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In a devastating ruling against Ford Motor Co., Alameda County, Calif., Superior Court Judge Michael Ballachey on Wednesday became the first judge in history to order a massive recall of vehicles that could cost the company $500 million. In a brief mid-morning hearing, the judge finalized his tentative August decision holding Ford liable for massive consumer fraud for hiding a potentially dangerous design defect in an ignition part. At the hearing, Ballachey lectured Ford’s lawyers for continuing to proclaim to the public and press that its vehicles are safe. Directing his ire at Ford attorney Richard Warmer, the judge asked how Ford could claim the cars were “safe” when Ford tried to conceal warranty failures and other documents from the Environmental Protection Agency and the National Highway Traffic Safety Administration. “The case was about concealment of a dangerous condition,” Ballachey said. “Take your car on the freeway, go 70 [mph], turn your motor off, and tell me that’s safe. I don’t think you have to kill someone to have an unsafe car. We’ve discussed this ad nauseum. Maybe I’m taking it too personally.” In his 20-page final order, which the judge issued Wednesday, Ballachey concluded that Ford not only built a faulty ignition module that was susceptible to heat damage, but then tried to conceal its problem from the government, the public and the court. “Ford failed to meet its obligations to report safety related defect information to relevant government agencies and, by doing so, concealed vital information related to the vehicle safety from the public,” Ballachey wrote. The vehicle recall comes as Ford is facing a mountain of publicity over a recall of 6.5 million Firestone tires on its trucks and sport utility vehicles. Ballachey’s decision cuts deeper into Ford’s already wounded reputation. Ballachey’s decision paves the way for a jury to decide how much the nation’s second largest automaker should pay in punitive damages. The class action suit represents 3.5 million customers in California, and Ballachey’s ruling means that as many as 1.7 million Fords — of all makes and models built between 1983 and 1995 — will be recalled unless Ballachey’s decision is overturned on appeal. Details of the order — such as who is included in the class, how much to compensate them, what vehicles qualify, and when to proceed with the recall — will be decided by court-appointed referee Jerome Falk Jr., an attorney at San Francisco’s Howard, Rice, Nemerovski, Canady, Falk & Rabkin. Speaking to reporters after the hearing, Ford attorney Warmer continued to deny that there is anything wrong with the ignition system. “The record in this case does not establish a safety problem, and we will prove that in the appellate process,” said Warmer, a partner in the San Francisco office of Los Angeles’ O’Melveny & Myers. “There’s a failure of proof on that issue — the case is built on fiction,” he said. “The vehicles are safe. [People] can continue to drive them safely.” Ballachey’s order comes 10 months after a jury attempted to tackle the first phase of the trial, but hung, forcing a mistrial. Since Bellachey’s decision has found Ford liable, the second jury will only consider punitive damages. Bellachey ordered lawyers to present a summary of their cases at an Oct. 27 hearing and have questions for the jury prepared. The jury trial probably won’t begin until after March. Ballachey said the trial should not take more than 10 or 15 days. Plaintiffs’ attorney Jeffrey Fazio, of San Francisco’s Hancock Rothert & Bunshoft, said he expected Ford to stonewall through appeals. “Ford is going to stubbornly resist and stay in bitter denial till the bitter end,” Fazio said. Ford spokesman Jim Cain says the company will question Ballachey’s standing to issue a recall and argue that the ignition module is reliable. Back in November, Ford’s lawyers had argued that the judge’s bench trial would bias any future jury trial. When an appeal will be filed will likely depend on when the court-appointed referee decides to begin a recall. Ford is facing five other class-action suits over the ignition modules in Tennessee, Maryland, Illinois, Alabama and Washington. “If those courts adopt Ballachey’s findings of fact, I can’t see why they need a jury trial outside of California,” Fazio said.

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