A federal judge approved on Thursday a Ford Motor Co. class-action settlement that will result in the repurchase of thousands of defective Ford Fiesta and Focus vehicles for up to $22,000 apiece, according to lawyers who crafted the agreement.

"You could see where this settlement could end up costing Ford hundreds of millions of dollars, potentially $500 million," said Michael Kirkpatrick, a lawyer at the nonprofit Public Citizen consumer advocacy group, who successfully argued against both Ford and the class-action law firm for re-review of the case in 2019 to get a better deal for consumers.

Ford customers claimed in legal filings their 2012-16 Focus and 2011-16 Fiesta compact cars were built with 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.”

In response to the ruling, Ford spokesman Said Deep said in a prepared statement, "We are pleased with the court’s ruling and look forward to the final implementation of the settlement."

A Detroit Free Press "Out of Gear" investigation published in July revealed for the first time internal company documents and emails showing that the Dearborn automaker knew the dual-clutch "Powershift" (DPS6) transmissions on the entry-level vehicles, built over the last decade, were defective from the start and continued building and selling them anyway as customers spent thousands on repairs.

More:Out of Gear: Follow the full Ford investigation

A month after the Free Press investigation, Ford extended warranty coverage to 600,000 vehicle owners.

"We embarked on an eight-year odyssey to hold Ford accountable," said Ryan Wu, lead class counsel at Capstone Law. "It's reasonable to assume that the settlement will deliver at least $100 million for the buyback benefit alone, with no upper (dollar) limit. None of the class members is timed out."

Car owners will have at least seven months from the order to file a buyback claim, and some may have up to the year 2023 to file, he said.

Over the last year, as the high-profile case has been argued in court, Ford opened up a voluntary buyback program. The company disclosed in court documents in 2019 that Ford spent $47 million buying back 2,666 vehicles.

Based on what consumers have reported to the lawyers, most of them appear to have received buybacks between $15,000 to $22,000 on each car, Wu said.

"We think the number of cars with serious problems are about 100,000," he said. "So assuming 10% of those car owners goes forward and files a claim, and does what they need to do, well, you do the math."

Wu said he felt uncomfortable offering an estimate, saying the full cost to Ford depends on the number of car owners who apply for financial relief. He did not challenge a "potential $500 million" cost to Ford.

Big payout

An internal Ford report dated December 2016 noted that 350,000 of the problem cars "have already reached 3+ repairs in the US," the Free Press investigation showed.

So while Wu estimated just 100,000 vehicles qualify for the buyback program, Kirkpatrick cited the Free Press documents and pointed to Ford's own data calculations when predicting a bigger payout.

"This settlement has two parts," Kirkpatrick said. "People get cash for the inconvenience of having multiple repairs or they may seek to have their vehicle repurchased."

A customer must show three or more repairs under most state lemon laws to get repurchase, Kirkpatrick said. "Under the settlement, a class member can qualify for repurchase either under the applicable state lemon law or the settlement-created standard of four transmission repairs within five years or 60,000 miles."

Ford wrote in its 2016 internal report, when framing projected costs through 2020, that "Total quality related spending for DPS6 could reach $3 billion."

Nearly 2 million owners and former owners stand to be affected by the settlement, which also includes a minimum $30 million in cash payments from Ford to customers that are separate from the buyback program. At least 1.5 million of the vehicles remain on the road today, according to U.S. vehicle registration data.

The $30 million is set aside for smaller payments of anything from $20 to $250 for customers who may not qualify for a buyback. Kirkpatrick said. He emphasized the settlement agreement requires Ford to spend all $30 million, so after everyone applies for what may seem like a trivial amount, if any remains unclaimed, those consumers who applied may receive a second payment check because "the residue" of the $30 million must be distributed.

So, one month after a brutal 2019 earnings report, Ford is now looking at a new liability of more than half a billion dollars related to Ford Fiesta and Focus vehicles.

More:Ford COO Jim Farley: Tough road ahead but we know what to do

More:Ford workers break their silence on faulty transmissions: 'Everybody knew'

More:US fraud prosecutors demand Ford Focus, Fiesta documents

Warranty cost hell

Jim Farley, now chief operating officer at Ford, said Feb. 26 to the Wolfe Research Global Auto, Auto Tech and Mobility Conference in New York that Ford had spent $5 billion on warranty costs in 2019, significantly up in recent years. It was, he said, the kind of uncontrolled spending the company planned to contain in the future with improved quality.

These cost totals do not include Ford's legal fees.

More:Lawsuit: Ford hid Focus, Fiesta transmission problems — then blamed customers

More:Ford: Court of Appeals orders review of Focus, Fiesta class-action deal

More:Ford to pay millions to Focus, Fiesta owners in transmission settlement

Sweeter deal

Anybody who didn't proactively opt out of the class-action case is bound by the settlement agreement. But thousands of consumers have active individual suits 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,” said Ken Stern, a Novi lawyer representing more than 12,000 Focus and Fiesta owners from around the country who opted out of the class-action lawsuit to sue Ford individually. "The frustration here has been overwhelming and these people deserve relief. Many owners have been waiting years."

Stern represents a majority of the car owners who rejected the class action.

Meanwhile, consumers who live in California typically can get a repurchase price plus additional civil penalties when they sue individually, Kirkpatrick said. "California has very pro-consumer laws. A lot of other states can't get anything other than the repurchase price and the statute of limitations is very short."

Judge Andre Birotte Jr. of the U.S. District Court for the Central District of California held a brief hearing Feb. 28 that included all parties to the lawsuit. He asked how consumers would be notified of their options, and lawyers discussed how Ford would be sending postcards to all affected consumers with directions. This is important, lawyers involved said, because the revised settlement provides relief to people who previously thought they failed to qualify for relief.

"Things have gotten better" for car owners, Kirkpatrick said.

Substantial cost

Brian Wolfman, a professor at Georgetown University who litigates public interest appeals all over the country, said industry observers will take note of the settlement details.

"It's signaling that the kind of behavior that Ford is alleged to have engaged in — of producing defective vehicles, not taking responsibility, potentially hiding the problem from the public — has real costs," he said. "It says this kind of behavior is risky and is going to undermine the bottom line of the company and its reputation with the public."

When consumers stand to collect significant money and the plaintiffs’ lawyers take care to provide good notice and make claiming easy, the "claim rate" to settlement money tends to be higher than average, he said. " There's no reason, with a big ticket item and good notice, you can’t get a high claim rate like 75%," Wolfman said.

No question, Ford Fiesta and Focus owners have been monitoring the case for months.

What about your mother?

Patty Wilden, 64, of Topeka, Kansas, is a retired nurse who purchased her 2014 Ford Focus with just 7 miles on it and her frustration is immeasurable. She paid about $23,000, she said.

"I just paid my car off three weeks ago, right after replacing the fourth transmission. I am on a limited income," she said. "I was so frustrated I went and talked to the manager. I said, 'I cannot believe you sold me a car you knew had a defective part in it. Would you have sold your mother this car?' He just looked at me. I said, 'I didn't think so.' "

When driving, Wilden said, the car sometimes jerks forward or does not accelerate when she depresses the gas pedal. She said customers have suffered with these cars financially and she's relieved to see consumers get compensated.

Now, after 40 years

Randy Hart, 70, of Columbia, Tennessee, retired from Ford in 2007 after 40 years of service that included material handling and production work. He has been struggling with multiple clutch repairs on his 2013 Ford Focus.

"The clutches need replaced again," he said. "The last time they were replaced, the manager said, 'You'll be back but don't worry, they extended the warranty.' But now they say he told me wrong."

Hart is eager to read details of the class-action settlement in hopes of recovery.

Connie Malloy, 53, an author from Milwaukee, replaced her trouble-free 2002 Focus with a 2016 Focus that lurched forward while in reverse gear.

"I tried two times to get my car in to have the clutch replaced again," she said. "I was told that the wait was almost two months due to volume of clutch replacements."

Malloy owned a Ford Escort for 11 years. Her first car was a Ford Mustang. Her brother owned a Mustang, too. The family has been loyal to Ford but the siblings say their loyalty has evaporated.

Her brother, a marketing executive, fought with a Ford dealership in Grand Rapids in 2019 and convinced them to buy back his 2016 Focus for $13,500 "to be done with this nightmare," she said.

"I was encouraged to trade my car in as opposed to getting it fixed because I was directly told that I would have my car in every six months to have the clutch replaced," Connie Malloy said. "Our hope is to have the car repurchased. Our car is paid off. Both my husband and I are lifelong Ford owners and, because of this, we will never own another Ford."

After reading details of the settlement, she said, "I am stunned. This totally feels like justice has been, or will be, served."

'I am a U.S. Marine'

George Simon, 91, of Tustin, California, said he has had his 2014 Focus towed to the dealership five times. And he is furious. He provided a receipt for $23,712.59 for his car and documentation of an ongoing struggle with Ford.

"It's been nothing but a headache," he said. "I am a U.S. Marine who served our country and protected these people for 21½ years. And now all I get is this piece of junk causing me nothing but grief. It has been in the shop since Feb. 11. We're coming up on 30 days. And it was in the shop about 30 days a few months ago."

He didn't know whether he'd qualify for any payments under the settlement but he is eager to read the agreement and see what's possible, he said.

"I was stranded in traffic when the car would not move with the engine running and the gear shift in drive," he said. "I also put the gear shift in low and it still wouldn't move."

Simon wrote after talking with a reporter, "I was a strong advocate of Ford Motor Company. This transmission problem was, and is, being deliberately mishandled. As a result ... unsuspecting and dedicated Ford customers were treated with disdain & contempt. I purchased in good faith a 2014 Ford Focus Titanium that has given me more nightmares than my combat experiences in Vietnam."

Who gets the $30M?

The mediation agreement says Ford will issue cash payments for:

Car owners with three or more service visits for transmission hardware replacements

Car owners with three or more software updates

Car owners who did not have a documented service visit and were turned away by a Ford dealer after complaining about a transmission problem. This part provides $20 to those owners — if they submit a form under penalty of perjury.

The websites below offer consumer information that includes how to file a claim:

https://consumerarbitrationprogram.com/submitclaim/

http://fordtransmissionsettlement.com/submit-a-claim.aspx

http://fordpowershiftlawsuit.com/

All Fiesta, Focus stories:Out of Gear: Follow the full Ford investigation

Contact Phoebe Wall Howard at 313-222-6512 orphoward@freepress.com.Follow her on Twitter@phoebesaid. Read more on Ford and sign up for our autos newsletter.