Ford Settles Ignition Switch Lawsuit
After six years denying there was a problem, attorneys for the Ford Motor Company went before a California judge Monday to hammer out a settlement that could affect more cars than any auto recall in U.S. history.
The court is reviewing a tentative agreement Ford worked out with plaintiffs' attorneys to replace an ignition system; a system consumers complain causes Fords to stall out, reports CBS News Correspondent Bill Whitaker.
The settlement could cost the automaker $1 billion to recall 5 million vehicles and replace parts.
The agreement ends years of litigation in which a California judge said the Detroit automaker was living in an "Alice in Wonderland" dreamland for denying ignition switches were defective.
"I think this is basically a win for consumers," said Jeff Fazio, a lead attorney in the case against Ford. "It could have been years before the cars were fixed, but with this it could come soon."
Under the agreement, Ford said it would replace the ignition devices to all Ford vehicles nationwide that have stalled and have no more than 100,000 miles, which is an estimated 500,000 to 650,000 vehicles in California and an estimated 5 million nationwide.
The deal would also extend warranties on several million other vehicles where the ignition devices have a potential to stall, Reporter Jeff Gilbert of CBS Affiliate WWJ reports
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A search of the NHTSA investigations database reveals three previous investigations of Ford ignition systems, in 1978-81, 1979 and 1991-1992.
The suit challenged Ford's placement of the thick film ignition module, which regulates electric current to the spark plugs. It charged that the ignition modules were put too close to the engine block, which caused them to overheat and fail.
Alameda County Superior Court Judge Michael E. Ballachey found last year that Ford was warned by an engineer that high temperatures would cause the device to fail and stall the enine. Ford's own documents show that the company confirmed the problem in internal studies, and could have moved the module to a cooler spot for an extra $4 per vehicle.
The government found no safety problems with the modules, but a National Highway Traffic Safety Administration official said the government would not have closed the case if Ford had given the agency key documents unveiled in the class-action case.
Fazio said he settled because, under the recall order, it could have taken years, if ever, before the vehicles would have been fixed. That is because Ford had said it would appeal the recall order, which affects all 1983-1995 Ford models in California.
The proposed settlement comes four months after Ballachey ordered as many as 2 million vehicles in California recalled as part of a statewide class-action suit in which the judge found that Ford concealed the shabby parts from government inspectors.
CBS News Correspondent John Blackstone reports that ruling appeared to be the first time a judge had ordered a vehicle recall. The agreement, if approved by the judge, wipes out the judge's recall order.
Ballachey's recall ruling was in the preliminary stages of the case, which was expected to go to trial later this month.
Ballachey said Ford concealed the stalling information from federal safety regulators, who were studying hundreds of complaints about Ford vehicles stalling.
The automaker said judges do not have the same power as does the NHTSA to order a vehicle recall. Under the deal, the vehicles could be fixed or the cost of previous replacements could come as early as next year, Fazio said.
The automaker already is involved in recalling 6.5 million Bridgestone/Firestone tires - standard equipment on Ford Explorers — that are being investigated in connection with more than 100 highway deaths.
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