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The latest pothole in what has been a bumpy ride for Ford’s defense in a class action could be a California case called Arntz Contracting Co. v. St. Paul Fire and Marine Insurance Co. It will be the first in limine motion the plaintiffs will make when both sides return to court in March to submit pretrial motions for Howard v. Ford, 763785-2 — which has already led to a bench recall of nearly 2 million cars and trucks. If the motion is successful, retired Alameda County Superior Court Judge Michael Ballachey’s blistering statement of decision from the bench — that the automaker failed to tell consumers about an ignition flaw that caused some models to stall on the road — would become binding on the jury in a related trial this fall. The motion “could have a significant impact, to say the least,” said lead plaintiffs’ attorney Jeffrey Fazio, because it would take away Ford’s chance to dispute liability, and jurors would be left to decide damages. The two-phase suit has already led to a historic bench recall, and Ballachey has ruled that Ford violated the unfair competition law and the Consumer Legal Remedies Act. Now that the bench trial for equitable issues is over, the attorneys are preparing for the retrial of the jury phase, which will determine damages. The first jury hung in 1999 after 10 days of deliberations. Fazio’s argument is based on 1996′s Arntz Contracting Co. v. St. Paul Fire and Marine Insurance Co., 47 Cal.App. 4th 464. “Ford will want to retry the liability issue,” said Fazio of Hancock Rothert & Bunshoft. “Our position is a jury can’t second-guess a trial judge.” Ford attorneys, while downplaying the motion’s implications, said that such an argument would violate the firm’s rights. “ Arntz does not apply here,” said Donald Lough, Ford’s Dearborn, Mich.-based in-house counsel. “We agree with Judge Ballachey’s original ruling that [the motion] would run roughshod over our constitutional right to a jury trial,” referring to the judge’s first reaction when plaintiffs’ attorneys broached the subject in court. Ford attorneys acknowledged that Ballachey may have changed his mind about the motion but declined to speculate how the judge will eventually rule. Arntz stems from a dispute between a contractor who was terminated from a Richmond Housing Authority project and its insurance company. The case was litigated in two bench trials and a jury trial. Both sides challenged lower court rulings on several grounds, with insurance company attorneys arguing that the court should not have read statements of decision from earlier bench trials to the jury. The justices unanimously ruled that using the decisions as evidence was not prejudicial. “Issues adjudicated in earlier phases of a bifurcated trial are binding in later phases of that trial and need not be relitigated,” wrote First District Court of Appeal Presiding Justice Gary Strankman, with William Stein and now-retired Justice Robert Dossee concurring. “While we do not endorse the wholesale introduction of statements of decision from one phase of a bifurcated trial into another … [T]he court was entitled to prepare its own statement of the case and craft it from its statements of decision that had passed through the crucible of the parties’ objections and proposed modifications,” Strankman wrote. That doesn’t apply to the Ford case, the carmaker’s attorneys say. “ Arntz deals with a situation where the parties stipulated to certain procedures,” said Lough. The litigants in Arntz agreed to try the case in phases, whereas Ford — anticipating that Arntz would be an issue — has always objected that the bench trial happened before a jury could resolve the claims for damages, he said. Originally, Ballachey wanted the jury trial to conclude before the bench trial started. After the first jury hung, Ballachey changed his mind and moved forward with the bench trial. Ford unsuccessfully tried to prevent Ballachey from proceeding with the bench trial until a jury retrial was complete. Ford’s case has “a totally different set of facts” than the Arntz case, Lough said. Plus, said Richard Warmer, Ford’s local counsel from O’Melveny & Myers, the jury must hear evidence about liability. “You are not entitled to damages until you prove liability,” said Warmer. Fazio disagrees. “We have to show that they defrauded consumers; we don’t have to try every little thing,” the attorney said. If the Arntz motion is not granted, Ford would have another shot at proving that the automaker is not liable, he said. The yet-to-be filed motion has been debated extensively and even surfaced during Ford’s ill-fated attempt to disqualify Ballachey from presiding over the retrial. Ballachey’s attorneys argued that Arntz was the real motive behind Ford’s attempt to boot the retired judge. “[What] Ford seeks in this challenge is to keep Ballachey’s determination of evidence in the first proceeding from being admitted in the second trial,” wrote Alameda County Counsel Richard Winnie in a January appellate argument. Then, Winnie was responding to Ford’s writ, which challenged a Sacramento County Superior Court judge’s ruling that kept Ballachey on the Ford case. “In effect Ford seeks to avoid the potential result of Arntz through disqualification of Judge Ballachey … . If the Arntz motion is decided unfavorably to Ford, it has an adequate remedy at law: appeal,” he wrote. The disqualification motion was not tied to Arntz, Lough said, but he acknowledged that the Ballachey ruling on the motion could be fodder for appeal. “It depends on how the court rules and how the ruling fits in with the rest of the case, but we think that if the court denies us a right to a trial, that would be reversible error,” he said. In California courts, it’s preferred that bench trials go before jury trials to narrow the issues that jurors must weigh, said Fazio. “Even if they won [the jury trial],” he said, “Ballachey could have found them liable for the equitable issues.”

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