Certain owners and former owners of Ford Focus and Ford Fiesta cars, who have sued the automaker that sold vehicles with defective transmissions, are pursuing claims based on violations of Michigan’s consumer protection statute.
They will get their way if state Attorney General Dana Nessel has her way.
Nessel, joining half a dozen county prosecutors, filed a legal brief Thursday urging the Michigan Supreme Court to consider the Ford case so that judges can provide clarity on how the Michigan Consumer Protection Act is properly interpreted and applied.
Nessel and other prosecutors argue that courts over the years have limited application of the act so much that they’ve rendered it toothless.
While the public officials have no direct connection to the legal action involving Ford, allowing these vehicle owners to have their case heard could help Michigan residents seeking protections originally intended by the legislation, prosecutors say.
“Consumers will benefit from this Court hearing this case and correcting a long-standing misinterpretation of consumer-protection law,” Nessel wrote in the brief.
The Ford case involves an estimated 12,000 consumers from Michigan and throughout the U.S. who opted out of a now-settled class-action lawsuit and chose to sue Ford on their own.
Judge Annette Berry of the Wayne County Circuit Court earlier in the case sided with consumers and ruled the Michigan Consumer Protection Act gives them the standing to sue. An appeals court then disagreed and sided with Ford, saying the act did not apply. Ford owners appealed to the Michigan Supreme Court.
Approximately 600 Michigan residents in the case could benefit from Nessel’s action.
Some settled for $20
In 2020, Ford settled a class-action lawsuit filed in 2012 involving more than 2 million consumers, making payments to those who applied for relief ranging from $20 to a total buyback that could exceed $20,000.
Ford customers claimed in legal filings their 2012-16 Focus and 2011-16 Fiesta compact cars were built with defective transmissions prone to “shuddering, slipping, bucking, jerking, hesitation while changing gears, premature internal wear, delays in downshifting and, in some cases, sudden or delayed acceleration.”
More:Ford knew Focus, Fiesta models had flawed transmission, sold them anyway
More:‘Our constant struggle to keep the Focus operable is truly overwhelming’
More:Ford workers break their silence on faulty transmissions: ‘Everybody knew’
Anybody who didn’t proactively opt out of the class-action case is bound by the settlement agreement. But thousands of consumers did and now have active lawsuits against Ford.
“Whether through direct litigation against Ford or through the class-action settlement, Ford must still be held fully accountable for design and manufacturing defects of the Powershift transmission,” Ken Stern, a Novi lawyer representing more than 12,000 owners from around the country who sued Ford individually, told the Free Press last March.
“The frustration here has been overwhelming and these people deserve relief,” he said.
Nessel said this week that hearing this Ford case benefits all Michigan residents and consumer fraud victims moving forward, unrelated to Ford specifically.
The court is presented with the chance to restore the Michigan Consumer Protection Act, she wrote, “as an effective weapon in the consumer-protection arsenal.”
Nessel cited a case where parents of children with epilepsy sued a doctor and his billing company and a hospital, alleging that they engaged in deceptive business practices resulting in the misdiagnosis of pediatric patients to increase profits, but the Court of Appeals found that because medicine is regulated, the defendants were exempt and parents couldn’t sue under the Michigan Consumer Protection Act.
Not now
Meanwhile, Ford spokesman Said Deep told the Free Press, “Consumers should have protections.” But, he said, in this case the Court of Appeals’ unanimously ruled “they do under other existing statutes or regulations. The Michigan Supreme Court fully reviewed an application to appeal that decision and decided not to take the case. Ford believes this is the correct interpretation of the statute.”
Focus, Fiesta owners filed a motion for reconsideration, which is what Nessel is joining.
Nursing home fraud
In situations such as credit card fraud, price gouging of baby formula, rental fraud, nursing home fraud and illegal price hikes on COVID-19 personal protection equipment — prosecutors say the law the way it’s currently interpreted in Michigan is toothless.
It must change, said Eli Savit, the Washtenaw County prosecutor.
“We’re urging the court to hear the (Ford) case,” he said. “From my position as a prosecutor, it’s very frustrating. We get a number of letters, emails and phone calls from people who have been victims of consumer scams. Economic crimes probably dwarf calls we get about any other matter. Because of the narrow reading of the law, consumers are really without any sort of avenue forward to vindicate what they hope is a claim.”
Over time, Michigan Supreme Court judges have interpreted consumer protection law in a way that it applies to nobody, Savit said. They’ve said that if a business is otherwise regulated, they’re exempt from the law. So if a business is regulated by a federal food or drug agency, transportation agency, environmental agency — they can’t be sued in Michigan.
“Consumers don’t even get an opportunity,” Savit said.
Ford’s consumers, like all consumers, shouldn’t be powerless because Ford is regulated by various federal agencies, county prosecutors told the Free Press.
‘Misrepresenting’ quality
“As written, the Act prohibits a broad swatch of conduct. Among other things, it bars businesses from grossly overcharging consumers, taking advantage of a consumer’s disability, misrepresenting the quality of goods or engaging in consumer coercion,” said a news release from Savit’s office explaining his interest.
This is about allowing local prosecutors and the state attorney general to investigate and prosecute consumer abuse.
The consumer act was narrowed in scope through judicial decisions in 1999 and 2007. Most recently, Savit noted, the court suggested that businesses are exempt from the act if they are other otherwise regulated by the state or federal government.
‘Cruel hoax’
“Nearly 40 years ago, former Attorney General Frank J. Kelley explained to this Court: ‘If every person or business which engages in an activity authorized by some statute or regulation were exempt from the Michigan Consumer Protection Act,” then it would be a “cruel hoax” on the policy makers who sought to give consumers protection, Nessel’s legal brief says. “The very thing he feared has come to pass.”
Prosecutor Matt Wiese of Marquette County said that because of a lack of clarity in case law in Michigan, prosecutors are simply unable to do their jobs. “We joined in the filing to ask for a clarifying decision from the Michigan Supreme Court.”
Prosecutor David Leyton of Genesee County wants to stop wrongdoing that now goes unpunished.
“Clarity will assist us in bringing actions on behalf of consumers,” he said. “We hear from the community about mortgage companies, used car dealers specifically, credit cards, robo calls.”
Filing these briefs, Leyton said, “It like an on ramp to get us where we need to go.”
Ford’s transmissions
“This is really a position about the institutional ability of prosecutors as well as the attorney general to go after and investigate consumer abuse,” Savit said, adding that prosecutors in Illinois, armed with a similar law, have been able to hold accountable the perpetrators of over 500 consumers scams.
More:Ford to pay millions to Focus, Fiesta owners in transmission settlement
More:As Ford pays owners thousands in Focus, Fiesta transmission case, deadline for payout looms
“Unfortunately, a series of decisions by our state Supreme Court has made it nearly impossible for prosecutors to exercise that authority. The result is that many businesses feel free to engage in consumer abuse. That is unacceptable. It is our hope that the Supreme Court will take the opportunity to clarify the scope of the act — and allow prosecutors to protect consumers in their communities.”
More:Out of Gear: Follow the full Ford investigation
Contact Phoebe Wall Howard: 313-222-6512 orphoward@freepress.com.Follow her on Twitter@phoebesaid. Read more on Ford and sign up for our autos newsletter.