I’d never buy a Ford car or truck, nor would I likely acquire shares in the company. But if Ford CEO Jim Farley could figure out how to monetize Ford’s legal department and spin it out as a separate business, I’d invest in a heartbeat. Talk about a business with unlimited growth potential!
It’s a wonder to me how Ford keeps track of all its recalls and lawsuits, which are sprouting like dandelions. Three lawsuits with damning allegations about Ford products were reported just last week, and the company was forced to recall more than 100,000 vehicles because of engine fire reports. Ford has pioneered what literally could become a killer category: Vehicle Flambe.
Little wonder that Steven Croley, Ford’s chief legal counsel, reports directly to Farley and Jon Huntsman, Ford’s vice chair for policy and a senior advisor to Farley and Executive Chair Bill Ford. Croley is a legal heavyweight: He earned his law degree from Yale, holds a doctorate in government from Princeton, held influential legal roles in the Obama White House, and made partner at the powerhouse law firm Latham & Watkins. He also served as associate dean at the University of Michigan Law School.
Croley also oversees sustainability, which increasingly might refer to Ford’s ability to remain an ongoing concern given its mounting legal problems relating to its continuous sale of shoddy vehicles, sometimes knowingly, and its inability to promptly fix them. Farley so far has been unable to address the problem, his $23 million in compensation last year notwithstanding.
The good news for Ford’s investors is that Croley and his legal eagles appear quite good at their jobs. As but one example, Ford recently reached a multistate settlement for exaggerating the real-world economy of its hybrids and the payload capacity of its Super Duty trucks. Ford settled the allegations for $19.2 million, petty cash for a company that last year pulled in $136 billion in revenues. The settlement didn’t require Ford to admit any wrongdoing.
Take a bow, Mr. Croley!
Fiesta and Focus lawsuit
Ford’s latest lawsuits include a new class-action brought against the company for problems with its PowerShift transmissions. Fortunately, Croley’s team is already up to speed on the issue.
As reported by The Drive, a trade publication:
The new lawsuit concerns US market models of the 2017-2019 Ford Fiesta, and 2017-2018 Ford Focus, equipped with the PowerShift transmission. Four plaintiffs filed the lawsuit, represented by Capstone Law APC and Berger & Montague P.C.
If those names are familiar, it’s because they were involved in a previous class action concerning PowerShift transmissions in Fiesta models from 2011-2016 and Focus models from 2012-2016. Another similar class action involved 7,000 owners, and ended with Ford paying millions of dollars to buy back affected cars.
Regardless of the models affected, the symptoms of PowerShift transmission failure are the same. Owners have reported cars shuddering and bucking, jerking and hesitation during gear changes, and transmissions slipping.
Other complaints include loss of drive or the car lurching forward when pulling away from a stop. The new class action lawsuit even asserts that at worst, “the PowerShift transmissions will cause the vehicles to lurch and move forward even when drivers apply the brake pedals.”
In previous models afflicted with PowerShift transmission issues, fixes from the automaker have done little to solve the problem. The Drive previously covered owners reporting recurring failures after multiple clutch replacements and other repairs. Extended warranty terms helped, but failed to solve the problem of a transmission that’s fundamentally unfit for purpose.
Here’s the kicker. According to this 2019 Detroit Free Press story, Ford knew that its Focus and Fiesta transmissions were flawed when it sold them.
Australia slapped Ford with a $10 million fine for selling the vehicles in that country, which strikes me as a love tap for behavior the country’s regulator deemed “unconscionable conduct.”
Ford’s Smoking SUVs
The Detroit Free Press reported last week on an expanded lawsuit relating to Ford’s 2021 Expedition and Lincoln Navigator SUVs catching fire, sometimes when parked and minding their own business.
From the Free Press:
What began as three unhappy owners of 2021 Ford Expedition and 2021 Lincoln Navigator vehicles has ballooned to 22 plaintiffs including one from the automaker’s home state of Michigan in a lawsuit filed this month against Ford Motor Co.
The plaintiffs say the Dearborn automaker failed to disclose a defect causing spontaneous under-hood fires in at least 66,000 vehicles when parked or running and that asking customers to drive defective vehicles while waiting for a fix is unreasonable.
The Seattle-based Hagens Berman Sobol Shapiro law firm amended the filing in the U.S. District Court for the Eastern District of Michigan to add 19 plaintiffs to the original three and also respond to Ford’s expanded recall.
“While it is positive news that Ford believes it has found its manufacturing defect that is behind at least 21 dangerous spontaneous fires in its luxury vehicles, at the same time, Ford has now admitted that this defect affects at least 66,000 vehicles still covered under warranty,” Steve Berman, Hagens Berman co-founder and managing partner, said in a news release.
“Ford claims to have designed a fix, yet admits it only has parts for a small subset of the affected vehicles, and the timeline Ford presents is at best several months in the future for most vehicles to be repaired.”
This quote from Berman is pure gold:
“The implication of Ford’s response is outrageous, essentially telling its own customers, ‘Yes, your car may catch fire in the middle of the night or while you’re away, so park it somewhere that will be a good place to have it engulfed in flames.’ How far from one’s home is a ‘safe’ distance to have a vehicle fire, exactly?” Berman said.
A Free Press reader suggested that Ford acquire the “Blazer” nameplate from GM, arguing it would be better suited for the Expedition or Navigator.
Ford’s Mexican-made Mustang
The Free Press also reported on a lawsuit involving Ford’s Mexican-made electric Mustangs. Farley says electric vehicles represent Ford’s future.
From the Free Press:
Three owners of the 2021-22 Mustang Mach-E have filed a federal lawsuit against Ford Motor Co., claiming the Dearborn automaker has known of a design flaw in its popular electric vehicles that causes them to lose power while driving down the road — and has not figured out how to fix the problem.
“Companies go through recalls all the time,” lawyer Aashish Desai of the Desai Law Firm in Costa Mesa, California, told the Free Press.
“But when you have damages that affect a safety issue and the company doesn’t appear to have a solution, then you get into a problem that nobody wants to drive around a car that may stop working while they’re driving,” he said. “I’m shocked they still have these cars out on the road.”
Finally, Ford last week ordered a recall and a stop sale on 100,689 vehicles outfitted with the company’s 2.5-liter hybrid or plug-in hybrid powertrain because of engine fire reports. The impacted vehicles are the Escape, the Lincoln Corsair, and the Maverick pickup truck.
Ford’s lawyers have other issues to deal with. The National Highway Traffic Safety Commission is investigating reports of “catastrophic engine failure” with Ford’s 2021 Bronco. Ford also has notified regulators that its four-door 2021-22 Ford Bronco may have a defective child safety lock on the passenger side of the back seat, allowing young children to open the door from the inside.
Ford must also address a 95-page nationwide class action complaint filed in federal court in San Francisco asserting that airbags with a defective product design were installed in “tens of millions” of cars made by Ford, General Motors, Audi and Volkswagen and allegedly have a “dangerous propensity to rupture and eject metal shrapnel” into the vehicle.
It seems obvious to me that Ford’s quality control problems are far more serious than Wall Street appreciates, or the buying public realizes.
Croley and his colleagues have their work cut out for them. I’m exhausted just reading about last week’s lawsuits.