Ford Pays Punitive Damages in Rollover
Ford Motor Co., the world’s third-largest carmaker, will pay $23.7 million in punitive damages to the family of three people who were killed in a 1993 rollover accident in Modesto involving a Bronco, a lawyer for the company said Monday.
Ford decided to abandon further appeals, said attorney Theodore J. Boutrous Jr. In 1999, Ford lost a $290-million jury verdict, which was reduced by a California appeals court in November.
Ford’s decision to pay is unlikely to encourage more lawsuits because the accident involved a 1978 vehicle, said Daniel Genter, chief investment officer at Los Angeles-based RNC Genter Capital Management, which holds $1.6 billion of debt securities, including Ford bonds.
“It’s a significant judgment, but it’s better to put this behind them,” Genter said. “There aren’t enough incidents involving vehicles of this vintage. Plaintiffs’ lawyers can’t parlay this into a class action.”
The total punitive payment, with interest, will be about $34.5 million, Boutrous said. Ford previously paid $6.6 million in actual damages. “We believe the remaining award is excessive and improper, but Ford decided to pay the judgment to resolve this 10-year-old case about a vehicle that was sold more than a quarter-century ago,” Boutrous said.
The lawsuit was brought by the family of a couple killed along with their 16-year-old son when their 1978 Bronco sport utility vehicle flipped on Interstate 5 near Modesto. The surviving children, Juan, Evangelina and Maria Romo, claimed the Bronco was more likely to roll over than a passenger vehicle and that Ford sold the Bronco knowing its removable fiberglass roof would not hold up in a rollover.
Ford argued at trial that the accident was caused by driver error and not by product defect. A California jury awarded $6.2 million in actual damages, along with the punitive award.
The trial court reversed the punitive judgment and reduced the compensatory award to $4.6 million. In June 2002, California’s Court of Appeals for the 5th District reinstated the punitive award.
Ford appealed to the Supreme Court, saying the punitive award was unconstitutional because it was 63 times compensatory damages. The Supreme Court set aside the award and sent the case back to the California courts to reconsider in light of the high court’s ruling in a case involving State Farm Mutual Insurance Co.
Before reduction by the appellate court in November, the judgment, with interest, was about $400 million, Boutrous said.
“It’s been a long road,” said attorney Laurence Drivon of Stockton, who represents the Romo family.
Ford shares fell 59 cents to $13.95 in New York Stock Exchange composite trading.
