Jury finds for plaintiff in first trial over Ford transmissions

LOS ANGELES -- A federal jury deliberated less than an hour Thursday and found for the plaintiff in a bellwether trial against Ford Motor Co., one of thousands filed by car owners who say the company failed to properly address transmission defects and then opted out of a class action settlement.

The jury awarded the plaintiff, represented by Bryan C. Altman of the Altman Law Group, the maximum civil penalty of $64,000.

Despite the size of the award, it could have a major impact on future negotiations in the class action settlement, which was rejected by a divided 9th U.S. Circuit Court of Appeals' panel after finding the trial judge did not thoroughly scrutinize the settlement before approving it.

"The jury, in nearly an immediate turn-around, very brief deliberation process determined unanimously that Ford willfully violated the California law," Altman said after the verdict. "It might affect the class action settlement entirely."

In closing arguments, one of Ford's attorneys, Frank P. Kelly of Shook, Hardy & Bacon LLP, reiterated the company's expert's testimony that he found no problems with safety or controllability of the cars. "It has been our view that shudder, as it has been described, is not a safety concern," Kelly said.

Spencer P. Hugret of Gordan Rees Scully Mansukhani LLP co-led the defense team.

But Altman told the jury, "Ford is making a mockery of our law here in California." He said the company authorized employees "with no known skills that are relevant for that position" to turn down his client's buy-back request after reviewing it for 11 minutes. "No automotive mechanic background, no safety analysis background, no appraisal background," he said of the decision-makers.

The case is one of thousands brought against Ford in a multi-district litigation similar to the now-unsettled class action, which involves nearly 2 million Ford customers claiming transmission defects caused their cars to "shudder, buck, and jerk" uncontrollably.

Ford faces a potential liability of $4 billion in litigation costs relating to the faulty transmissions in Focus and Fiesta models made between 2011 and 2016, according to financial documents cited in the Detroit Free Press.

The trial is one of four expected to be heard in the coming months, brought by car owners who opted out of the class action. Mark Pedante v. Ford Motor Company, 17-CV06656 (C.D. Cal., filed Sept. 8, 2017).

While class and litigation members are of two distinct groups, the result of the multi-district litigation trial just ended before U.S. District Judge Andre Birotte Jr. will greatly influence future negotiations in the class action settlement, said class attorney Michael Kirkpatrick of Public Citizen in Washington D.C.

The class action settlement includes a buy-back program for eligible class members. However, as part of the settlement, a $35 million cash payment for repairs that was approved by Birotte in 2017 was overturned in September after the 9th Circuit panel ruled 2-1 to reject it.

The panel reversed the settlement after Public Citizen challenged how much money would be awarded to consumers for repairs, arguing the vast majority of members would have received nothing. .

The majority of the appellate panel said Birotte should have applied a heightened scrutiny to the settlement before approving it since the attorney fees were disproportionate to the class recovery and because the settlement included a "clear sailing" provision whereby Ford agreed not to object to the award sought by the class.."

"When confronted with a clear sailing provision, the district court has a heightened duty to peer into the provision and scrutinize closely the relationship between attorneys' fees and benefit to the class," the opinion read.

Last week, the Detroit Free Press reported U.S. Department of Justice criminal fraud investigators have demanded documents related to the transmissions used in about 2 million Ford Fiesta and Focus vehicles sold during the time of the alleged defects in this case. The DOJ is looking into allegations Ford knew of the transmission defects before putting the cars in dealerships to be sold.