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Calif. Judge Orders 2 Million Fords Recalled

Cameron

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October 11, 2000 6:37 pm EST

By Michael Kahn
OAKLAND, Calif. (Reuters) - A California judge on Wednesday ordered Ford Motor Co. (F.N) to take back and fix up to 2 million autos after finding it misled consumers about a design defect that makes them likely to stall, marking the first time a judge has ever issued a vehicle recall.

Ballachey's decision came as a fresh blow to the No. 2 U.S. automaker, which is battling a tidal wave of bad publicity and lawsuits over the recent recall of 6.5 million Firestone tires on its trucks and sports utility vehicles.

The Firestone tire recall already has spurred the U.S. Congress to consider new laws requiring automakers and equipment suppliers to increase reporting of potential defects, both at home and in foreign countries, to the U.S. National Highway Traffic Safety Administration.

On Tuesday, Masatoshi Ono, U.S. chief executive of Bridgestone/Firestone Inc., was replaced by John Lampe. The company is a unit of Japan's Bridgestone Corp.(5108.T).

"This case was about concealment of a dangerous condition," Alameda Superior Court Judge Michael Ballachey said of Wednesday's decision, which affirms a recall order first made in August. "I don't think you have to kill someone to have an unsafe car," he added.

Lawyers said Ballachey's order, which only applies to vehicles sold in California, meant the issue would now go to a court-appointed official who will determine the details of when and how the recall should proceed. FORD FACES SUITS IN OTHER STATES

The automaker faces similar class-action lawsuits in Alabama, Maryland, Illinois, Tennessee and Washington, which are on hold until the California case is concluded.

Lawyers said the California recall includes virtually every Ford model from 1984-1987 as well as selected vehicles manufactured through 1995 and a few in 1983. It involves more than 22 million vehicles nationwide.

Ford spokesman Jim Cain said Ford would appeal the decision by attacking Ballachey's standing to issue the recall order as well as allegations of unreliability surrounding the thick film ignition (TFI) module at the center of the case.

"This trial is far from over. The judge does not have the authority to order a recall and we will prove that on appeal," Cain said. "More to the point, there is no reason for a recall order because there is nothing to fix."

The multibillion-dollar case involves allegations that Ford placed TFI modules too close to the engine in at least 1.7 million California cars and trucks between 1983 and 1995, causing them to stall. There are about 3.5 million current and former California Ford owners represented in the class.

In a harshly worded preliminary decision issued in August, Ballachey accused Ford of producing a "blizzard of unpersuasive statistical evidence" about the reliability of TFI, which is believed to be installed on tens of millions of Ford vehicles around the country.

"Ford's strategy, clearly established by the credible evidence was: If you don't ask the right question, we don't have to answer with what common sense tells us you want to know," Ballachey wrote. JUDGE SAYS HAS RIGHT TO ISSUE RECALL

Typically, automakers act on their own to recall products, sometimes pressured by the U.S. National Highway Traffic Administration which also has the legal authority to order recalls. But Ballachey said California law gave him the power to do so.

PaineWebber analyst Joseph Phillippi said the idea of a judge ordering a recall makes investors nervous and should prompt the auto industry to rally around Ford on the issue.

"I think there's clearly going to be an impact on the market," Phillippi said. "You'll have 28-29 auto manufacturers all in Ford's camp cheering them on," he added.

Lawyers for the plaintiffs vowed to press ahead with the case, one of the largest ever filed against a U.S. automaker, although they conceded that the chances of the recall order being enforced any time soon were slim.

"We are going to move forward as fast as possible, and I frankly expect them to appeal because the name of the game at this point is delay," attorney Paul Nelson said. "I think the judge got it 100 percent right."

Ford's Cain said however that the judge had been swayed by unsupported arguments that the TFI problem constituted a real safety hazard for consumers.

"This whole idea that the plaintiffs tried to create that there was some massive safety risk simply isn't supported by the facts," Cain said, noting that at no time in the trial did the plaintiffs demonstrate that deaths or injuries had resulted from the alleged stalling problem.

Nevertheless, Ballachey's decision Wednesday marked yet another major setback for Ford in the case. The same judge last year declared a mistrial in the same case after a jury deadlocked.

But he went ahead with a bench trial on the case, overruling objections from Ford, whose lawyers argued that doing so could bias a future jury against the company in the retrial.
 




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