Jury Finds Blue Bird Corporation Liable for Fraud

DriVer · 11-23-2010, 03:05 PM

Jury finds Blue Bird Corporation liable for fraud, lawyer reports

BY: Greg Gerber posted on November 23, 2010 12:01
RV D@ily Report

BIRMINGHAM, Mich. -- On Nov. 18, an Ottawa County, Mich., jury rendered a verdict that Blue Bird Corporation committed intentional fraud, among other things, in that it knowingly manufactured 57 overweight and dangerous motorhomes and for two years, between 2004-2006, sold them to unsuspecting customers, a law firm representing victims reported today.

Blue Bird manufactured and sold these coaches, designated Blue Bird "Wanderlodge M450 LXi", at prices starting at $700,000 and reaching more than $1 million dollars.

The jury verdict stated that Blue Bird made the fraudulent statements with the intent that the statements be relied upon by its customer and that Blue Bird intentionally created a false impression about its product intending that its customer would rely upon it, said H. Joel Newman, a founding shareholder in the law firm of Hyman Lippitt PC.

The jury verdict was rendered in favor of Anthony McNeal, of Franklin, Mich., on his claims for fraud, silent fraud, breach of the Michigan Consumer Protection Act, and breach of implied warranty.

Newman, who served as McNeal's lead trial attorney, said he believes it is critical that this information finally comes to light six years after the first dangerous vehicle was manufactured, because this company manufactures and sells school buses that transport thousands of children every day.

The lawsuit alleged that the defects in these motorhomes, which Blue Bird denied and/or failed to disclose, were known for years, even as it continued to manufacture and sell the vehicles caused, among other things, a disproportionate number of front tire problems, especially on the curb side of the vehicle, said Newman. He believes at least one fatal accident was caused by the same defects the jury found. The fatal accident occurred in October 2007 ,and is the subject of a secret settlement between Blue Bird and the family of the decedent, said Newman.

Shortly after the accident, in December 2007, Blue Bird reported the problem to NHTSA. Customers were notified in March 2008. Blue Bird then conducted a recall which did not resolve the problem, said Newman. Then it conducted a second phase of the recall that resulted in additional problems, he added. Subsequently, a third phase recall was conducted. The jury found that the vehicle was still defective even after the third recall by Blue Bird, said Newman.

"During the trial, company witnesses admitted knowing the coaches were built with tie rods which did not meet their specifications," said Newman. "According to the witnesses, when Blue Bird learned of the tie rod problem, it failed to warn customers or dealers promptly, and continued to manufacture and sell the coaches. They also admitted that failed tie rods could result in loss of steering control.

"Company engineers admitted on cross examination that the company had weighed the coaches at the time of manufacture and knew of the overweight condition since 2004," he added. "Company witnesses admitted on cross examination that the coaches should never have been built or sold in their overweight condition."

Several of the engineers involved testified that the best fix would have been to reduce the weight of the coaches substantially, Newman explained.

According to the lawsuit, that would have been expensive, and was not done. "The lawsuit alleged that in the end, the company opted for a series of less expensive solutions," said Newman. "Hyman Lippitt PC believes in the interim, Blue Bird misrepresented the unloaded vehicle weights and the cargo carrying capacities of the coaches and continued to sell them.

"Months before the fatal accident in October 2007, Blue Bird sold its motorhome division to Coachworks Holdings, Inc.," Newman explained. "Coachworks' president, Dale T. Carson, testified that Blue Bird had not disclosed that the vehicles exceeded their axle weight ratings until after Coachworks had purchased the business. Mr. Carson testified that Coachworks learned of the problem after the purchase and never manufactured a single Wanderlodge M450 LXi. Coachworks is now in Chapter 11 bankruptcy."