Ford Settles Ignition Lawsuit

Ford Motor Co. agreed Thursday to reimburse current and former owners for repairs on millions of cars and trucks prone to stall because of a flawed ignition system.

The deal approved by a California judge could cost the automaker as much as $2.7 billion, according to an estimate from the plaintiffs. Ford attorney Richard Warmer disputed that estimate, without offering specifics.

"This will not be something that will have a material effect on the company's financial position," Warmer said.

The settlement ends years of litigation and will pave the way for millions of current and former Ford owners nationwide to be reimbursed for repairs and related expenses, such as towing fees.

However, it does nothing to remove from the road the estimated 12 million Fords nationwide equipped with the ignition system, originally installed in 20 million vehicles. These cars and trucks remain prone to stall without warning, according to Ford's internal documents.

"I think it's as good as they could have possibly gotten, short of a recall," said Jeff Fazio, the lead attorney suing Ford.

Ford has maintained that its ignition devices and vehicles are safe and admitted no wrongdoing in the settlement.

Alameda Superior Court Judge Michael E. Ballachey, who said earlier that the automaker was living in an "Alice in Wonderland" dream by denying the ignition modules were defective, finally signed the settlement Thursday after weeks of closed-door negotiations.

"I thought this wasn't going to happen," Ballachey said.

The out-of-court agreement came two months after The Associated Press reported that at least 11 deaths and 31 injuries were blamed on stalling in Ford vehicles equipped with the ignition device. The AP also obtained internal Ford memos that show the automaker had evidence its ignition design could make engines suddenly fail on the road.

Ballachey ruled that Ford knew as early as 1982 that the vehicles were prone to stalling, especially when engines grew hot, and that Ford failed to alert consumers and repeatedly deceived federal regulators by claiming the modules weren't flawed.

A trial was expected to begin later this year and could have exposed Ford to billions of dollars in damages under California consumer laws.

The suit challenged Ford's placement of the thick film ignition module, which regulates electric current to the spark plugs.

In 29 models sold between 1983 and 1995, the module was mounted on the distributor near the engine block, where it was exposed to high temperatures. According to internal documents, Ford had redesigned the ignition to save as much as $2 per vehicle and to increase fuel economy.

One internal Ford document reviewed by the AP shows Ford knew the ignition devices should not be exposed to temperatures above 257 degrees. Another shows Ford warned its engineers that many engines ran at temperatures higher than this, potentially resulting in "rapid catastrophic failure."

A well-placed forme National Highway Traffic Safety Administration official said Ford concealed the information from federal safety regulators, who were studying hundreds of complaints about Ford vehicles stalling. Michael B. Brownlee, who oversaw the defects investigations, said the government might not have closed its four investigations if Ford had provided these and other key documents.

The federal government, which decided against a recall years before the memos became known, cannot recall the vehicles now because the legal timeline to order a recall has elapsed on the aging vehicles, legal experts said.

The settlement was approved as the beleaguered automaker weathers a series of financial setbacks, as well as a 15 percent erosion in vehicle sales and the costly Firestone tire situation.

Last week, Ford reported a third quarter loss of $692 million. A year earlier, it earned $888 million and was poised to overtake General Motors Corp. as the most profitable automaker.

Ford's credit rating was reduced two notches last week by Standard & Poor's, a few days after Ford said it would cut fourth quarter dividends in half.

The federal government has blamed at least 271 deaths on Firestone brand tires that experienced tread separation. Many of those tires were installed as original equipment on Ford Explorer sport utility vehicles, some of which rolled over.

Firestone parent company Bridgestone/Firestone Corp. insists the vehicle is partly to blame for the accidents. Ford says it's entirely a tire problem and last May began a $3 billion program to replace 13 million Firestone tires.

In September, Ford recalled nearly 788,000 Windstar minivans because they have faulty parts that could catch fire. All the 1999 and 2000 models being recalled have a wiper motor that can collect moisture and overheat.

To cut costs, Ford is eliminating 4,000 to 5,000 white collar jobs by the end of the year and has reduced auto production.

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