By Karen Padley

CHICAGO (Reuters) - Cooper Tire & Rubber Co. has settled a lawsuit over a 1998 accident that killed four people and seriously injured two others.

The settlement, reached late Thursday in Little Rock, Arkansas, came one day after a U.S. District Court judge sanctioned the tiremaker for burning potentially damaging documents.

A trial of the tire separation case had been set to start on Tuesday in Helena, Arkansas. The amount of the settlement, which also resolves the sanctions, was not disclosed.

Cooper, the second-largest U.S. tiremaker behind Goodyear Tire & Rubber Co. , said insurance will cover the settlement, and the sanctions had no bearing on its decision to settle the suit.

"Despite the fact that the tire was not the fault of the May 1998 accident, the settlement is in the best interest of all concerned," the Findlay, Ohio, company said in a statement on Friday.

Cooper Tire still faces several other similar lawsuits pending across the country. In addition, a New Jersey judge is considering a proposed class-action settlement that would provide an extended warranty on as many as 170 million tires.

Investors have been paying closer attention to such lawsuits given the large number of cases filed against Ford Motor Co. and Bridgestone Corp (news - external web site).'s Firestone unit. Federal regulators have linked 271 deaths and more than 800 injuries to rollover accidents involving Ford Explorer sport utility vehicles and Firestone tires.

SANCTIONS ON BURNT DOCUMENTS

The Little Rock, Arkansas, lawsuit had been brought by Nellie Brownlee. Her grandsons, Demario and Rashad Hervey, were both seriously injured in the accident that killed their parents, Scharlotte and Edward Hervey; a third brother; and the driver of another vehicle, Lane Whitaker.

Brownlee's attorneys had alleged that Cooper made a defective tire. Cooper countered that the tire was six years old at the time and was punctured during normal use.

U.S. District Court Judge George Howard Jr. said on Wednesday he would allow the plaintiffs to inform the jurors that Cooper had destroyed documents that they may infer would have hurt the company's case.

"The plaintiffs' initial discovery requests and the diligence with which plaintiffs pursued follow-up discovery should have confirmed the need of defendant to maintain and produce these records to plaintiffs," the judge said in an order.

The judge also wrote "that defendant knew, or should have known, that these documents would become material, and, thus, should have been preserved."

Howard had also ordered Cooper to pay the brothers' legal fees for pursuing the sanctions. A global settlement, such as the one the company reached on Thursday, typically covers such fees.

Cooper Tire, in its defense, had blamed two "rogue" employees for burning the records and said the actions weren't ordered by management.

Before the settlement, Brownlee's attorneys had said they hadn't decided on a specific amount of damages to request, but it would be "substantial."

When charges of document destruction first surfaced on May 10, Cooper's shares fell as much as 24 percent. The stock, which has recovered somewhat since then, was up 31 cents at $23.43 in midday New York Stock Exchange (news - web sites) trade.