Court of Appeals vacates Ford Focus and Ford Fiesta class-action deal

For the past EIGHT years, Ford Fiesta and Ford Focus owners have had issues with their problematic dual clutch transmissions (DPS6) in a class action titled Vargas v. Ford Motor Company. Later, Ford extended two warranty extensions for the clutch and also for the TCM, namely 14001 and 14002. A class action that had originally been filed in 2013 was finally nearing settlement in 2018, with the judge overseeing the class action signing off on the settlement.

Last week, after more than a few class members complained about the benefits received under the settlement, the US 9th Circuit Court of Appeals vacated that settlement and sent it back to the original court for further review. Essentially, the appellate court had issues with how much money would be awarded to consumers and the fact that the vast majority of the car owners would have received nothing under the settlement. The appellate court questioned the lower court's scrutiny of the class-action attorneys and the terms of the settlement, suggesting that the lawyers didn't adequately represent consumers but rather pushed through the settlement based on their own financial interests. This actually isn't the first time that class action law firm was questioned as to how well they represented their class member clients.

Here is a excerpt from the memorandum the Court of Appeal issued:

A class action settlement may be approved only if it is “fair, reasonable, and adequate.” Fed. R. Civ. P. 23(e)(2). This Court reviews a district court’s approval of a proposed class action settlement for abuse of discretion. We rarely overturn a proposed settlement based on considerations of substantive fairness unless it is clear that class counsel’s self-interest, rather than the class’s interests, influenced the agreement. “However, we hold district courts to a higher procedural standard when making that determination of substantive fairness. . . .” That procedural burden is stricter still when, as here, settlement is negotiated prior to class certification. In this posture, “[t]o survive appellate review, the district court must show that it has explored comprehensively all factors, and must give a reasoned response to all non-frivolous objections.”

Finally, with respect to the fee award, this Court has warned district courts to be alert for certain “subtle signs that class counsel have allowed pursuit of their own self-interests and that of certain class members to infect the negotiations.” At least two of those signs are present in this settlement, which includes a fee award disproportionate to the class recovery and a “clear sailing” provision whereby defendant agreed not to object to the award sought by class counsel. Id. “While the existence of these . . . signs does not mean the settlement cannot still be fair, reasonable, or adequate, they required the district court to examine them, and adequately to develop the record to support its final approval decision.” Moreover, “when confronted with a clear sailing provision, the district court has a heightened duty to peer into the provision and scrutinize closely the relationship between attorneys’ fees and benefit to the class.” The district court did not undertake that inquiry here.

<citations omitted>

858, 864 (9th Cir. 2012)).

What does this mean for Ford Focus and Ford Fiesta owners with DPS6 dual clutch transmission issues? Most likely, they'll have to wait much longer for the class action settlement to resolve. What can you do now if you own a Ford Fiesta or Ford Focus with issues? If you’re in California, feel free to drop a line below.