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October 22, 2000 - Lawsuits Again Threaten Piper Aircraft

Less than a decade after legal problems drove Vero Beach's biggest private employer into bankruptcy, the New Piper Aircraft Inc. again must defend itself in court. A $ 75 million lawsuit filed last month questions Piper's credibility as a maker of safe, reliable aircraft, while another, year-old suit portrays the manufacturer as racist. Despite the suits, Piper officials hope to regain the altitude the company lost when it filed for Chapter 11 bankruptcy in 1991. It employs 1,400 people in Vero Beach and projects sales this year of $ 200 million, up from $ 146 million last year. Chuck Suma, Piper's chief executive and president, told the National Business Aviation Association in New Orleans earlier this month that he expects the company to do $ 300 million in sales next year, cranking out 530 planes and employing up to 1,500 people.

Rather than lawsuits, Suma focused on the newly released Malibu Meridian, a luxurious $ 1.5 million turboprop that is Piper's answer to more expensive corporate jets - and its first new plane since emerging from bankruptcy in 1995. But the suits are impossible to ignore, especially for a company that largely attributes its unraveling nine years ago to product-liability claims. Depending on their outcomes, the cases could hurt Piper's credibility as both a manufacturer and business leader.

Tyrus Bowers, a former summer intern at Piper, filed a racial discrimination suit last November in the U.S. District Court in West Palm Beach, alleging he was turned down for a permanent job because he is black. A month later, his father, Herman Bowers, and 17 other current and former black employees joined the suit.

The plaintiffs say they were repeatedly denied the opportunity to earn overtime pay, passed over for promotions in favor of less-qualified whites, exposed to racial epithets on bathroom walls, paid on a separate scale and forced to adhere to tougher standards. The lawsuit also states that Piper had no blacks in top management and ignored repeated complaints of a racially hostile workplace.

Specifically, the suit says Piper allowed whites to display a hanging noose that intimidated black employees, let racial graffiti such as "KKK is #1" stay on the bathroom wall for a month while removing nonracial, sexually crude graffiti within a day, and applied a "white-glove" test to jobs completed by black employees but rarely to those of whites, the suit states. "There is evidence of extreme conduct," said Saul Smolar, a Fort Lauderdale attorney who's representing the plaintiffs. "It's hard to believe that something like that happened. I had doubts myself." Smolar, who was reluctant to talk about the case, said both sides will continue taking depositions over the next three months. Meanwhile, he said, an economist will be hired to decide how much money the plaintiffs should seek. The case could go to trial in March. Piper denies the allegations.

"Piper is dedicated to maintaining a workplace that is free from all forms of discrimination," Suma said Thursday. "This type of legal procedure . . . follows a pattern of attacking healthy, growing companies such as ours in an effort to extract settlements and legal fees."

Meanwhile, a lawsuit filed Sept. 20 in U.S. District Court in Fort Pierce could prove even more troublesome, particularly to Piper's bottom line. The $ 75 million suit, which seeks class action status, targets Piper and Textron Lycoming of Williamsport, Pa., for a faulty engine part in the Malibu Mirage, a six-seat airplane that lists for $ 869,800.

The plaintiff, Dallas businessman William Montgomery, contends Piper and Textron knew about the engine problem for several years and did nothing about it, jeopardizing people's safety and costing owners hundreds of thousands of dollars.

Piper said in a news release that it's working with Textron to resolve "all known component issues" and "maintains that the Malibu Mirage is a safe and reliable aircraft." But Charles Ames, one of Montgomery's attorneys in Dallas, says Piper was too slow to act after learning of the engine problem. "Piper is at the mercy of Textron, who is producing a bad engine, and what makes it worse is Piper knew all along it had a bad engine and yet continued to put out a product with a bad engine," said Ames, the previous owner of 13 Piper-made planes.

"I think it hurts their credibility with potential customers." Piper officials call the Montgomery suit frivolous and say they are unwilling to settle.

Ames filed a related suit last month in Beaumont, Texas, for $ 3.5 million on behalf of four plane-crash survivors who allege that the Mirage engine problem caused their accident. Three other Malibu Mirages have crashed in the past four years, Ames said. No fatalities resulted.

Piper, founded in 1937, is one of the older names in general aviation. It builds personal and business aircraft ranging in price from $ 135,000 to $ 1.5 million. The company is privately held, though Suma is interested in going public. Suma, who grew up near the Vero Beach Airport, joined Piper as a riveter during its heyday in 1976, when it produced 4,000 planes a year and employed 3,600 people.

He rose through the ranks to become director of manufacturing operations in the 1980s; at the same time, Piper passed through three owners before winding up in bankruptcy court in 1991.

A year later, Suma was promoted to president and chief operating officer, but it wasn't until 1994, with the passage of the General Aviation Revitalization Act, that Suma was able to taxi Piper out of bankruptcy.

Under the federal law, a manufacturer is liable for a plane up to 18 years after production. The General Aviation Manufacturers Association, a Washington lobbying group, says the law largely explains the industry's resurgence during the past five years. The industry built 2,504 planes last year, accounting for $ 7.9 billion in sales, compared with $ 2.3 billion in sales on 928 planes in 1994.

"We were basically devastated by the number of lawsuits. Piper went bankrupt mainly because of product liability lawsuits," said Shelly Simi, spokeswoman for the manufacturers association, which is made up of 53 companies, including Piper. Suma is chairman of the association's board. "Since that time, Cessna has gotten back into production of single-engine airplanes," Simi said. "Piper has the new Malibu Meridian, and we're now looking at several other business aircraft produced by various manufacturers." Suma said the lawsuits against Piper pale in comparison with the sheer number of suits it faced in the 1980s. He also said he does not expect the recent lawsuits to slow Piper down.

"It's just an indication that the company is healthy and growing," Suma said. "The trial lawyers have not gone away because of the General Aviation Revitalization Act. They've just found a new way to come at us." Editor's note: Staff writer Amy Martinez' sister, Tracey Ellerson, is an associate with the law firm Akerman Senterfitt & Eidson in Orlando, which has been hired to defend New Piper Aircraft Inc. in the racial discrimination lawsuit. Ellerson is involved in the suit but is bound by a confidentiality agreement with Piper and has not discussed the case with Martinez.

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