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Department of Justice Probe Continues as Ford Fuel Economy Lawsuits Heat Up

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SEC Filing Discloses Criminal Inquiry

Washington, DCIt was buried on page 70 of Ford Motor Co.’s March 31 SEC Form 10-Q, just before the last of many charts. The bland and reassuring words with which Ford disclosed a Department of Justice criminal investigation into Ford fuel economy representations belies the potential importance of that investigation to Ford class action lawsuits that now target both the Ford Ranger and F-150 truck models.

In general, the DOJ may open either civil or criminal investigations. The fact that the Ford fuel economy rating investigation is criminal in nature suggests that the DOJ has evidence of an intentional violation of law.

This is not Ford’s first brush with fuel economy misrepresentations. In 2014 the company was forced to revise fuel economy ratings on six models, including the Fiesta, and the C-Max and Fusion hybrid cars. It sent checks for as much as $1,050 to more than 200,000 owners to compensate them for their vehicles’ mileage shortcomings.

“Nothing to see here, folks”


The full text of the SEC disclosure is as follows:

Emissions Certification (as previously reported on page 23 of our 2018 Form 10-K Report). As previously reported, the Company has become aware of a potential concern involving its U.S. emissions certification process. This matter currently focuses on issues relating to road load estimations, including analytical modeling and coastdown testing. The potential concern does not involve the use of defeat devices (see page 10 of our 2018 Form 10-K Report for a definition of defeat devices). We voluntarily disclosed this matter to the U.S. Environmental Protection Agency and the California Air Resources Board on February 18, 2019 and February 21, 2019, respectively. Subsequently, the U.S. Department of Justice opened a criminal investigation into the matter. In addition, we have notified a number of other state and federal agencies. We are fully cooperating with all government agencies. Because this matter is still in the preliminary stages, we cannot predict the outcome, and we cannot provide assurance that it will not have a material adverse effect on us.”

Neither Ford, nor the DOJ has commented further. It should be noted, however, that one of the pending lawsuits, Brewer v. Ford Motor Co, filed July 2019 in the Eastern District of Michigan, alleges that certain vehicles were also equipped with a “cheat device.”

Intentional violations of law


Apart from the cheat device claims, the central allegations of Brewer are that “Ford deliberately miscalculated and misrepresented factors used in vehicle certification testing in order to report that its vehicles used less fuel and emitted less pollution than they actually did.”

The key concept is deliberateness. The plaintiffs have tried to show deliberateness by working backwards through evidence that employees knew and reported their qualms about the testing process and the results it produced. Whistleblowers reported concerns about the testing process as early as September 2018. They may have known before then.

However, to anticipate the arguments of defense counsel, the lapse in time between September 2018 and February 2019, when Ford turned itself into the EPA and the California Air Resources Board is not long. On the other hand, car and truck sales are highly seasonal with a surge in the later months of the year. Either way, this is not a slam dunk on the question of deliberateness.

Long, bad history


What may weigh heavily in the minds of judge and jury is a long, bad history of car manufacturers and their tenuous relationship with truth on the topic of mileage and emissions. Ford is the third major automaker to be investigated over mileage and fuel emissions reporting in the last few years. This is also not their first investigation.

Volkswagen AG paid a $4.3 billion penalty in 2017 for misrepresenting information about its diesel engines’ emissions to regulators and customers. Fiat Chrysler agreed to pay $800 million in civil penalties and other costs to resolve claims by the DOJ and California that some of its diesel vehicles contained illegal emissions software to limit pollution during lab tests.

It is a bad history that arouses suspicion, but it is not dispositive of the issue at hand. As the Ford fuel economy class action lawsuits wind their way through the civil court system, the DOJ’s criminal investigation may ultimately shed further light on the question of deliberate intent. That may shape future civil class action litigation.

READ ABOUT FORD FUEL ECONOMY LAWSUITS

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READER COMMENTS

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Gets surges. hard time starting. low gas mileage, Emissions problems, check engine light. radio malfunctions

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I own a 2013 Ford Taurus SE and get poor mileage. Do I qualify for this law suit?

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