Ford loses $300 million fraud case in California

Thanks to the California ballot proposition system, the state has some of the strictest consumer protection laws in the country.

The ballot initiative process allows Californians to propose laws and constitutional amendments without the support of the governor or legislature.

All someone has to do to get a law passed in California is:

• Write out the text of the law

• Submit the initiative draft to the Attorney General

• Pay $2,000 filing fee (which is refunded if the measure qualifies for an election ballot)

• Collect signatures from registered voters

If the ballot proposition receives signatures equal to at least 8% of the votes cast for governor in the previous election and it passes the Secretary of State's scrutiny of the red tape, it is eligible to be placed on the ballot for a statewide vote.

California passed the Song-Beverly Consumer Warranty Act in 1970.

California's lemon laws protect consumers, manufacturers foot the bill

Song-Beverly is one of the strongest consumer protection laws in the country. It 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.

Ford’s total U.S. sales by year:

• 2024: 2.08 million vehicles sold, +4.2%

• 2023: 1.99 million vehicles sold, +7.1%

• 2022: 1.77 million vehicles sold, -2.2%

• 2021: 1.9 million vehicles sold, -6.8% Source: Best-Selling Cars

Related: Defense accuses Ford of retaliation in messy RICO lawsuit

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 loses RICO lawsuit brought 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.

This week, the judge dismissed Ford's case, ruling that Knight Law Group and its codefendants were protected by a legal doctrine known as Noerr-Pennington immunity, which shields petitioners from antitrust claims when they lobby the government, even if their advocacy promotes government action that would reduce competition.

Related: Ford files shocking $300 million RICO lawsuit

U.S. District Judge Michelle Williams Court also dismissed Ford's RICO claim in the case Ford Motor Co v. Knight Law Group LLP, U.S. District Court for the Central District of California, No. 25-04550.

"Knight Law will never be deterred by attempts to chill its advocacy, and it will now go back to doing what it does best: protecting the American people," said Neal Katyal, the defendant's lawyer, according to Reuters.

Meanwhile, according to the news service, Douglass Lampe, Ford's counsel, said the company was disappointed in the ruling but noted that the court "did not find that Ford was wrong on the facts or that the lemon law lawyers did not commit fraud."

Ford says it had evidence of wrongdoing

The defendants filed a motion to dismiss the case on the grounds that Ford was using this case as a “thermonuclear device” to chill lawsuits brought against the companies, interfering with their First Amendment rights.

“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,” Knight Law Group spokesperson Terry Fahn told TheStreet in August.

But Ford claimed it had clear evidence of malfeasance.

The motor company said it 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.

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.

Related: Ford suffers another major F-150 setback

This story was originally published by TheStreet on Nov 27, 2025, where it first appeared in the Automotive section. Add TheStreet as a Preferred Source by clicking here.