By NORIHIKO SHIROUZU
Staff Reporter of THE WALL STREET JOURNAL
DETROIT -- In a highly unusual move, a California state judge ordered
Ford Motor Co. to recall 1.7 million Ford cars and trucks, dealing a blow
to a company struggling to contain damage to its reputation from the
Firestone tire debacle.
Alameda County Superior Court Judge Michael
Ballachey said in his order Wednesday that the
No. 2 auto maker had known for nearly two
decades that vehicles were prone to stalling
because of "flawed" ignition modules, but failed
to cooperate with federal safety regulators or alert consumers. Judge
Ballachey's decision is a major step forward for plaintiffs in the case,
who had argued that top company officials, including the board, knew
there were widespread problems with the ignition systems.
The order also said the California judge may force Ford, in addition to
the recall, to pay restitution for replacing the ignition system and award
reasonable attorney fees and other costs incurred.
One internal Ford document that plaintiffs' lawyers presented to the
judge showed that the Dearborn, Mich., auto maker was proposing in
1986 a $200 million provision to deal with the ignition problem. The
same document said Ford estimated a per-unit warranty repair cost to
fix the problem to be $176.
Ford "knew from the very beginning ... that the TFI module was
vulnerable to thermal stress and that heat was the enemy of electronic
devices," the judge wrote in his 21-page order. "Ford failed to meet its
obligations to report safety related defect information to relevant
governmental agencies and, by so doing, concealed vital information
related to vehicle safety from the consuming public."
Judge Ballachey had signaled his intention to order a recall in August,
but had allowed Ford more time to argue its position that a recall was
unwarranted. The case is being watched closely, not just in the auto
industry, but by other manufacturers worried by the prospect of state
judges ordering product recalls.
The court now will have to determine what kind of recall Ford would
have to conduct. But Ford is expected to appeal as soon as that
decision comes, among other moves. The company is seen as likely to
argue that a state judge has no power to order automotive recalls.
"The judge doesn't have the authority to order a recall. No state-court
judge does; that's the NHTSA's job," said Jim Cain, a Ford spokesman,
referring to the National Highway Traffic Safety Administration in
Washington. "Even if he did have the authority, the recall would serve
no purpose, because there is absolutely nothing to fix."
Harsh Questions
The order comes at a bad time for Ford, which has been facing harsh
questions from regulators, consumers and members of Congress over
its handling of safety concerns surrounding its popular Explorer
sport-utility vehicle and Firestone tires used on the truck.
Bridgestone/Firestone Inc. has recalled 6.5 million Firestone tires, many
of them installed on the Explorer, amid charges that sudden tread
separations caused accidents linked to about 150 deaths in the U.S.
and overseas. Ford is trying to help complete the recall months earlier
than expected, by the end of November, to put the furor to rest. But
the harsh language in Judge Ballachey's order is a setback for the auto
maker.
The order stemmed from a class-action suit filed on behalf of 3.5 million
Ford owners in California. According to Jeff Fazio, the lead lawyer for
the
case, the plaintiffs claim the vehicles are prone to stalling because poorly
placed ignition devices were exposed to excessive heat from the engine
block. Similar class-action lawsuits are pending in Alabama, Maryland,
Illinois, Tennessee and Washington, according to Mr. Cain at Ford.
The California class-action claims refer to more than 20 million Ford
vehicles, of many models, from the 1983 model year through 1995, but
Judge Ballachey's order applies to only a portion of them, 1.7 million
vehicles in California and currently on the road.
Repeated Deception Alleged
In his ruling, the judge said Ford had been aware of the stalling problem
at least since 1982. He said Ford repeatedly deceived U.S. regulators by
insisting there were no ignition-system problems.
Wednesday, Ford maintained its position. "We have looked at
government stalling data and accident data, and there is absolutely
nothing to suggest that our cars stalled any more or any less than
anyone else's," said spokesman Mr. Cain. "If we honestly believed that
there was a safety issue, money would not be an object; we would go
out there and we would fix the vehicles. But this is courtroom
engineering; it's amazing the case has gotten this far."
The internal Ford document plaintiffs' lawyers presented during the trial
described a Ford board meeting on Oct. 9, 1986. That document, other
than discussing a possible estimate of cost to deal with the problem,
showed an effort by a number of Ford engineers to find ways to deal
with the stalling issue. The most critical factor behind Wednesday's
decision, Mr. Fazio said, was "a sheer volume of evidence that pointed
to the huge problem Ford tried to hide for years."
Write to Norihiko Shirouzu at norihiko.shirouzu@wsj.com