California passed the Song-Beverly Consumer Warranty Act in 1970.
The law, one of the strongest consumer protection laws in the country, protects California car buyers and other consumers from buying faulty products.
The law ensures that every retail sale of consumer goods in the state comes with certain implied warranties and limits retailers from voiding those warranties.
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So if you buy a car from Ford that is a lemon, the car manufacturer could be required to buy back or replace your vehicle if, after a “reasonable” number of repair attempts, no solution is found.
Retailers sued under the law must reimburse litigation costs and attorneys' fees.
While auto manufacturers are usually the defendants in these lemon-law cases, Ford went on the offensive earlier this year.
Ford files RICO against lemon-law firms
In May, Ford filed a civil racketeering lawsuit against lemon-law firms and lawyers in California.
In the lawsuit filed in U.S. District Court for the Central District of California, Ford alleges that three law firms, led by the Knight Law Group LLP and six affiliated attorneys and staff members, violated the Racketeer Influenced and Corrupt Organizations Act, overbilling for legal fees by submitting court timesheets recording more than 24 hours worked in a single day.
“Ford’s civil RICO suit against a number of lawyers and law firms is a result of a comprehensive investigation that uncovered what’s alleged to be a massive scheme to submit phantom invoices filled with ‘ghost hours' for work that was never performed to deceive California judges, dupe their own clients and to defraud auto manufacturers,” Ford counsel Doug Lampo said in a statement to The Detroit News.
But one of the defendants in the case says Ford's motivation for filing the lawsuit is nefarious.
Lemon-law firms fire back at Ford in motion to dismiss
The defendants in the case are arguing that Ford is suing them only out of retaliation for their
pursuing claims against the company and are saying the case should be thrown out,
according to a report.
Knight Law filed a motion to dismiss based on the grounds that Ford is using this case as a “thermonuclear device” to chill lawsuits brought against the companies, interfering with their
First Amendment rights.
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“As one court put it, if litigation activities could serve as a basis for a RICO claim, almost any
lawsuit could spawn a retaliatory action, which would inundate the federal courts with
procedurally complex RICO pleadings, engender wasteful satellite litigation, and spawn ad
infinitum litigation with each party claiming that the opponent's previous action was malicious
and meritless,” Knight Laws motion says, according to CarComplaints.com.
The motion goes on to say that Ford's RICO claims “fall on their face,” since the law firms have a
record of wins against Ford in court.
Ford also fails to adequately allege racketeering activity to the specificity needed under the law
to constitute a RICO, according to the motion.
Ford says it has evidence of lemon-law firm wrongdoing
While the law firms say Ford is being vindictive, Ford says it has evidence of malfeasance.
Ford says it has identified hundreds of cases in which at least $100 million of legal bills were fraudulently charged to manufacturers by lemon-law lawyers.
In one instance, one attorney billed as many as 57.5 hours on November 30 across multiple cases. That same lawyer billed more than 20 hours on at least 66 occasions.
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Knight Law denied Ford's allegations in a statement to TheStreet, calling them ridiculous.
“This action by Ford is nothing more than a thinly veiled attempt to silence firms who would dare to hold them responsible and seek justice for consumers,” said Knight Law Group spokesperson Terry Fahn.
Ford says these law firms are taking advantage of a law meant to protect consumers to fraudulently enrich themselves.
“Defendants abused their positions of trust as members of the Bar to deceive the courts,” said Daniel Saunders, the Ford attorney who filed the lawsuit. Ford says that at least half of the legal fee applications on behalf of vehicle buyers over the last decade were inflated.
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