Ford hit hard by major lawsuits

Ford hit hard by major lawsuits
REUTERS

DETROIT, MAR 25: Ford Motor Co said that it faced multibillion-dollar claims from lawsuits over safety issues last year, including deaths and injuries in roll-overs of its popular ‘Explorer’ sport utility vehicle (SUV).

In its annual report, filed with the Securities and Exchange Commission, the world’s second-largest automaker spelled out four specific safety-related lawsuits, in which it said damages claimed by plaintiffs totalled more than $5 billion.

Actual outstanding legal claims for damages against the company could add up to far more than $5 billion, however. Ford did not reveal, in its SEC filing, the amount of damages which it said, had been sought in securities fraud and shareholder derivative lawsuits stemming from alleged improprieties in its handling of last year’s Firestone tire recall, and the Explorer rollovers.

But in one case, it said, the plaintiffs sought “injunctive relief and damages, a return of all director compensation during the period of the alleged breaches, and attorneys’ fees.”

It added that the investor lawsuits alleged “that the company’s board members breached their fiduciary duties to the company and shareholders by failing to inform themselves adequately, regarding Firestone tires.”

In securities fraud class action suits filed against Ford last year, the company said plaintiffs alleged that from early 1999, through the announcement of the Firestone tire recall last summer, “Ford made misrepresentations about the safety of Ford products and the Explorer in particular.”

The SEC filing was thought to mark Ford’s first public comment on the fraud lawsuits.

Ford Chief Executive Jacques Nasser has vigorously defended the safety record of the Explorer, which is the world’s best-selling SUV. He and other Ford officials have argued repeatedly, that the root cause of Explorer roll-overs were deadly blowouts and tread separations in Firestone’s 15-inch ATX, ATX II and Wilderness AT tires, and said they had nothing to do with the Explorer itself.Federal regulators have linked more than 170 deaths and about 500 injuries to the Firestone tires, many of which, were fitted as standard equipment on Explorers.

Federal investigators have yet to determine the exact cause of the failure in the 15-inch tires, which were manufactured by the US unit of Bridgestone Corp. Around 6.5 million of the tires were recalled by Firestone, at what Ford has described at its own insistence.

Ford has recently rushed to reach an out-of-court settlement of lawsuits over the Explorer roll-overs, in which it stood as a defendant alongside Firestone.But as of Dec 31, it said Explorer-related cases in which damages had been specified by plaintiffs and their lawyers totalled at least $590 million.The single biggest stated claim for damages over safety issues involving Ford, as of Dec 31, totalled at least $2.4 billion, the company said in its so-called 10-K filing.

It said the claims were made in connection with personal injury suits over the alleged propensity of the Bronco II sport utility vehicle to roll-over.Production of the Bronco II, a forerunner of the Explorer, was discontinued in 1996.

Separately, Ford said it faced various asbestos-related claims in which plaintiffs were seeking actual and punitive damages totalling about $1.7 billion.And in other lawsuits connected with safety issues, Ford said plaintiffs were seeking at least $603 million, as of Dec 31, because of injuries that resulted or were aggravated by alleged defects in seat belts or other occupant restraint systems.