US:Court upholds dismissal of Ford tire safety suit
Court upholds dismissal of Ford tire safety suit
Shareholders claimed they were misled about Explorer woes
By David Shepardson / The Detroit News
DEARBORN — A federal appeals court has upheld the dismissal of a class-action lawsuit filed by Ford Motor Co. stockholders who claimed the company misled them about the safety of tires on Ford Explorers.
A group of Ford shareholders — including the Public School Teachers’ Pension and Retirement Fund of Chicago, the International Brotherhood of Electrical Workers, Local 98 and the Ohio Tuition Trust Authority — filed suit in 2000.
The suits claimed Ford omitted information concerning the “dangerousness” of Ford Explorer models equipped with Bridgestone/Firestone ATX tires when making statements about the quality and safety of the Explorer. The SUV came under intense scrutiny from federal regulators investigating what caused Firestone tires to fail, mostly on Explorer models. Firestone was eventually forced to recall millions of tires.
In the suit, the groups also suggested Ford’s financial statements during the recall period were false because Ford failed to include information concerning possible liability of related lawsuits and recalls.
“We are pleased that the Sixth Circuit recognized that this claim should not proceed,” said Ford spokeswoman Kathleen Vokes.
The suits were filed on behalf of all shareholders who bought Ford stock between March 31, 1998 and August 31, 2000.
The three-judge panel in Cincinnati rejected arguments Ford misled investors by repeatedly touting its quality as “its best ever” and stating “quality comes first.”
“Such statements are either mere corporate puffery or hyperbole that a reasonable investor would not view as significantly changing the general gist of available information,” Judge Cornelia G. Kennedy wrote for the court.
As part of its defense, Ford warned in a 1999 Securities and Exchange Commission filing that it was subject to 28 ongoing federal investigations of alleged safety defects. It also warned investors that recall campaign expenses could be substantial.
The automaker’s tire problems came to light in August 2000 when Bridgestone first recalled 6.5 million tires, mostly on Explorer. U.S. regulators have linked the failure of Firestone tires and resulting rollover accidents to 271 deaths and more than 800 injuries in the United States.
In May 2001, Ford decided to spend about $3 billion to replace around 11 million tires. The recall was completed by November 2002.
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My next Ford.....