Carrera GT Crash Hits a Nerve

The ink wasn’t even dry when the email inboxes, telephone lines, mailbox, and other forms of communication got red hot

The “Legal Files” column in the December 2007 issue of SCM, which discussed the $4.5m settlement of the Carrera GT fatal crash lawsuit, hit a nerve within the SCM community. The ink wasn’t even dry when the email inboxes, telephone and fax lines, and other forms of communication were humming. Most comments were critical that the column was overly biased toward the plaintiff’s point of view and challenged us to give equal time to the “other side of the story.” And here it is, in a special four-page expanded section.

Porsche, Ferrari Club complain

We received a lengthy letter from Tony Fouladpour, the Manager of Corporate Communications at Porsche Cars North America, which is printed in its entirety following this article. Efforts to contact Fouladpour to discuss this further were unsuccessful due to his travel schedule.

We also received comments from Craig McLaughlin-a former attorney, an experienced racer and, at the time of the incident, President of the San Diego Region of the Ferrari Owners Club, which sponsored the fateful track day. He was present at the event, and intimately involved in all pre-trial discovery activities.

McLaughlin states that Craig McClellan, the plaintiff’s attorney, is a highly skilled attorney. However, he is “first and foremost, an advocate and not a journalist or historian.” That is true. Lawyers are trained to advocate their client’s position, and it’s hard for them to turn that off and become objective, even when the lawsuit is over.

But that doesn’t necessarily mean McClellan is wrong; one can be biased and right at the same time. McLaughlin and Fouladpour are in the same position. SCM readers should keep potential biases in mind when considering the comments of all three, which we believe are all well-intentioned.

McLaughlin makes the point that the case never went to trial, so there was no real “determination” about anything. That is true. He states that the decision of his group of defendants to settle was based on a “cost to defend, versus a cost to settle analysis.” That may be true as well, but “Legal Files” believes there had to be some “risk of losing” in the analysis as well.

Taking issue with the facts

Fouladpour and McLaughlin claim several factual inaccuracies in the December column:

• • McLaughlin disputes that the Ferrari entered the track too slowly. Given the modest 2% share of the settlement from this defendant, “Legal Files” believes that fact was disputed.

• • McLaughlin takes issue with the statement that drivers were instructed to move to the right after entering the track. If that was a misunderstanding on our part, “Legal Files” apologizes for the error.

• • McLaughlin acknowledges that there were problems with the track’s entry design, but that they were explained to the participants at the drivers’ meeting. If we accept that, it raises an interesting legal issue. Is disclosure of design defects enough? At what point would the organizers be required to cancel the event because of the danger? Keep in mind the California Supreme Court ruled that releases are ineffective against liability for gross negligence, and at least in Washington and Virginia, against ordinary negligence.

• • Fouladpour states that Keaton and Rudl were looking at each other, not the track, when the Carrrera GT entered the straightaway. “Legal Files” can’t accept or deny that, but can state that it is unaware of any other person having said that.

• • Fouladpour states that electronic stability control would not have helped because the Carrera GT went off the track with the front wheels pointed straight ahead. However, that is contrary to other reports about the accident report. All of which described the rear-end of the car as coming around.

• • McLaughlin denies that any technician said anything to any FOC official involved in the track day about the condition or handling characteristics of Keaton’s Carrera GT.

Who paid up and why

Fouladpour, in his letter, denies that the defendants sought to apportion the settlement responsibility among themselves. We can accept his statements as they pertain to Porsche. However, McLaughlin says that the FOC, as the sponsor of the event, carried a single insurance policy that covered the FOC, the organizer, the Chief Steward who had been hired by the FOC to run the event, and the track.

The FOC was confident that the track and/or the Chief Steward bore the major share of any responsibility among their group, and wanted the settlement to be apportioned among their group in that manner. However, their attorneys advised that the Court would not do that, and the settlement had to be a single amount for the entire group of defendants.

Porsche’s relatively small settlement can be taken as an indication that the case against it was weak. However, McClellan claims that Porsche simply benefited from being the last defendant to settle. Had the case against Porsche gone to trial, it would have received credit for all settlements from all other defendants. Consequently, the odds of recovering more than $4.5 million were not enough to merit going forward. No doubt, both of these parties make good points, but there may be some posturing in each view. “Legal Files” will have to leave it at that.

Supercars and less super drivers

Fouladpour takes great umbrage at the claim that anything was wrong with the condition or design of the Carrera GT. McClellan says there were no specific mechanical issues with the car, the only complaint being that the lack of electronic stability control was a design defect. McClellan and Fouladpour disagree about whether ESC could have been used, and we can’t judge that point. But note that the National Highway Traffic Safety Administration has recently issued a rule that requires ESC in all under-10,000 lb. vehicles by 2012, with a three-year phase-in beginning September 1, 2008.

This is an interesting legal point. At what point should a manufacturer be held liable when its otherwise non-defective supercar is sold to a less-than-super driver? “Legal Files” has little doubt that the customers questioned by Porsche had no desire for ESC, and that Keaton would likely have turned it off anyway. But the Carrera GT was sold to customers who may not know how to handle the car. McClellan’s suggestion that a street crash should be Porsche’s greatest worry is a good one. Hopefully, we will never find out if he is correct.

Keeping sight of the human element

The most important comments about the case come from McLaughlin. He urges that “Legal Files” not lose sight of the human element. Referring to FOC members and organizers, he says, “After all, Corey Rudl and Ben Keaton were our friends. We were absolutely devastated when they died.”

In particular, the event organizer was the most affected. He was among the group who went to the Rudl house that afternoon to tell Tracy Rudl about the death of her husband. And, when he informed his insurance agent that he might be sued as the organizer of the event, his homeowner’s insurance company immediately filed suit against him, seeking a determination that his policy did not cover him.

After hiring his own attorney to defend that lawsuit, it was pointed out to the plaintiff that the organizer was an uncompensated director of the non-profit FOC, and as such, California law immunized him from liability absent a showing of gross negligence. McClellan confirmed that was the case, and the plaintiff promptly dismissed him from the lawsuit, but not before he had incurred thousands of dollars in legal fees.

McLaughlin also advises that the club has not sponsored a track day since, and he doesn’t know if they ever will again. He is sure the organizer will never be involved again and resents any insinuation that he or any other FOC members acted cavalierly. “Legal Files” has never intended any such insinuation.

McLaughlin is concerned about the impact on the Rudl and Keaton families. He feels no animosity about the lawsuit, and is “heartened by the financial assistance the settlement has provided Mrs. Rudl. The money will never replace her husband, and her and Mrs. Keaton’s losses will be with them forever.”

Carrera GT Letters

From: Jim Rosenthal, M.D., Annapolis, MD

I thought the “Legal Files” series on the Carrera GT crash and settlement was particularly well done, for several reasons.

• • • • – No other car enthusiast magazine bothers to mention these kinds of issues, let alone go into them in penetrating depth.

• • • • -Since many of us are buying faster and faster cars, our chances of being involved in this kind of incident are increasing.

• • • • -And the “real world” is always out there waiting to make its presence known, even when we are Walter Mittying it around the track.

When I owned a Ferrari, I was sometimes invited to drive the car at Summit Point on FOC track days, and also track days that local clubs had organized. I have never taken a track driving course, and frankly I am only an average-skilled street driver, though I also ride a motorcycle, which makes me a bit more aware than the guy next to me. I did not drive the Ferrari at Summit, partly because there were always loose ends about its behavior, with which I was not happy. In addition, the occasional bland assertions that “no one ever flunks tech” bothered me. And frankly, I thought tech seemed to consist mostly of taking all the loose items out of the car and verifying that the brake fluid was changed in the last year. Oh, and seeing that your helmet fit.

After I sold the Ferrari, I decided to buy something I could work on myself and ordered a Kirkham Cobra, a 289 version with the 427 coil-over frame and suspension. Fortunately for me, this model did not come with a rollover bar, which meant no track days for it, either. Most Kirkhams are driven on the track-the company sponsors track events at Miller Motorsports Park in Utah for the owners, and most race their own cars-but I am just as happy to have the opportunity removed. I think if I am going to drive on the track, I would rather do it with an instructor and in someone else’s car. I realize Paul Newman began racing at about my current age, 56, but I am no Paul Newman in a variety of ways, driving skill first among them.

As the collector car and car enthusiast hobbies grow, and as there are more rich people with the ability to buy a car the capabilities of which exceed the driving abilities of nearly anyone who owns one, accidents and tragedies like the Porsche incident may become more common. I hope not. As an emergency physician, I am way too familiar with sudden violent death as it is. But if you look at motorcycle fatality figures, according to Motorcycle Consumer News, the accident and death rates are rising for middle-aged motorcycle riders like me. There are some parallels; people who can now afford what they wanted for years are buying those vehicles and riding, or driving them. And another parallel; the sport motorcycles now sold are beyond the capabilities of superbikes of ten and 15 years ago, and have been for a while. They are bought most often by young riders with a keen appetite for speed who frequently die on them; another illustrative case of eyes bigger than stomach.

I am not a fan of government regulation of areas such as this, although I would be in favor of ESC being installed on cars of the type that got into the wreck you described. I think the only thing that will regulate this kind of recreation and make it safer is more careful behavior on the part of the participants, and as the settlement showed, the agreement was that the participants could have indeed been significantly more careful. I am also relieved that Porsche was not more liable; although I am not a Porsche enthusiast, I do believe they are generally good engineers and constructors, and the deaths that occurred were less their responsibility than anyone else’s-as the settlement showed.

From: Tony Fouladpour, Manager, Corporate Communications, Porsche Cars North America, Inc.

Knowing that your publication is typically one that should pride itself on checking fact from fiction, we were disappointed by your reporting on the resolution of the Rudl lawsuit in California. Much of the key information you received from plaintiff’s counsel about Ben Keaton and his Carrera GT was simply wrong; of course, knowing that this information came from such a source should have sounded a cautionary alarm.

This lawsuit was brought by the widow of the passenger in Ben Keaton’s Porsche Carrera GT. As the depositions in the case showed, Ben Keaton was a skilled amateur driver with a strong history in testing the limits of his vehicles. However, the crash, though tragic, was fundamentally the same as most of the crashes on the public roads. Ben Keaton was distracted and likely not paying close attention to the track when another vehicle pulled out from the pits in front of him. He was traveling at 130 mph at the time (the entering vehicle was traveling at a very slow pace), and he swerved hard right and was on the grass and sliding in less than a second.

There was a reason he was not looking at the track. According to all accounts, Ben Keaton was a skilled amateur driver who had attended every driving school he could find, including the Porsche driving schools in the U.S. and the training for new Carrera GT owners in Germany. He was passionate about his belief in the Carrera GT and had sent eight separate buyers to a Porsche dealership to buy Carrera GTs. Ben got nothing for those referrals except personal satisfaction.

On this day, his passenger, Corey Rudl, a wealthy Internet entrepreneur, was driving a Lamborghini, but it broke down. Ben Keaton wanted Rudl to know what a great car the Carrera GT was and took Rudl out for some laps. As they came back down the straightaway at the end of their first lap, they were observed by multiple witnesses with their helmeted heads turned toward each other. A Ferrari pulled out of the pit exit in front of Keaton. The Carrera GT’s tire marks showed Keaton did not react until the very last split second. He swerved hard right and was on the grass in less than a second. Grass is similar to ice at those speeds and the center of the vehicle took a straight line over 300 feet into a barrier wall. Again, it was a tragic crash, and we feel for the victims and those close to them.

Your article suggests there was a moment in the case where the parties seemed to allocate responsibility among the defendants for settlement. Nothing could be further from the truth. Ben Keaton’s estate settled with plaintiff in mid-2006 for $2,250,000. In December 2006, the California Speedway, the Ferrari Owners Club, and the other on-scene defendants all settled for a combined $1,875,000. Porsche had no involvement in either settlement.

With this money banked, plaintiff’s counsel pursued enormous amounts of discovery against Porsche in both Germany and the U.S. He also kept looking for a winning theory and never found one. Sometimes it was airbags, sometimes oversteer, sometimes lack of controllability, and finally a claim that a vehicle used on a race track should have mandatory Electronic Stability Control systems. Understanding that he could seek tens of millions of dollars in financial losses for Corey Rudl’s wife, plaintiff’s counsel asserted to Porsche attorneys that it would take multiple millions of dollars for Porsche to settle the case. Plaintiff finally worked his way down to $350,000. At that point, it was a simple matter of accounting: it would be considerably less expensive for Porsche to settle than to go through a lengthy trial and appeal. Culpability was not implied by this financial decision in any respect, as a reading of the settlement document clearly shows. Settlement also saved the time of key management and engineering personnel so they could continue to develop product in Germany instead of being involved in the trial. Settlement at this low level is simply a good business decision-nothing more.

Bottom line: The case facts did not support the plaintiff’s case against Porsche.

Plaintiff’s counsel knows full well there was no report of something being wrong with the handling of the Carrera GT leading up to the California Speedway event that took place in June 2005. Ben Keaton was meticulous in making sure that everything was in top condition in his Carrera GT. Both of the quality Porsche dealerships that serviced his vehicle were consistently impressed by both his vehicle and the care he took with it. Ben Keaton had an extraordinarily high passion for his Carrera GT. This was confirmed by his wife at her deposition and by the eight Carrera GT buyers he sent to the dealership.

The mechanic who is mentioned in your article and supposedly warned Keaton actually had nothing to do with this event and he proved to be anything but a true authority. Without getting into all the details, the Ferrari Owners Club that employed him sought to have him banned from actual inspections. After a Board hearing, Maxwell’s recommended position was ended. Plaintiff’s counsel then paid this individual to be a car handling “expert” for this case and ignored his past experiences.

In fact, most importantly, the authorized Porsche dealership that had been regularly maintaining the Carrera GT signed off on the inspection form, knowing the car was in great condition.
Plaintiff’s counsel’s comments against the Carrera GT were taken from documents during the vehicle development phase. The testing of the final production vehicle in March and April 2003 showed the Carrera GT was in excellent condition, both mechanically and in handling design. This was the goal of Porsche’s management and engineers-to have a vehicle with the costly technology of a race car, but with the comfort and accessibility of a street vehicle. A well-mannered vehicle with remarkable stability at high speed. Their success at doing this is fully reflected in the Green Light without reservations in Porsche’s final approval documentation. It was also recognized by the witnesses at the California Speedway that day who uniformly reported on the consistent stability and power of the Carrera GT.

The ESC claim is a red herring to anyone who knows about true sports cars. Ben Keaton would not have used it on the California Speedway. Still at the time of development, no one had ever developed an ESC for a carbon fiber monocoque design; technology had simply not advanced that far. And it is also true that Porsche was in contact with customers during the development of the Carrera GT and they indicated no interest in that technology for this vehicle.

More importantly, however, is the fact that the Plaintiff’s counsel also does not appear to understand what ESC does. It only assists a driver when the vehicle is going in a different direction than the steering wheel is trying to point it. The Carrera GT was going in exactly the direction Ben Keaton wanted- sharply away from the rear end of the Ferrari. In any other car, he would have crashed into the Ferrari. In the Carrera GT, he escaped that impact, but at 130 mph, he was off of the track in a split second and on the grass, where nothing could help him because there was no more traction.

The Carrera GT was and remains an enormous favorite with our customers because it provides high performance with controllability in all of its performance aspects, and user comfort. We hope that in the future a more balanced story will be told.

From: Curtis Burton, Houston, TX

I am an avid reader of your magazine and enjoy it immensely. I am also the owner of a number of classic muscle cars as well as a Ford GT and a Ferrari F430 Spyder. To say I’m disappointed in the results of the Carrera lawsuit and the legal issues it will give rise to is an understatement.

First and foremost, anyone who gets into any automobile and is traveling at triple-digit speeds understands the risk to the hardware and to himself. To blame the track, the flagger, the car designer, or the owner for ensuing events is wrong. It is also self-serving and convenient if you’re out to collect a $4.5 million judgment. This should never have reached a courtroom.

Getting on that track in the first place is a decision that places you in harm’s way. Anyone with the sense of a billy goat knows that. For a grieving wife to claim poor Rudl got shortchanged by everyone in the line of folks that had to pay her is a cop out. Where is his personal responsibility for his actions? If he wanted to be absolutely safe, he should not have been at the track. The fact that he was (and I’m willing to bet it wasn’t the first or only time) suggests he was familiar with high-performance cars, their risks, and the unknowns that surround performance hardware. And if he wasn’t, that’s even more of a reason to stay at home in his easy chair.

I’m an engineer by profession, so it isn’t a stretch for me to say that all mechanical devices have flaws and failure modes. Cars are no different. If I operate my Ford GT according to all the rules and hit a wet spot just right on the road, it is still going to spin out and potentially be involved in a wreck. The same is true with the F430, and while you may argue the traction control system will minimize the risk, it doesn’t eliminate it.

This case is lawsuit abuse, plain and simple. The fact that Mrs. Rudl won doesn’t alter that.
You’re not talking about operating in a normal driving mode and having a part fail that shouldn’t have, you are talking about operating a high-performance vehicle on a race track and all the risks to which that exposes you. Shame on the courts and the wife for ignoring the person most responsible for the death-Mr. Rudl.

I fear the time is coming when no car company will design performance cars because of this exact type of lawsuit abuse. Your article asks, “Was anything accomplished?” You missed a couple. Certainly, this lawsuit will make the costs go up for anyone who wants to enjoy his car on a track day. Insurance companies have to allow for negligence and now gross negligence clauses and factor in the fact that the Mr. Rudl’s wives of this world will sue them and win regardless. That means in the not too distant future, we will all be denied the opportunity to operate our cars on these tracks because no one will underwrite the risk. Sad.