Ford Discount Offer to Settle Suit Upheld

An appeals court on Tuesday upheld an agreement by Ford Motor Co. to grant a $400 discount on new Ford cars to the owners of Mustang convertibles built from 1983 to 1986 with alleged door defects.

The 1994 agreement, which settled a nationwide class-action suit against the car maker, was challenged by a consumer group as too limited because it benefited only owners who buy a Ford car or light truck within a year.

But the 4th District Court of Appeal ruled that the settlement is fair and reasonable.

The justices noted that the alleged defect had caused no injuries and at worst caused poor door fit, some water leakage, wind noise and minor cosmetic damage, such as paint chipping. The court said the maximum cost of those repairs was $600.

Ford agreed to settle the class-action suit by granting $400 coupons to owners of Mustangs made in those years, potentially worth up to $26 million, rather than pay cash. The coupons can be used toward the purchase of a new Ford car or light truck and cannot be signed over to anyone else.

About 65,000 new Mustangs were sold from 1983 to 1986.

The agreement was approved by former Orange County Superior Court Judge William F. Rylaarsdam, who now serves on the appellate court. Rylaarsdam did not take part in the court’s 3-0 ruling.

Public Citizen, a consumer group affiliated with advocate Ralph Nader, appealed the settlement, estimating that only a tiny percentage of Mustang owners would redeem the coupons.

The court noted some reservations about settling cases through coupons that can benefit the defendant by encouraging new big-ticket purchases. But the justices said the settlement, which involved a mediator, followed three years of proceedings that prompted lawyers on both sides to question the likely success of the lawsuit.