Renegotiated settlement with Ford awaits judge’s OK

A renegotiated class settlement potentially worth hundreds of millions of dollars was reached between Ford Motor Co. and 2 million Focus and Fiesta owners after objectors withdrew their objections Friday.

The deal, soon to be sent to U.S. District Judge Andre Birotte of Los Angeles for approval, includes a guaranteed $30 million cash payment and a buyback program for qualified class members, lead class counsel Ryan H. Wu of Capstone Law APC said Friday.

"When we negotiated the settlement, we knew that the unique buyback program that we crafted would be immensely valuable," Wu said. "Unfortunately, at the time of the initial final approval in 2017, we could not provide a hard figure on the value because the program hadn't begun. But in the two years or so since the program was implemented, we can now report that, as of December 31, 2019, Ford has made $47.4 million in direct payments to the class for repurchase claims. We believe that the buyback program alone will vastly exceed $100 million in benefits to the class when all is said and done."

Ford has faced a cascade of lawsuits arising from faulty transmissions in its Fiesta and Focus models made between 2011 and 2016. Litigants who said their vehicles "shudder, buck, and jerk" uncontrollably have for the most part either joined the nearly 2 million class members involved in the settlement or brought individual claims in a multi-district litigation. Omar Vargas v. Ford Motor Company (C.D. Cal., filed Sept. 28, 2012.)

The original settlement, approved by Birotte in 2017, included a buy-back program for eligible class members and a $35 million cash payment. After Washington D.C.-based Michael T. Kirkpatrick of Public Citizen Litigation Group, representing a class of former-owners, challenged the amount individual class members would receive, a panel of the 9th U.S. Circuit Court of Appeals vacated the deal in September 2019.

The 2-1 panel majority said since the deal included a clear sailing provision in which Ford agreed not to object to plaintiffs' attorney fees and because the fees were disproportionately high compared to the amount litigants would receive, Birotte should have applied higher scrutiny. The panel did however note that it expressed, "no view about the settlement's substantive fairness."

Kirkpatrick said while the deal has been improved in myriad of ways, a key factor that led him to withdraw his objection was Ford's disclosure that it had already shelled out a substantial amount to eligible class members.

"The improvements, as well as Ford's disclosure that it has already spent over $47 million to repurchase 2,666 class vehicles, have resolved many of the concerns that drove our clients' opposition to the original settlement agreement, and we believe the new agreement is a fair compromise," Kirkpatrick said in an email Friday.

Wu, who previously fought to keep the original settlement in place, said he is hopeful Birotte will approve the amended deal.

"Given the claims information, we now know that the original settlement delivered exceptional value to the class and was fair and reasonable," Wu said. "So we were disappointed by the delay caused by the appeal. Even so, we appreciated the efforts of former objectors' counsel, who worked with us to negotiate additional benefits to the class."

A final fairness hearing is scheduled for Feb. 28 before Birotte. Ford attorneys were not immediately available for comment Friday.