Ford Can’t Steer Clear of Consumers’ Defect Claims

A prospective class action against major automaker Ford received a boost recently when Judge Lucy H. Koh of the Northern District of California denied (in large part) Ford’s Motion to Dismiss. See Philips v. Ford Motor Company, No. 14-02989 (N.D. Cal. July 7, 2015) (order available here).

The complaint was filed by plaintiffs seeking to represent a class of California consumers who purchased or leased 2010-2014 Ford Fusion vehicles or 2012-2014 Ford Focus vehicles (“Class Vehicles”), which are allegedly equipped with a defective Electronic Power Assisted Steering (“EPAS”) system. The plaintiffs contended that Ford knew and should have disclosed that the Class Vehicles have the same steering defect that led the National Highway Traffic Safety Administration to investigate the Ford Explorer, resulting in a recall in 2014.

Ford’s motion sought dismissal of fraudulent omissions claims under California’s Consumer Legal Remedies Act (“CLRA”), Unfair Competition Law, and common law fraud. In arguing that Ford did not have a duty to disclose the steering defect and, therefore, that the plaintiffs could not allege a fraudulent omission claim, Ford conceded that the defect was a “safety hazard,” but tried to convince the court that the hazard was not an “unreasonable” one, and thus did not constitute a material fact under Daugherty v. American Honda Motor Co., 144 Cal. App. 4th 824 (2006). Judge Koh was not swayed by this argument, stating in the Order that, “[a]t the very least, it is plausible that a total failure in a vehicle’s power steering—at high or low speeds—constitutes an unreasonable safety hazard. Accordingly, . . . for purposes of a motion to dismiss, [the plaintiffs] have alleged a material safety defect that Ford had a duty to disclose.” Order at 22.

The court also rejected Ford’s contention that the plaintiffs had not adequately alleged Ford’s pre-sale knowledge of the defect, finding that the plaintiffs had “plausibly alleged that Ford knew about the EPAS system defects ‘since as early as 2010’” based on technical service bulletins issued by Ford in 2011 and 2012. Order at 18. The plaintiffs’ success on these two points entitles them to seek damages for violations of the CLRA and common law fraud, though the court ultimately dismissed the plaintiffs’ equitable claims under the UCL and CLRA—not based on merit, but merely because the plaintiffs already had an adequate remedy at law.

Authored by: 
Cody Padgett, Associate
CAPSTONE LAW APC