaint is being taken seriously, a satisfactory explanation of what happened, and an assurance that steps are being taken so it won't happen again to someone else. At the moment, however, most firms facing lawsuits find it safer to play hardball, and lawyers say that's especially true in the arena of product liability involving physical injury.
Unless a company's liability is beyond doubt, says Feinberg, "corporations don't apologize, and don't feel they can. It's a signal that they're liable. In those cases, the implications go way beyond the individual case." He contends that apologies should most likely occur in cases where the causation is clear or unassailable, and in which the consequences beyond the individual case are negligible. In the Firestone-Ford case, he explains, the liability was apparently so clear, and the impact on other cases apparently so negligible because of the unusual circumstances, that the apology to Bailey could only help, especially since it kept the case out of court, where damning evidence was likely to come out.
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