Ford Transmission Settlement Appeal: No Settlement

September 14, 2019 — A Ford transmission settlement that was appealed has been sent back to the lower district court after the 9th Circuit Court of Appeals found serious problems with the settlement being "fair" and "adequate" for consumers.

Five Ford customers, joined by consumer advocacy group Public Citizen, objected to the settlement by arguing the settlement had no meaningful value to most Ford customers.

According to lawyers who filed the Ford transmission lawsuit, the settlement was worth about $35 million for Fiesta and Focus owners. But in their appeal of the settlement, the objectors pointed out how that amount was reached based on the total payment amount available for every eligible vehicle.

Class action lawsuits are known for their low claim rates, meaning only a small percentage of customers will file a claim. Many vehicle owners simply ignore the entire subject because they weren't the customers who filed the lawsuits in the first place.

This makes the $35 million calculation nonsense, and even lawyers for Ford owners admit they anticipated less than 15% of owners would even file a claim. In reality, only 8% of customers eventually filed a claim.

The appeals court ruled the attorneys who filed the transmission lawsuit were receiving $8.8 million in fees while the majority of Ford customers received nothing.

Two of the three appeals court judges ruled district courts have been warned to watch for “subtle signs that class counsel have allowed pursuit of their own self interests and that of certain class members to infect the negotiations.”

According to the appeals ruling, at least two of those signs occurred in the transmission settlement. The attorney fee award of $8.8 million is "disproportionate to the class recovery and a 'clear sailing' provision whereby defendant [Ford] agreed not to object to the award sought by class counsel."

The 9th Circuit also saw problems with the settlement claiming 2 million Ford customers would be included in the class action, yet an expert for the plaintiffs who sued admitted there were only 92,891 eligible Fiesta and Focus vehicles.

"Thus, only a very small fraction of the class likely stands to gain any monetary benefit." - 9th Circuit Court of Appeals

In a 2-1 ruling, the appeals court ruled it will “vacate final settlement approval and remand so that the district court may conduct a more searching inquiry."

According to the Ford PowerShift class action lawsuit, the transmissions cause Fiesta and Focus vehicles to lurch, lunge, jerk and hesitate when accelerating. The plaintiffs also claim the vehicles have problems with delayed acceleration and downshifting.

Hundreds of lawsuits have been filed against the automaker concerning the PowerShift transmissions, with some attorneys filing dozens of lawsuits in California alone.

According to the Fiesta and Focus transmission settlement agreement, owners and lessees of 2011-2016 Ford Fiesta and 2012-2016 Ford Focus vehicles with three or more dealer visits for replacements of one of the primary transmission parts could receive $200 for the third service visit, with increasing payments for each additional visit.

However, that deal leaves out customers with less than three service visits.

The settlement also says an owner may receive a discount certificate toward the purchase of a Ford vehicle for twice the cash value, in lieu of settlement payments.

Customers who had a third clutch replacement after two clutches were replaced within the 5-year/60,000 mile powertrain warranty could receive a replacement clutch with a 2-year warranty.

For Fiesta and Focus customers who had at least three transmission software flashes performed by Ford dealers, those owners could receive $50 starting with the third software flash, with an additional $50 for each subsequent software flash, up to $600. But again, this leaves out customers who had less than three software flashes.

Owners and lessees could also enter arbitration with Ford based on state lemon laws, possibly giving customers the option to have Ford buy back the cars.

However, as referenced by the appeals court, by the end of the claims process only 8% of eligible customers filed settlement claims.

The National Highway Traffic Safety Administration (NHTSA) checked into the alleged transmission problems but safety regulators didn't find an unreasonable risk to safety and said no recall was necessary.

The Ford transmission lawsuit was filed in the U.S. District Court for the Central District of California - Vargas, et al., v. Ford Motor Company.

The plaintiffs are represented by Capstone Law APC, Berger & Montague P.C., and Zimmerman Law Offices P.C.

Ford has battled Fiesta and Focus drivers for years over the dual-clutch PowerShift transmissions, including in Canada where the automaker settled a transmission class action lawsuit.

Check out more of Ford's alleged transmission troubles below.