Excerpted from The Associated Press, 10/25/2001

An agreement was finally made between Ford Motor Co. and lawyers representing a class action lawsuit in Alameda County (Calif.) Superior Court.

The out-of-court settlement ends years of litigation and avoids a court-ordered trial expected to begin later this year which could have exposed Ford to billions of dollars in damages under California consumer law. "I think it's as good as they could have possibly gotten, short of a recall," says Jeff Fazio, lead attorney suing Ford.

The settlement comes two months after The Associated Press reported that at least 11 deaths and 31 injuries were blamed on stalling Ford vehicles equipped with the ignition device. The AP also obtained internal Ford memos that show the automaker had evidence its ignition design could make engines suddenly fail on the road.

The deal could cost the automaker as much as $2.7 billion according to an estimate from the plaintiffs; that amount was disputed by Ford as being inflated. "This [setttlement and related costs] will not be something that will have a material effect on the company's financial position," says Ford attorney Richard Warmer.

Affected are 20 million cars and trucks that are prone to stall, of which an estimated 12 million are still on the road. The ignition device, called a TFI (Thick Film Integrated) ignition module, was mounted on the distributors and originally installed on many 1983-95 model Ford cars & trucks, including all models of the Mustang SVO and other EEC-IV vehicles. Failure of the TFI module can occur due to extreme heat and vibration exposure, causing a "rapid catastrophic failure" -- in other words, the vehicle would stall.

Millions of current and former Ford owners nationwide can be reimbursed for repairs and related expenses such as towing fees, so long as the vehicle has or had less than 100,000 miles at the time of failure.

The settlement does not affect any of the wrongful-death and personal-injury lawsuits filed over the defect. "If Ford were concerned about public safety, they would have recalled the vehicles," says Clarence Ditlow of the Center for Automotive Safety.

The judge ruled that Ford knew as early as 1982 that the vehicles were prone to stalling, especially when engines grew hot; having concealed internal documents from NHTSA investigators, the case against Ford was closed years ago due to lack of evidence.

The lawsuit challenges Ford's placement of the TFI ignition module which regulates electric current to the spark plugs.

The module was mounted in 29 Ford models on the distributor near the engine block where it was exposed to temperatures above 257 degrees which could cause failure of the module. Ford engineers knew that some engine compartments had temperatures exceeding that.

Judge Michael E. Ballachey finally signed the settlement Thursday after weeks of closed-door negotiations which expands the original California case of 2 million vehicles to cover vehicles nationwide.

Specific details on the reimbursement program are yet to be announced.