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September 16, 2025 1\n\n\n 1 UNITED STATES DISTRICT COURT\n EASTERN DISTRICT OF MICHIGAN\n 2 SOUTHERN DIVISION\n\n 3 ALBERT GUZMAN,\n\n 4 Plaintiff,\n\n 5 -v- Case No. 24-12080\n\n 6 FORD MOTOR COMPANY, et al.,\n\n 7 Defendant.\n ____________________________________/\n 8\n MOTION HEARING\n 9\n BEFORE THE HONORABLE LINDA V. PARKER\n 10 United States District Judge\n Theodore Levin United States Courthouse\n 11 231 West Lafayette Boulevard\n Detroit, Michigan\n 12 September 16, 2025\n\n 13 APPEARANCES:\n\n 14 FOR THE Nicholas J. Siciliano\n DEFENDANTS: Latham & Watkins LLP\n 15 330 North Wabash Avenue\n Suite 2800\n 16 Chicago, IL 60611\n\n 17 Roger P. Meyers\n Bush Seyferth PLLC\n 18 100 W. Big Beaver Road\n Suite 400\n 19 Troy, MI 48084\n\n 20 FOR THE MOVANTS: Francis P. McConville\n Labaton Keller Sucharow LLP\n 21 140 Broadway\n New York, NY 10005\n 22\n Adam M. Apton\n 23 Levi & Korsinsky, LLP\n 33 Whitehall Street, 27th Floor\n 24 New York, NY 10004\n\n 25\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1054 Filed 09/17/25 Page 2 of 51\n MOTION HEARING - September 16, 2025 2\n\n\n 1 APPEARANCES David Shea\n CONTINUED... Shea Law Firm PLLC\n 2 26100 American Dr.\n 2nd Floor\n 3 Southfield, MI 48034\n\n 4 Michael Albert\n Robbins Geller Rudman & Dowd LLP\n 5 655 West Broadway\n Suite 1900\n 6 San Diego, CA 92101\n\n 7 ALSO PRESENT: Matthew I. Henzi, Asher Kelly\n Ken Dolitsky, Robbins, Geller\n 8 Tom Michaud, VanOverbeke Michaud & Timmony\n Samuel Pigler, Local 710 Pension Fund Rep\n 9\n\n 10\n\n 11\n\n 12\n\n 13\n\n 14\n\n 15\n\n 16\n\n 17\n\n 18\n\n 19\n\n 20\n\n 21\n\n 22\n\n 23 To Obtain a Certified Transcript Contact:\n Shacara V. Mapp, CSR-9305, RMR, FCRR, CRR\n 24 www.transcriptorders.com\n\n 25\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1055 Filed 09/17/25 Page 3 of 51\n MOTION HEARING - September 16, 2025 3\n\n\n 1 TABLE OF CONTENTS\n\n 2 MATTER PAGE\n\n 3 MOTION HEARING............................................\n\n 4 THE COURT'S INITIAL QUESTIONS............................. 6\n Counsel's Response\n 5 By Mr. Apton:............................................. 7\n By Mr. McConville:........................................ 16\n 6 By Mr. Albert:............................................ 29\n Counsel's Follow-up Response\n 7 By Mr. McConville:........................................ 41\n By Mr. Apton:............................................. 45\n 8 By Mr. Siciliano:......................................... 47\n\n 9 WITNESSES:\n\n 10 None......................................................\n\n 11 EXHIBITS RECEIVED:\n\n 12 None Offered..............................................\n\n 13\n\n 14\n\n 15\n\n 16\n\n 17 Certificate of Reporter................................... 51\n\n 18\n\n 19\n\n 20\n\n 21\n\n 22\n\n 23\n\n 24\n\n 25\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1056 Filed 09/17/25 Page 4 of 51\n MOTION HEARING - September 16, 2025 4\n\n\n 1 Detroit, Michigan\n\n 2 September 16, 2025\n\n 3 10:04 a.m.\n\n 4 * * *\n\n 5 LAW CLERK: All rise.\n\n 6 The United States District Court for the Eastern\n\n 7 District of Michigan is now in session. The Honorable Linda\n\n 8 V. Parker presiding.\n\n 9 The Court calls Guzman versus Ford Motor Company, et\n\n 10 al, Civil Case Number 24-12080, time set for a motion hearing.\n\n 11 Counsel, if you'll state your name for the record,\n\n 12 beginning with the movants.\n\n 13 MR. McCONVILLE: Good morning, Your Honor. Francis\n\n 14 P. McConville on behalf of Teamsters Local 710, --\n\n 15 THE COURT: Thank you.\n\n 16 MR. McCONVILLE: -- of the law firm, Labaton, Keller,\n\n 17 and Sucharow.\n\n 18 THE COURT: Okay. I want you to say your name once\n\n 19 more for me.\n\n 20 MR. McCONVILLE: Francis McConville.\n\n 21 THE COURT: Thank you. Good.\n\n 22 MR. MEYERS: Good morning. My name is Michael Albert\n\n 23 from the Robbins, Geller, Rudman, and Dowd Law Firm, and we\n\n 24 represent Clark Crippen.\n\n 25 THE COURT: Good. Mr. Crippen's counsel. Okay.\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1057 Filed 09/17/25 Page 5 of 51\n MOTION HEARING - September 16, 2025 5\n\n\n 1 MR. APTON: Good morning, Your Honor. Adam Apton\n\n 2 from Levi and Korsinsky for Mr. Ronald Ferrante.\n\n 3 MR. SHEA: Good morning, Your Honor. David Shea on\n\n 4 behalf of Mr. Ferrante.\n\n 5 THE COURT: Okay. All right.\n\n 6 And, here?\n\n 7 MR. SICILIANO: Nick Siciliano from Latham and\n\n 8 Watkins on behalf of the defendants.\n\n 9 THE COURT: Thank you.\n\n 10 Sir?\n\n 11 MR. MEYERS: Good morning, Your Honor. Roger Meyers\n\n 12 from the Seyferth Law Firm, also on behalf of the defendants.\n\n 13 THE COURT: All right. Thank you. You may be\n\n 14 seated.\n\n 15 And gentlemen who are seated behind you, are these\n\n 16 clients? Tell me who it is. Is this Mr. Ferrante, Mr.\n\n 17 Crippen, someone from Teamsters? Tell me who this is.\n\n 18 MR. McCONVILLE: Yes, Your Honor, with me is Matthew\n\n 19 Henzi, who is a member of the Asher Kelly Firm, local counsel.\n\n 20 And then, I also have Mr. Sam Pilger who -- he is a board\n\n 21 member on the Local 710 Pension System.\n\n 22 THE COURT: Okay. Anyone else?\n\n 23 Okay. Be seated, everyone. Thank you.\n\n 24 There was someone else in the back? Who else? I'm\n\n 25 sorry.\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1058 Filed 09/17/25 Page 6 of 51\n MOTION HEARING - September 16, 2025 6\n\n\n 1 MR. ALBERT: Yes, Your Honor. I'm sorry. I have my\n\n 2 colleague, Ken Dolitsky, from the Robbins, Geller Law Firm,\n\n 3 and Tom Michaud from the VMT Law Firm who is our local\n\n 4 counsel.\n\n 5 THE COURT: Excellent. All right.\n\n 6 So I have read everything that you all have put\n\n 7 before me. Quite a bit, but it's all good. I've got it, and\n\n 8 I have questions.\n\n 9 And so, I would like to start off with my questions.\n\n 10 And then, I'm going to allow you to close, if you would, you\n\n 11 know, if a part I have covered has not been brought out in\n\n 12 terms of my questions.\n\n 13 I'm going to begin with counsel for Mr. Ferrante.\n\n 14 Who is that? Thank you.\n\n 15 MR. APTON: Should I approach the lectern, Your\n\n 16 Honor?\n\n 17 THE COURT: You can.\n\n 18 MR. APTON: Okay.\n\n 19 THE COURT: You can.\n\n 20 THE COURT'S INITIAL QUESTIONS\n\n 21 THE COURT: All right. How are you doing this\n\n 22 morning?\n\n 23 MR. APTON: Very good. And, yourself?\n\n 24 THE COURT: Excellent. I'm doing well.\n\n 25 I want to just start off with what I perceived as\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1059 Filed 09/17/25 Page 7 of 51\n MOTION HEARING - September 16, 2025 7\n\n\n 1 your view, potentially, that the expanded class period, the\n\n 2 Sklodowski class period, if you will, you believe that -- and\n\n 3 I know that Mr. Sklodowski's counsel is not present today.\n\n 4 But you believe from what you've filed, that Sklodowski's\n\n 5 complaint was filed for a nefarious reason. We first had\n\n 6 Guzman, we had the initial class period, and then you seemed\n\n 7 to imply -- and maybe not \"nefarious\" is the word you would\n\n 8 use, -- but I think you do have -- take objection to the fact\n\n 9 that it was filed. And my question -- I mean, believing it\n\n 10 was filed to make way for Mr. Crippen to, perhaps, have the\n\n 11 largest financial interest. I note that Mr. Crippen is not\n\n 12 represented by the same attorneys from Sklodowski.\n\n 13 So my question, do you believe that Crippen and his\n\n 14 counsel were colluding with counsel from Guzman and\n\n 15 Sklodowski? And if you do, can you tell me the basis?\n\n 16 If that's not applicable at all here, what are you\n\n 17 really saying?\n\n 18 COUNSEL'S RESPONSE\n\n 19 MR. APTON: I wouldn't say colluding, Your Honor.\n\n 20 THE COURT: Okay.\n\n 21 MR. APTON: A strong word.\n\n 22 THE COURT: It is.\n\n 23 MR. APTON: Nefarious reasons, also --\n\n 24 THE COURT: A little too strong?\n\n 25 MR. APTON: -- a bit strong.\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1060 Filed 09/17/25 Page 8 of 51\n MOTION HEARING - September 16, 2025 8\n\n\n 1 I mean, I know counsel, for most of the folks in\n\n 2 here, and we do have good working relationships.\n\n 3 THE COURT: Okay. Good.\n\n 4 MR. APTON: I do think that the class period in this\n\n 5 Sklodowski action, though, doesn't make sense under the\n\n 6 allegations certainly before the board. If this case is about\n\n 7 Ford Blue, it would not make sense if there was a\n\n 8 misrepresentation about Ford Blue before Ford Blue came into\n\n 9 existence. But as Your Honor knows, in the reply papers,\n\n 10 we've made clear it doesn't make sense.\n\n 11 THE COURT: Okay.\n\n 12 MR. APTON: Mr. Ferrante has the largest financial\n\n 13 interest in the lot, under either of the class periods. And\n\n 14 at that point, we should be looking at whether or not any of\n\n 15 the other movants have enough proof, evidence to rebut the\n\n 16 presumption in Mr. Ferrante's favor.\n\n 17 THE COURT: Okay. When you talk about the Ford Blue\n\n 18 segment, so to speak -- is that how you refer to it?\n\n 19 MR. APTON: Yes, Your Honor.\n\n 20 THE COURT: So wasn't there -- I thought there was\n\n 21 information to suggest that it wasn't just limited -- that\n\n 22 that issue was not just limited to the initial class period.\n\n 23 The concerns about warranties and so forth were -- existed\n\n 24 well before the initial class period. You know, sometime --\n\n 25 well, it included, I should say, the 2021 period.\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1061 Filed 09/17/25 Page 9 of 51\n MOTION HEARING - September 16, 2025 9\n\n\n 1 MR. APTON: Sure.\n\n 2 THE COURT: Do you dispute that, sir?\n\n 3 MR. APTON: So, Your Honor, the -- I guess this issue\n\n 4 turns on the corrective disclosure at the end of the class\n\n 5 period, --\n\n 6 THE COURT: Okay.\n\n 7 MR. APTON: -- in July of 2024. At that point in\n\n 8 time, Ford comes out and says we have higher warranty\n\n 9 reserves, Ford, Ford Blue. It ties to Ford Blue. And so,\n\n 10 that is the basis for our understanding of the allegations and\n\n 11 our argument as to whether the Sklodowski class period should\n\n 12 or should not be credited at this stage. It may very well be,\n\n 13 Your Honor, that facts come to light during the course of the\n\n 14 case where, yeah, the class period should not only encompass\n\n 15 Sklodowski, but even events prior to that. But at this point\n\n 16 in time, we look at what's on file before the Court, and\n\n 17 that's the way I look at the allegations.\n\n 18 THE COURT: Okay.\n\n 19 I notice that just in terms of your opportunity to\n\n 20 file a reply to the other filings, that you didn't really\n\n 21 address the other movants' argument, that your client's\n\n 22 failure to disclose securities transactions for the Sklodowski\n\n 23 proposed class period rendered his motion untimely.\n\n 24 What do you have to say about it now, because I\n\n 25 didn't see you responding directly to it? Did I miss\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1062 Filed 09/17/25 Page 10 of 51\n MOTION HEARING - September 16, 2025 10\n\n\n 1 something?\n\n 2 MR. APTON: Yes, Your Honor.\n\n 3 Well, I shouldn't say that.\n\n 4 THE COURT: Okay.\n\n 5 MR. APTON: Respectfully, I -- the reply brief, as\n\n 6 Your Honor knows, is limited to seven pages, --\n\n 7 THE COURT: Okay.\n\n 8 MR. APTON: -- so we have to be very careful with the\n\n 9 number of words and what we say. I do address that. There\n\n 10 was no -- on pages four and five, and six of the reply, page\n\n 11 IDs 1041 to 1043, --\n\n 12 THE COURT: So okay.\n\n 13 MR. APTON: -- we do address this notion that\n\n 14 Mr. Ferrante intentionally concealed transactions from the\n\n 15 Court; which is false. We voluntarily provided those\n\n 16 additional transactions in a supplemental declaration with our\n\n 17 opposition. That was at ECF number 39-4. And with those\n\n 18 additional transactions, Mr. Ferrante's recoverable loss\n\n 19 actually increases. It's not as if these additional\n\n 20 transactions somehow eliminated his -- his financial interest\n\n 21 in the case, or otherwise rendered him unfit to pursue\n\n 22 recovery. It actually made him more --\n\n 23 THE COURT: A little bit bolstered?\n\n 24 MR. APTON: Yeah, it did, Your Honor.\n\n 25 And so, you know, look, I understand that in this\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1063 Filed 09/17/25 Page 11 of 51\n MOTION HEARING - September 16, 2025 11\n\n\n 1 situation when one movant, Mr. Ferrante, has the largest\n\n 2 financial interest in the case and appears to be adequate and\n\n 3 typical, and the presumption is vested in his favor, the other\n\n 4 movants have to come forward with proof, and so they try to\n\n 5 create arguments.\n\n 6 THE COURT: They take issue with the timeliness of\n\n 7 his disclosure. What do you have to say about that?\n\n 8 MR. APTON: I would have to say that the additional\n\n 9 transactions provided in the supplemental declaration do not\n\n 10 render him inadequate, or preclude him from serving as lead\n\n 11 plaintiff.\n\n 12 Mr. Ferrante's certification complied with the PSLRA,\n\n 13 he provided the transactions in the complaint that was on\n\n 14 file. And we cite the Ultimasa case for that point, from\n\n 15 2019, in New York. Even still, there are a number of cases\n\n 16 from cross the country where providing additional transactions\n\n 17 after the 60-day deadline does not render a movant incapable\n\n 18 or inadequate, or unfit to serve as lead plaintiff.\n\n 19 Again, these are not additional transactions that\n\n 20 conflicted with his interest or the interest of the class, at\n\n 21 all. It made his loss greater. And so, the cases where you\n\n 22 do see this becoming a problem is where additional\n\n 23 transactions come out during the course of the briefing that\n\n 24 decrease a movant's loss, --\n\n 25 THE COURT: Okay.\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1064 Filed 09/17/25 Page 12 of 51\n MOTION HEARING - September 16, 2025 12\n\n\n 1 MR. APTON: -- or somehow show that he was trying to\n\n 2 conceal something intentionally. And, that's not the case\n\n 3 here.\n\n 4 THE COURT: Well, I mean clearly, they're going to\n\n 5 the adequacy of -- under Rule 23, that the plaint -- that your\n\n 6 client, as being lead plaintiff, is not capable of taking it\n\n 7 on. And the Teamsters, actually, specifically talks about\n\n 8 there was gross negligence involved in not having, you know,\n\n 9 included the information that we've been discussing.\n\n 10 How do you respond to that?\n\n 11 MR. APTON: I would say that is a gross\n\n 12 mischaracterization of what happened.\n\n 13 THE COURT: Okay.\n\n 14 MR. APTON: We have Mr. Ferrante who provided his\n\n 15 transactions for the -- the Guzman class period. Not a single\n\n 16 transaction was omitted. And none of the transactions was\n\n 17 provided in error. It's the additional class period from the\n\n 18 Sklodowski case filed two weeks before the 60-day deadline\n\n 19 that arguably created a need to disclose more, which we did,\n\n 20 in our opposition. We did not hold anything back.\n\n 21 THE COURT: Okay.\n\n 22 You have -- obviously, I know -- I mean, you're\n\n 23 opposing the -- oppose the appointment of Mr. Crippen as lead\n\n 24 plaintiff. Are there any other defenses -- I mean, you spoke\n\n 25 specifically just this morning about the Ford Blue segment and\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1065 Filed 09/17/25 Page 13 of 51\n MOTION HEARING - September 16, 2025 13\n\n\n 1 how it kind of fits in there. Are there any other defenses --\n\n 2 and you believe, from what you've filed, that that puts him in\n\n 3 a position where the fact that he -- let's see.\n\n 4 I'm talking about the typicality --\n\n 5 MR. APTON: Yes.\n\n 6 THE COURT: -- requirement now. And you say that you\n\n 7 feel that that's an issue for Mr. Crippen. Can you expand on\n\n 8 that for me?\n\n 9 MR. APTON: Sure.\n\n 10 So if there's a difference, assuming there's a\n\n 11 difference between typicality and adequacy, --\n\n 12 THE COURT: I think there is. You don't see it?\n\n 13 MR. APTON: No, I do, Your Honor.\n\n 14 THE COURT: Okay.\n\n 15 MR. APTON: But I would characterize it as more of an\n\n 16 adequacy issue, because in terms of typicality, Mr. Crippen\n\n 17 certainly bought during a class period, the expanded class\n\n 18 period. He bought on the open market. He invested a\n\n 19 significant amount in Ford, so I would say he's typical of the\n\n 20 class.\n\n 21 The adequacy issue that we've raised in our briefing\n\n 22 is, well, if the Sklodowski class period is not legitimate,\n\n 23 for lack of a better word, --\n\n 24 THE COURT: Okay.\n\n 25 MR. APTON: -- then Mr. Crippen potentially has a\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1066 Filed 09/17/25 Page 14 of 51\n MOTION HEARING - September 16, 2025 14\n\n\n 1 problem. But if we're going to go with the expand class\n\n 2 period, the broadest class period possible, then that's not an\n\n 3 issue that is dealt with at this stage of the proceedings.\n\n 4 It's only an issue if Your Honor thinks that on the face of\n\n 5 the pleadings, there's enough to say, yeah, we should not look\n\n 6 at the Sklodowski class period, we should focus only on\n\n 7 Guzman. But otherwise --\n\n 8 THE COURT: Do you think --\n\n 9 MR. APTON: Oh.\n\n 10 THE COURT: -- there are any other defenses that only\n\n 11 Crippen -- that are unique to Crippen, or to the punitive\n\n 12 class members who only purchased securities before April of\n\n 13 2022? What other defenses? Am I missing anything in terms of\n\n 14 --\n\n 15 MR. APTON: No, Your Honor.\n\n 16 And, Your Honor, if Mr. Crippen had a larger\n\n 17 financial interest in the case than Mr. Ferrante, I probably\n\n 18 wouldn't be here because there's no point in trying to rebut\n\n 19 that presumption that would be vested in Mr. Crippen at this\n\n 20 -- at this stage of the case.\n\n 21 I understand Teamsters has an argument about it being\n\n 22 an institution, but that's not enough to overcome that\n\n 23 presumption. There's no special provisions for institutions.\n\n 24 Notwithstanding the PSLRA's preference for institutional\n\n 25 investors, if an institution does not have larger financial\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1067 Filed 09/17/25 Page 15 of 51\n MOTION HEARING - September 16, 2025 15\n\n\n 1 interest, that's it. And in this case, it's hard because the\n\n 2 Teamsters Fund is a large fund. The amount of money they\n\n 3 lost, though, percentage wise, is minuscule compared to\n\n 4 Mr. Ferrante or Mr. Crippen. So if anyone's going to be more\n\n 5 interested in pursuing this case to the fullest extent of the\n\n 6 law, it's going to be those retail, those individual investors\n\n 7 who really need that money back, not the Teamsters Fund that\n\n 8 effectively lost what amounts to what, a rounding error.\n\n 9 THE COURT: Now, I want to go back to what we talked\n\n 10 about earlier with Teamsters and what their argument is.\n\n 11 MR. APTON: Sure.\n\n 12 THE COURT: Their argument specifically is that your\n\n 13 client didn't disclose based upon the Sklodowski complaint.\n\n 14 What is your response to that?\n\n 15 MR. APTON: My response to that is that the\n\n 16 Sklodowski complaint was filed two weeks before the deadline.\n\n 17 Notices for the expanded deadline were not prevalent in the\n\n 18 marketplace. There was no intent to conceal any transactions.\n\n 19 The transactions were voluntarily provided once the issue was\n\n 20 -- was raised by the competing movants. And there was no\n\n 21 problem, so to speak, created by the additional transactions.\n\n 22 So again, they did not eliminate Mr. Ferrante's loss,\n\n 23 or even lessen it, but increased it. Mr. Ferrante would have\n\n 24 no motive to withhold transactions. And, there was no error.\n\n 25 Again, the cases cited by the Teamsters Fund all\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1068 Filed 09/17/25 Page 16 of 51\n MOTION HEARING - September 16, 2025 16\n\n\n 1 involve cases where the certifications contain errors, serious\n\n 2 errors. There were no errors in Mr. Ferrante's certification.\n\n 3 It was completely in compliance with the PSLRA, providing all\n\n 4 of his transaction data for the class period. And when the\n\n 5 issue of the expanded class period was raised, of course he\n\n 6 provided the transactions. Why wouldn't he? He has more to\n\n 7 gain by pursuing the broader class period.\n\n 8 THE COURT: I'm going to talk to you in a little bit.\n\n 9 You can have a seat for now.\n\n 10 MR. APTON: Very good. Thank you, Your Honor.\n\n 11 THE COURT: I want to talk to Teamsters' counsel.\n\n 12 I'm going to give you a chance to respond to what's\n\n 13 been said in terms of -- I don't want to put words in your\n\n 14 mouth, so you give me your position on the adequacy of\n\n 15 Mr. Ferrante.\n\n 16 MR. McCONVILLE: Thank you, Your Honor.\n\n 17 THE COURT: And then, I'm going to let you -- we're\n\n 18 going to talk specifically about --\n\n 19 MR. McCONVILLE: Sure. I look forward to it again.\n\n 20 Frank McConville from Labaton, Keller, Sucharow on\n\n 21 behalf of Local 710. So there were a lot of reasons given for\n\n 22 why the initial transactions for Mr. Ferrante were not\n\n 23 included in its initial motion, but I think Your Honor hit it\n\n 24 right on the head, it was gross negligence. Because the\n\n 25 complaint that was filed that expanded --\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1069 Filed 09/17/25 Page 17 of 51\n MOTION HEARING - September 16, 2025 17\n\n\n 1 THE COURT: You said that, I didn't say it.\n\n 2 Okay. Go ahead.\n\n 3 MR. McCONVILLE: No, you repeated the words that were\n\n 4 in our papers.\n\n 5 THE COURT: I did. I did.\n\n 6 MR. McCONVILLE: And the reality is, the complaint\n\n 7 that was filed that expanded the class period is part of the\n\n 8 case now. That class period controls. That case was filed on\n\n 9 September 23rd of 2024. Mr. Ferrante signed his certification\n\n 10 for the initial class period on September 9, 2024. So query\n\n 11 whether Mr. Ferrante was even aware of the expanded class\n\n 12 period. Because if the position that Mr. Ferrante and his\n\n 13 counsel take is that the expanded class period is frivolous or\n\n 14 implausible, or shouldn't control because something nefarious\n\n 15 was happening here, well then, that should have been discussed\n\n 16 in the opening brief. In which, he had two weeks to prepare\n\n 17 to say, look, the class period that was initially filed is the\n\n 18 most plausible and controlling class period, notwithstanding\n\n 19 this additional class period. We don't think it controls, but\n\n 20 here are our transactions.\n\n 21 And the reason why I think that this is the case, as\n\n 22 counsel for Mr. Ferrante just said several times, his losses\n\n 23 go up. Why wouldn't he include transactions in a period where\n\n 24 his losses actually go up? It's to his benefit.\n\n 25 So, no, there's no --\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1070 Filed 09/17/25 Page 18 of 51\n MOTION HEARING - September 16, 2025 18\n\n\n 1 THE COURT: So what do you think the reason -- what\n\n 2 rationale do you believe?\n\n 3 MR. McCONVILLE: I don't think Mr. Ferrante was aware\n\n 4 of the longer class period.\n\n 5 THE COURT: Okay.\n\n 6 MR. McCONVILLE: Which again, goes to his adequacy.\n\n 7 And let me just point Your Honor to a new case that\n\n 8 came out earlier in 2025, where the same exact issue happened.\n\n 9 And, in fact, it was an institutional investor that failed to\n\n 10 disclose transactions in the initial class period.\n\n 11 THE COURT: Okay.\n\n 12 MR. McCONVILLE: The case is Salem versus Methode\n\n 13 Electronics it's 24-cv-07696. It's in the Northern District\n\n 14 of Illinois, and it's in front of Judge Ellis.\n\n 15 And the Court explained there was a Michigan fund\n\n 16 that failed to identify and correct their certification for\n\n 17 the controlling class period. And the Court said that,\n\n 18 enough, is evidence of inadequacy, and I will not appoint you.\n\n 19 And the Court appointed a movant with a smaller financial\n\n 20 interest, which also happened to be an institutional investor.\n\n 21 THE COURT: Okay.\n\n 22 MR. McCONVILLE: But our position on the\n\n 23 certification as we lay in -- lay out in our papers is one of\n\n 24 two things; the first being, we are -- Mr. Ferrante is\n\n 25 advocating on behalf of a shorter class period, which puts him\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1071 Filed 09/17/25 Page 19 of 51\n MOTION HEARING - September 16, 2025 19\n\n\n 1 in a position that we believe is antagonistic to the full\n\n 2 interest of the class. We think the more likely option, as\n\n 3 we've been discussing this morning, is that it's just a plain\n\n 4 error. He didn't know of the longer class period. He didn't\n\n 5 revise the certification after the new class period was filed.\n\n 6 And, he didn't include it in his initial motion. So you've\n\n 7 got to question: If Mr. Ferrante doesn't know the controlling\n\n 8 class period, how's he going to adequate -- adequately lead\n\n 9 this litigation?\n\n 10 And the point about the percentage of loss, that has\n\n 11 been widely rejected throughout the jurisprudence of PSLRA of\n\n 12 the lead plaintiff. If the metric for a financial interest\n\n 13 would be what percentage of a portfolio, you know, the loss\n\n 14 included, an institutional investor would never be appointed\n\n 15 because their portfolios are so large.\n\n 16 And on that point, I will point out that Mr. Sam\n\n 17 Pilger from Local 710 is at the hearing today, and neither of\n\n 18 the two individuals. So, you know, if the argument is if this\n\n 19 means a lot to them, why aren't they here?\n\n 20 THE COURT: Okay. All right.\n\n 21 You have asked me to look at the first two Lax\n\n 22 factors, which deal with the number of shares purchased during\n\n 23 the class period, as well as the number of net shares\n\n 24 purchased during the class period, in order for me to assess\n\n 25 who has the largest financial interest here. However, you\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1072 Filed 09/17/25 Page 20 of 51\n MOTION HEARING - September 16, 2025 20\n\n\n 1 also -- I glean from your -- really from your filings, is that\n\n 2 you're urging me to focus on only that second factor, the net\n\n 3 shares. Why is that?\n\n 4 MR. McCONVILLE: Right.\n\n 5 So in normal instances, the four Lax factors: --\n\n 6 THE COURT: Yep.\n\n 7 MR. APTON: -- total shares, net shares, net\n\n 8 expenditures, and losses, --\n\n 9 THE COURT: Right.\n\n 10 MR. McCONVILLE: -- in normal instances, the losses\n\n 11 will encapsulate the first three factors. And so, you look at\n\n 12 the loss because it's the most -- it's the truest indicator of\n\n 13 a financial interest, of the potential recovery in the class,\n\n 14 right? That's what the PSLRA is looking for.\n\n 15 In this specific case, we think that net shares is\n\n 16 the most important metric.\n\n 17 THE COURT: And I got that --\n\n 18 MR. McCONVILLE: Sure.\n\n 19 THE COURT: -- from what you were saying.\n\n 20 MR. McCONVILLE: And I'll explain why.\n\n 21 THE COURT: Yep. Yes, please.\n\n 22 MR. McCONVILLE: The pleadings before the Court,\n\n 23 there are two complaints now, both of them include only one\n\n 24 disclosure. And that one disclosure is from July of 2024.\n\n 25 There are no corrective disclosures throughout the class\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1073 Filed 09/17/25 Page 21 of 51\n MOTION HEARING - September 16, 2025 21\n\n\n 1 period, okay? Which means -- and this is based on any of the\n\n 2 cases that we cite in our papers, ECF 38, 11 to 14. When\n\n 3 there is one disclosure, courts have looked at that and\n\n 4 determined there's a constant fraud premium throughout the\n\n 5 class period.\n\n 6 THE COURT: Right.\n\n 7 MR. McCONVILLE: Now that means that each share, no\n\n 8 matter what price you buy the stock at, each share is damaged\n\n 9 that exact same amount, that amount that comes out at the end\n\n 10 of the class period. And when you combine -- so that alone --\n\n 11 we think that fact pattern alone would lend the Court to look\n\n 12 very closely at the net shares competent of the Lax factors.\n\n 13 Now, when you combine that with the way that the Ford\n\n 14 stock traded during this class period, --\n\n 15 THE COURT: Yep.\n\n 16 MR. McCONVILLE: -- and the way that Mr. Crippen --\n\n 17 because really, the net shares discussion for us is really\n\n 18 with Mr. Ferrante out with adequacy issues is our position, --\n\n 19 THE COURT: I know.\n\n 20 MR. McCONVILLE: -- would be Mr. Crippen. When you\n\n 21 look at his purchasing pattern, he buys, basically, his entire\n\n 22 position at the class period high.\n\n 23 And what do I mean by that? He bought 65,000 plus\n\n 24 shares of his 67,000 shares at $24 on January 13th of 2022.\n\n 25 The class period high for the Ford stock was the next day,\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1074 Filed 09/17/25 Page 22 of 51\n MOTION HEARING - September 16, 2025 22\n\n\n 1 January 14th of 2022, at $25. The stock, thereafter,\n\n 2 throughout the course of the class period, trades downwards\n\n 3 from that $24, where Mr. Crippen purchases, all the way down\n\n 4 to is 13.67. And there's no allegation that that 11-point\n\n 5 delta was the result of any disclosure of fraud. That is just\n\n 6 normal marketing dynamics. The stock trades up, it trades\n\n 7 down. Ford is a stock that, you know, trades at various\n\n 8 levels.\n\n 9 And so, what you need to do really closely is look at\n\n 10 his LIFO loss. We don't dispute the calculation. The\n\n 11 calculation and the math makes sense. But what we say is that\n\n 12 entire difference between that 24 and that 13 needs to be set\n\n 13 aside because it's for reasons entirely unrelated to the\n\n 14 fraud.\n\n 15 And this is pursuant to the Dura Pharmaceuticals case\n\n 16 from the Supreme Court. In order to demonstrate actual\n\n 17 damages, which is what the recovery in this case is looking\n\n 18 for, you need to show that the purchase of their shares was\n\n 19 held over a corrective disclosure.\n\n 20 And there's authority on this point, Your Honor. The\n\n 21 case Turpel v. Canopy Growth, 704 F. Supp. 3d 456, where the\n\n 22 Court looks at the exact same fact pattern: Purchases at the\n\n 23 class period high, stock trade is all the way down, holds the\n\n 24 shares, and then the stock goes down. The difference, the\n\n 25 Court said you have to put that aside because it's not\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1075 Filed 09/17/25 Page 23 of 51\n MOTION HEARING - September 16, 2025 23\n\n\n 1 recoverable under the federal securities laws.\n\n 2 So based on -- on these sort of very unique\n\n 3 circumstances, the single disclosure, Crippen's trading\n\n 4 profile, and the way Ford stock traded, we believe that the\n\n 5 relief sought by the class, which is the financial interest\n\n 6 competent of the PSLRA, is best exemplified by the net shares.\n\n 7 That's our position.\n\n 8 THE COURT: Yep.\n\n 9 MR. McCONVILLE: And again, this is not a new\n\n 10 concept.\n\n 11 Your Honor, I will read the Pio case, which I was\n\n 12 counsel for the losing movant in that case, so I'm very\n\n 13 familiar with that opinion, where the Court says, retained\n\n 14 shares more closely approximates recoverable losses, whereas\n\n 15 here, the alleged fraud was only disclosed at the end of the\n\n 16 class period and, therefore, variations and share price during\n\n 17 the class period are the result of their factors. Same\n\n 18 situation here.\n\n 19 I'll cite another case, Markett v. Xoma, 2016 West\n\n 20 Law 2902286. This is at pages five and six, where the Court\n\n 21 says: In single disclosure cases, the retained shares or the\n\n 22 net shares is more accurate than LIFO because it excludes\n\n 23 losses incurred during the class period, that are likely\n\n 24 attributable to normal market fluctuations rather than broad.\n\n 25 That's what we have here.\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1076 Filed 09/17/25 Page 24 of 51\n MOTION HEARING - September 16, 2025 24\n\n\n 1 So that is -- and I apologize if I'm being\n\n 2 longwinded.\n\n 3 THE COURT: No.\n\n 4 MR. McCONVILLE: That is sort of the explanation for\n\n 5 why we think the net shares component is really the\n\n 6 dispositive one for determining --\n\n 7 THE COURT: And I'm going to be asking counsel to\n\n 8 respond to that, too, --\n\n 9 MR. McCONVILLE: Sure.\n\n 10 THE COURT: -- so keep that in mind. I've just made\n\n 11 a note of that, so go ahead.\n\n 12 MR. McCONVILLE: No problem.\n\n 13 We think the net shares is the dispositive one.\n\n 14 THE COURT: Okay. Yep.\n\n 15 Let me ask you, you said in your response brief that\n\n 16 Crippen -- Mr. Crippen, as well as Mr. Ferrante, their -- as\n\n 17 well as their initial motion demonstrates that they're unknown\n\n 18 individuals who lack sophistication to serve as lead\n\n 19 plaintiff. You've identified in Mr. Ferrante's filing, which\n\n 20 you believe -- you've identified the defects in his pleading,\n\n 21 you've said that before, as to why that supports your\n\n 22 position. Aside from Mr. Crippen's asserted lack of\n\n 23 experience with complex and or securities class actions, what\n\n 24 about his initial motion do you feel shows his inadequacy to\n\n 25 serve as lead plaintiff?\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1077 Filed 09/17/25 Page 25 of 51\n MOTION HEARING - September 16, 2025 25\n\n\n 1 MR. McCONVILLE: Yeah. Your Honor, I think there's a\n\n 2 subtle distinction here. I don't know if I would say\n\n 3 inadequate. What I would say is he failed to trigger the\n\n 4 adequacy requirement under the PSLRA. And the reason I say\n\n 5 that is because there's a growing rubric of the requirements\n\n 6 that individuals need to show in order to trigger the most\n\n 7 adequate plaintiff presumption.\n\n 8 THE COURT: Okay.\n\n 9 MR. McCONVILLE: And we cite our case at -- we cite\n\n 10 these cases in our papers: The TG Therapeutics case, the\n\n 11 World Wrestling case, the HEXO Corp. case, where the courts\n\n 12 really look at, what sort of experience does this individual\n\n 13 have managing lawyers, demonstrating that they can be in\n\n 14 control of the lawyers in a complex litigation. Because\n\n 15 that's precisely what the PSLRA was designed for, they want\n\n 16 the lawyers to be controlled by the clients, sophisticated,\n\n 17 whether it be an individual or whether it be an institution,\n\n 18 that are really going to sit down and make sure that the case\n\n 19 is being prosecuted.\n\n 20 THE COURT: Do you cite those cases in your --\n\n 21 MR. McCONVILLE: We do.\n\n 22 THE COURT: Okay.\n\n 23 MR. McCONVILLE: And I'm happy to provide the\n\n 24 citations for you right now.\n\n 25 So TG Therapeutics is 2022 West Law 1655585; World\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1078 Filed 09/17/25 Page 26 of 51\n MOTION HEARING - September 16, 2025 26\n\n\n 1 Wrestling is 2020 West Law 2614703, and HEXO is 2020 West Law\n\n 2 905753.\n\n 3 THE COURT: Those are all cases within this circuit?\n\n 4 MR. McCONVILLE: Those are all cases in the Southern\n\n 5 District of New York, Your Honor.\n\n 6 THE COURT: Southern District of?\n\n 7 MR. McCONVILLE: New York.\n\n 8 THE COURT: Thank you.\n\n 9 MR. McCONVILLE: Apologies.\n\n 10 But again, they go to ensuring that the class is\n\n 11 protected by an -- by the leader who is going to control the\n\n 12 lawyers and push the litigation forward, who's going to be\n\n 13 able to sit at the table across from defense counsel, some of\n\n 14 the biggest firms in the world, and ensure that, you know,\n\n 15 whether it's a mediation or some other type of resolution,\n\n 16 ensure that the class is being protected in getting the most\n\n 17 money back possible.\n\n 18 And this is not -- you know, this is not just\n\n 19 hypothetical. I'll cite some statistics that have come out in\n\n 20 recent reports from Cornerstone Research, which indicates that\n\n 21 when institutional investors lead class actions, the\n\n 22 settlements are over five times larger. And when institutions\n\n 23 lead class actions, there's a 38 reduct -- a 38 percent\n\n 24 reduction in the motion to dismiss being granted.\n\n 25 So these are -- these are objective metrics that show\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1079 Filed 09/17/25 Page 27 of 51\n MOTION HEARING - September 16, 2025 27\n\n\n 1 that Congress was right, institutional investors should be the\n\n 2 lead plaintiff here. Particularly, when it's a close call.\n\n 3 If there were an individual in this case that had a\n\n 4 $5 million loss, that had experience overseeing lawyers, that\n\n 5 really looked like they were sophisticated and to -- and could\n\n 6 do a great job, we wouldn't be here today. We would say the\n\n 7 class is in good hands. But because it's a relatively close\n\n 8 call, no one has a massive financial interest here, we think\n\n 9 the case law is pretty clear that you really have to take a\n\n 10 good, hard look at what the individuals have presented in\n\n 11 their motion, and contrast that with an institutional investor\n\n 12 that has done this before, that is -- experienced fiduciary.\n\n 13 We have over -- Local 710 has over 14,000 members, four and a\n\n 14 half billion under management. They've settled cases before\n\n 15 in the multimillion-dollar range, and so we think the class is\n\n 16 really best served by having that institutional investor lead\n\n 17 the case.\n\n 18 THE COURT: Okay. And do you -- and just getting\n\n 19 back to Mr. Crippen, too, did anything else besides the --\n\n 20 that can speak to his inability to satisfy the requirements\n\n 21 set forth in Rule 23?\n\n 22 MR. McCONVILLE: Yeah. I would point to, as counsel\n\n 23 for Ferrante said, the trading that occurred prior to the\n\n 24 start of the Cruise last period, everything is in the longer\n\n 25 class period. And again, we take position that the lead\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1080 Filed 09/17/25 Page 28 of 51\n MOTION HEARING - September 16, 2025 28\n\n\n 1 plaintiff takes the longer class period controls. It's in the\n\n 2 best interest of the class. But as this happened numerous\n\n 3 times in other cases, when a class period gets shortened and\n\n 4 the lead plaintiff now no longer has a position in the case,\n\n 5 that could be a year, two years down the road, all of a\n\n 6 sudden, we need to re-open the case and find a new lead\n\n 7 plaintiff which, you know, delays the case, delay -- delays\n\n 8 the prosecution, and ultimately, is not in the best interest\n\n 9 of the class.\n\n 10 I'll point Your Honor to -- to one opinion actually\n\n 11 handling this exact same scenario, and said you need to ask in\n\n 12 management for SanDisk case. 2016 West Law 406283 where Judge\n\n 13 Chhabria, out in the Northern District of California,\n\n 14 indicated in his lead plaintiff order that he had hesitation\n\n 15 appointing one fund because they only had trading in a longer\n\n 16 period. He did so, but then when he dismissed that period, he\n\n 17 basically said in his motion to dismiss order, I should have\n\n 18 used the shorter period because now I need to appoint a new\n\n 19 lead plaintiff.\n\n 20 THE COURT: Okay. All right.\n\n 21 One -- okay. We've covered it. All right. Thank\n\n 22 you.\n\n 23 MR. McCONVILLE: Thank you, Your Honor.\n\n 24 THE COURT: I'm going talk to counsel for\n\n 25 Mr. Crippen. I'm going to give you an opportunity this\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1081 Filed 09/17/25 Page 29 of 51\n MOTION HEARING - September 16, 2025 29\n\n\n 1 morning, Counsel, to just go right in it, and tell me how you\n\n 2 feel about the perspective, and the statements that have been\n\n 3 made regarding your client not being adequate to serve as lead\n\n 4 plaintiff.\n\n 5 MR. ALBERT: Your Honor, the only attack to my\n\n 6 client's adequacy that I've heard so far is some suggestion\n\n 7 that we manipulated the class period.\n\n 8 THE COURT: That you?\n\n 9 MR. ALBERT: That we manipulated the class period.\n\n 10 And I mean, that's just false.\n\n 11 THE COURT: Okay.\n\n 12 MR. ALBERT: Really, the two issues, I think, are\n\n 13 before the Court are which of the proposed class periods to\n\n 14 use, and what's the appropriate metric for financial interest.\n\n 15 THE COURT: Let me just ask you a question.\n\n 16 MR. ALBERT: Sure.\n\n 17 THE COURT: Have you -- have you had an opportunity\n\n 18 to speak to Sklodowski's attorney?\n\n 19 MR. ALBERT: We did.\n\n 20 THE COURT: Do you know why this filing is\n\n 21 encompassing -- goes beyond the initial class period of\n\n 22 Guzman? Why? Do you understand why?\n\n 23 MR. ALBERT: I understand why the case supports the\n\n 24 longer class period, but I don't know what Sklodowski's\n\n 25 counsel, what their rationale was.\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1082 Filed 09/17/25 Page 30 of 51\n MOTION HEARING - September 16, 2025 30\n\n\n 1 THE COURT: Okay. Go ahead. You can go ahead then.\n\n 2 You said the two most important things?\n\n 3 MR. ALBERT: I was just going to say that I think the\n\n 4 PSLRA provides a very clear three-step process for appointing\n\n 5 a lead plaintiff. And in this case, it really burns on two\n\n 6 main questions that Your Honor has been asking counsel about.\n\n 7 The first thing is longer class period versus shorter class\n\n 8 period, and the second -- the second key issue is how do you\n\n 9 gauge larger financial interest.\n\n 10 THE COURT: Okay.\n\n 11 MR. ALBERT: Your Honor, on -- on the first issue of\n\n 12 class period, not only does the law support -- overwhelmingly\n\n 13 support using the most inclusive class period, because at this\n\n 14 stage of the litigation, it incorporates more class members,\n\n 15 it increases Plaintiff's claim, and it's just overall good for\n\n 16 the case. But specifically, in this case, it makes sense as\n\n 17 well, for the reasons we've described in our papers.\n\n 18 And I'm happy to get into those if you'd like, Your\n\n 19 Honor.\n\n 20 But the second, I think, more critical question is\n\n 21 how you measure financial interest. All movants set forth\n\n 22 their financial interest using LIFO loss. The ultimate goal\n\n 23 of this litigation is to recover the losses suffered by\n\n 24 investors. And that's the dominant approach within the\n\n 25 Sixth-- and District courts within the Sixth Circuit.\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1083 Filed 09/17/25 Page 31 of 51\n MOTION HEARING - September 16, 2025 31\n\n\n 1 And I would point Your Honor to the FirstEnergy case\n\n 2 where Judge Marbley really meticulously analyzes this from\n\n 3 start to finish.\n\n 4 And, Your Honor, I think the reason why we're here\n\n 5 and even debating this is because of Your Honor's decision in\n\n 6 General Motors. And, the General Motors' case was so\n\n 7 distinguishable for several reasons, but the movants were\n\n 8 setting forth their losses using different metrics. In each\n\n 9 brief, from the opening to the opposition, to the reply, the\n\n 10 metrics kept changing.\n\n 11 Here, everyone agrees --\n\n 12 THE COURT: Yeah.\n\n 13 MR. ALBERT: -- on the LIFO numbers. There's no\n\n 14 dispute, like, if you add this number. The only real question\n\n 15 is whether in this case we should -- we should look to the\n\n 16 other factors.\n\n 17 And for the reasons that I think Judge Marbley talks\n\n 18 about in FirstEnergy, those other factors, which serve as a\n\n 19 proxy for loss, are just simply not necessary when we all\n\n 20 agree on -- on loss.\n\n 21 THE COURT: Okay.\n\n 22 MR. ALBERT: And if I may, Your Honor, I just wanted\n\n 23 to address a few -- a few points that the other counsel have\n\n 24 made against --\n\n 25 THE COURT: For Mr. Crippen?\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1084 Filed 09/17/25 Page 32 of 51\n MOTION HEARING - September 16, 2025 32\n\n\n 1 MR. ALBERT: -- our motion. Yes.\n\n 2 THE COURT: Okay.\n\n 3 MR. ALBERT: I think Teamsters 710's counsel has a\n\n 4 very hard position to kind of toe here because on one hand,\n\n 5 you know, they're saying that Mr. Ferrante, for example,\n\n 6 should have alluded to the class period issues in his opening\n\n 7 motion, and if he wasn't going to provide the trading for the\n\n 8 longer class period, he should have said it in his opening\n\n 9 motion. But if -- if net shares purchased is the end all and\n\n 10 be all of financial interest, why didn't they talk about it in\n\n 11 their opening motion? None of the facts of the case changed.\n\n 12 There's one corrective disclosure alleged, and if that was\n\n 13 their position, they should have addressed it then and there.\n\n 14 Along those same lines, counsel for Teamsters 710\n\n 15 talks about, well, courts routinely reject this percentage of\n\n 16 the portfolio argument that Mr. Ferrante's counsel made with\n\n 17 respect to retail investors versus institutional investors.\n\n 18 Namely, that retail investors lost a bigger percentage of\n\n 19 their portfolio so that, you know, they're going to care about\n\n 20 the case more. And it's true that that's an outlier position\n\n 21 that's been rejected by courts, but so has this idea that net\n\n 22 shares purchased is the end all, be all. It's approximately\n\n 23 the same amount of courts that have -- that after they look at\n\n 24 the percentage of the portfolio, they could find -- they find\n\n 25 losses. I'm sorry, they find net shares purchased determined.\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1085 Filed 09/17/25 Page 33 of 51\n MOTION HEARING - September 16, 2025 33\n\n\n 1 And the reason for that, Your Honor, is because in\n\n 2 these cases, we're at the very beginning stage. And Your\n\n 3 Honor really discusses this in Pio versus General Motors,\n\n 4 where he talked about, look, this is the beginning of the\n\n 5 case, a lot of things are going to change in the case, and\n\n 6 there's not supposed to be this huge analysis on the merits --\n\n 7 of the merits at this stage. That's not to say, Your Honor,\n\n 8 that, don't look at the merits.\n\n 9 If you want to talk about potential credit --\n\n 10 corrective disclosures in the case, Ford -- Ford releases\n\n 11 information about its warranty information -- I'm sorry, about\n\n 12 its product defect issues pretty -- pretty regularly. There\n\n 13 are a lot of disclosures in the case, a lot of announcements\n\n 14 in the case about -- about the issues that affected -- that\n\n 15 affected investors here. So I think it's -- it's very\n\n 16 premature to just say we only look at -- you know, we look at\n\n 17 net shares purchased because there's one end-of-class rate\n\n 18 disclosure.\n\n 19 THE COURT: Let me ask you something just in terms\n\n 20 of, I'm just still trying to flush out more of the adequacy\n\n 21 arguments that have been raised in looking, really, at Rule\n\n 22 23. I'm comfortable in knowing that the LIFO method,\n\n 23 everybody agrees on that. And so, there -- I am looking at\n\n 24 these other factors, and I want you to, with counsel who just\n\n 25 was speaking -- who was that? That was Mr. --\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1086 Filed 09/17/25 Page 34 of 51\n MOTION HEARING - September 16, 2025 34\n\n\n 1 MR. McCONVILLE: McConville.\n\n 2 THE COURT: Thank you, Mr. McConville.\n\n 3 -- was talking about, you know, what courts are\n\n 4 looking to for purposes of selecting the lead plaintiff,\n\n 5 understanding that you do need to have a savvy plaintiff who\n\n 6 can really work with the lawyers, and that there's a\n\n 7 management required -- requirement of the lawyers.\n\n 8 Can you speak to that and, you know, your client's\n\n 9 ability to do that? And what kind of experience has he had\n\n 10 that would place him in the position to execute what many\n\n 11 courts have found to be an important factor?\n\n 12 MR. ALBERT: Sure, Your Honor.\n\n 13 And, Your Honor, it's true what Mr. McConville said,\n\n 14 that the PSLRA's legislative history shows a preference for\n\n 15 institutional investors. But the statute's plain text, it\n\n 16 makes clear that the preference is expressed through the\n\n 17 financial interest requirement. It's not a factor -- they\n\n 18 don't get extra credit for being an institutional investor.\n\n 19 That really goes to the heart of the Teamsters 710's position\n\n 20 here.\n\n 21 THE COURT: I'm not talking about that, though. I'm\n\n 22 talking about specifically whether or not, in terms of the\n\n 23 adequacy of your client serving as lead plaintiff, would he be\n\n 24 able to -- you know, is there something in his prior\n\n 25 experience that would, you know, speak to his ability to\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1087 Filed 09/17/25 Page 35 of 51\n MOTION HEARING - September 16, 2025 35\n\n\n 1 manage counsel. And that -- that is something that has\n\n 2 emerged.\n\n 3 Has he done that before? Has he had to ensure that a\n\n 4 class's interest are being protected? Does he have the\n\n 5 experience that Mr. McConville has explained, and cited cases\n\n 6 of, in support of the fact that courts are viewing a lead\n\n 7 plaintiff's responsibility to include just that.\n\n 8 What about Mr. Crippen's experience -- because it\n\n 9 wasn't anywhere in the materials that I viewed, -- that speaks\n\n 10 to his experience to be able to do that?\n\n 11 MR. ALBERT: Sure, Your Honor.\n\n 12 THE COURT: Okay.\n\n 13 MR. ALBERT: So Mr. Crippen has about 30 years of\n\n 14 experience of federal service. He -- he worked for the Coast\n\n 15 Guard -- he worked for the Coast Guard, and then he's a\n\n 16 Vietnam War vet --\n\n 17 THE COURT: Yep.\n\n 18 MR. ALBERT: -- veteran. I believe he has experience\n\n 19 overseeing counsel in routine matters. I do not believe that\n\n 20 he has experience overseeing groups of lawyers in connection\n\n 21 with complex securities litigation. But that goes back to the\n\n 22 statute, Your Honor. They would have made it a requirement\n\n 23 for an institutional -- for a movant to be an institution if\n\n 24 that's what they wanted, Your Honor.\n\n 25 I would also say that the Southern District of New\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1088 Filed 09/17/25 Page 36 of 51\n MOTION HEARING - September 16, 2025 36\n\n\n 1 York cases pointed to by Mr. McConville, they look at -- they\n\n 2 look at the errors in the filings of these individuals. And\n\n 3 then, as an additional reason for not appointing them, they\n\n 4 say, hey, this person made errors out the gate, and in\n\n 5 addition to that, you know, we don't have any indication of\n\n 6 their sophistication.\n\n 7 THE COURT: Right.\n\n 8 MR. ALBERT: But sophistication isn't -- like, you\n\n 9 can't exclude someone from overseeing a case because they\n\n 10 haven't managed a securities class action or an anti-trust\n\n 11 class action, or -- Mr. Crippen is eminently qualified.\n\n 12 THE COURT: Okay. Hang on a second. I want to make\n\n 13 sure I've asked everything I want to ask in terms of the\n\n 14 typicality or the adequacy issue.\n\n 15 MR. ALBERT: Your Honor, and if I just may say one\n\n 16 more thing.\n\n 17 THE COURT: Yeah.\n\n 18 MR. ALBERT: The statute requires a prima facie\n\n 19 showing of typicality and adequacy. It doesn't require an\n\n 20 evidentiary test of this person's qualifications to manage\n\n 21 groups of lawyers.\n\n 22 THE COURT: How do you -- okay. I appreciate that.\n\n 23 How do you respond to the issue of all of the -- the\n\n 24 purchasing that your client did on one date, and they were\n\n 25 purchased at a high level, high amount? How do you respond to\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1089 Filed 09/17/25 Page 37 of 51\n MOTION HEARING - September 16, 2025 37\n\n\n 1 that being -- that's factual, right?\n\n 2 MR. ALBERT: It's absolutely factual.\n\n 3 THE COURT: Okay.\n\n 4 And so, do you feel -- you've heard other counsel\n\n 5 complain about that and object to that, and to talk about -- I\n\n 6 mean certainly, his interest are -- can be viewed differently\n\n 7 in terms of if we were to look at an expanded class period.\n\n 8 How can he speak to that? Does he even have losses there?\n\n 9 Does he have, you know -- and, it's been raised, the word has\n\n 10 been used, \"self-interest.\" How do you respond to that?\n\n 11 MR. ALBERT: Your Honor, the typicality requirement\n\n 12 does not -- does not require some sort of diverse trading\n\n 13 pattern. As Mr. Apton conceded, my client purchased within\n\n 14 the longer class period, just like everyone else did.\n\n 15 Essentially, what both competing movants --\n\n 16 particularly, Teamsters 710 is doing, is they're inviting a\n\n 17 beauty contest. They're saying, hey, you purchased on a\n\n 18 Wednesday instead of a -- instead of Tuesday. Hey, look, we\n\n 19 have three purchases, you have one purchase.\n\n 20 The statute provides a very clear three-step process,\n\n 21 Your Honor. And again, if it wasn't for the General Motors\n\n 22 case, which is distinguishable on the facts, and which -- it's\n\n 23 like the saying, bad facts makes bad loss sometimes. This is\n\n 24 a very simple process.\n\n 25 You look to law. Like over 95 percent of courts,\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1090 Filed 09/17/25 Page 38 of 51\n MOTION HEARING - September 16, 2025 38\n\n\n 1 Your Honor, since -- in the 30 years of the PSLRA's\n\n 2 jurisprudence, there's about 200 cases a year. What's that,\n\n 3 like, 5- or 6,000 cases? Over 90 percent of them, you look at\n\n 4 LIFO loss, you identify the movant that has the largest\n\n 5 financial interest, and then you see if that movant made a\n\n 6 prima facie showing of typicality and adequacy. And if they\n\n 7 did, the other movants could advance to rebut it, using proof,\n\n 8 Your Honor, not speculation. There's no freewheeling beauty\n\n 9 contest where it's, hey, we have this many billions under\n\n 10 assets under management, we've recovered this amount for\n\n 11 shareholders.\n\n 12 Mr. McConville lists all these statistics about\n\n 13 institutional investor recoveries. I can stand up here and\n\n 14 say, well, Your Honor, you know, Mr. Crippen is the most\n\n 15 qualified movant because he hired the law firm that recovered\n\n 16 70 percent of all -- of all dollars recovered last year in\n\n 17 securities litigation. That's from the ISS Securities Class\n\n 18 Action Report from last year. But that doesn't matter if we\n\n 19 have the presumption, and it can't be rebutted.\n\n 20 THE COURT: Okay. Anything else you want to say at\n\n 21 this point?\n\n 22 MR. ALBERT: No, Your Honor, unless Your Honor has\n\n 23 any other questions.\n\n 24 THE COURT: Not right now. I'm going to ask a group\n\n 25 question, so -- well, maybe you can. Let me see. Let me give\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1091 Filed 09/17/25 Page 39 of 51\n MOTION HEARING - September 16, 2025 39\n\n\n 1 -- let me just check.\n\n 2 Okay. Are there any -- let me ask you while you're\n\n 3 here. You have taken the position -- what is specifically\n\n 4 your position on -- you believe that the -- you don't have an\n\n 5 objection to using the expanded class period; yes, or no?\n\n 6 MR. ALBERT: I do not have an objection, I believe\n\n 7 the longer class period --\n\n 8 THE COURT: Is the one to you?\n\n 9 MR. ALBERT: -- is necessary.\n\n 10 THE COURT: Okay. Okay.\n\n 11 Are there any -- anything else that you have -- is\n\n 12 there something that you have not yet addressed in terms of\n\n 13 whether or not -- when you look at the allegations that have\n\n 14 been set forth in the pleadings, do you feel -- and you've\n\n 15 addressed this, but I want to just hear it one more time, just\n\n 16 in terms of the material, misstatements, or omissions that you\n\n 17 believe existed, or others believe that existed, do you\n\n 18 believe that any of those omissions or state -- misstatements\n\n 19 support using the longer class period correctly?\n\n 20 MR. ALBERT: Yes, Your Honor. The --\n\n 21 THE COURT: Okay. Speak to that.\n\n 22 MR. ALBERT: The longer class period includes two key\n\n 23 financial reports and the shorter period doesn't.\n\n 24 THE COURT: Okay.\n\n 25 MR. ALBERT: It's Ford's 3-Q 2021, Form 10-Q. That\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1092 Filed 09/17/25 Page 40 of 51\n MOTION HEARING - September 16, 2025 40\n\n\n 1 was filed on October 28th, I believe, 2021. And then the full\n\n 2 year 10-K filed on February 4, 2022.\n\n 3 The all -- the allegations are that these reports\n\n 4 were the beginning of the allegedly misleading course of\n\n 5 conduct. And while these filings, they disclosed certain\n\n 6 warranty accruals, they're alleged to be materially misleading\n\n 7 because they failed to disclose the known underlying\n\n 8 deficiencies in the quality control, and the true escalating\n\n 9 costs of those -- of those issues.\n\n 10 And the factual basis for including this, I think, is\n\n 11 pretty strong. We laid out in our papers, the -- when\n\n 12 everything was ultimately disclosed in 2024, they were\n\n 13 explicitly attributable, by Ford's own management, to problems\n\n 14 with the 2021 model years. Issues that the company admitted\n\n 15 that they -- that, quote, \"could have been detected at\n\n 16 launch.\" Therefore, the financial statements issued during 20\n\n 17 -- 2021 and 2022, which were the first to reflect the\n\n 18 financial impact of those defective models, they were\n\n 19 misleading for omitting this important information.\n\n 20 THE COURT: All right. Anything else you want to\n\n 21 say?\n\n 22 MR. ALBERT: No, Your Honor.\n\n 23 THE COURT: Okay.\n\n 24 MR. ALBERT: Thank you very much.\n\n 25 THE COURT: All right. I'm going to give counsel for\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1093 Filed 09/17/25 Page 41 of 51\n MOTION HEARING - September 16, 2025 41\n\n\n 1 Teamsters, and then for Mr. Ferrante, an opportunity to\n\n 2 respond, and then I'll take it from there. I've got a couple\n\n 3 group questions.\n\n 4 MR. McCONVILLE: Thank you, Your Honor.\n\n 5 THE COURT: Clean up, yeah.\n\n 6 COUNSEL'S FOLLOW-UP RESPONSE\n\n 7 MR. McCONVILLE: Unless you have any specific\n\n 8 questions, I'll go ahead and respond.\n\n 9 THE COURT: Nope, go ahead.\n\n 10 MR. McCONVILLE: So the point about Local 710 sort of\n\n 11 shifting gears in the loss analysis is just a blatant\n\n 12 mischaracterization of what we actually put in our brief.\n\n 13 THE COURT: Let me stop you. I want you to address\n\n 14 the last question.\n\n 15 MR. McCONVILLE: Sure.\n\n 16 THE COURT: Yeah, I want everyone to address that\n\n 17 question.\n\n 18 MR. McCONVILLE: So the last question about the class\n\n 19 period?\n\n 20 THE COURT: Yeah.\n\n 21 MR. McCONVILLE: Yeah, we agree with counsel for\n\n 22 Crippen, that the class period that protects the longest --\n\n 23 the largest possible class of investors should be the\n\n 24 controlling class period at this stage of the litigation.\n\n 25 That said, we do think that there's a significant\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1094 Filed 09/17/25 Page 42 of 51\n MOTION HEARING - September 16, 2025 42\n\n\n 1 risk that that class period will get cut, for reasons that\n\n 2 Mr. Ferrante has stated. And if that were to happen, again,\n\n 3 Mr. Crippen has no trading in the operative class period.\n\n 4 THE COURT: Okay.\n\n 5 Okay. You can go ahead.\n\n 6 MR. McCONVILLE: Sure.\n\n 7 Just really quickly about the shifting gears analysis\n\n 8 for the loss -- the financial interest. We put in our opening\n\n 9 brief the four Lax factors. At no point did we say the LIFO\n\n 10 loss is a controlling loss. We stated total shares, net\n\n 11 shares, expenditures, and losses. It was only after seeing\n\n 12 Mr. Crippen's trading pattern, which, again, is very unique,\n\n 13 and purchases basically entire position at class period high,\n\n 14 did we realize that the LIFO calculation is just not a\n\n 15 reliable metric. We're not disputing his LIFO calculation.\n\n 16 THE COURT: Okay.\n\n 17 MR. McCONVILLE: That's right, the math is correct.\n\n 18 It's just not a reliable metric for determining the relief\n\n 19 sought by the class.\n\n 20 And I'll point to Your Honor's order in Pio because I\n\n 21 don't think it's distinguishable at all. That case had one\n\n 22 disclosure, and the movants in that case jockeyed about with\n\n 23 the various ways to calculate losses. They did a retained\n\n 24 share analysis, they did a -- you know, an analysis of LIFO.\n\n 25 They did this, they did that. But -- and I remember because I\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1095 Filed 09/17/25 Page 43 of 51\n MOTION HEARING - September 16, 2025 43\n\n\n 1 was in the courtroom for the Court's hearing on that, the\n\n 2 parties agreed, counsel for New York teachers, and counsel for\n\n 3 Menora agreed that the LIFO calculations was correct math. So\n\n 4 it's not like we're disputing the math, it was that they\n\n 5 turned the loss into an apples-to-orange comparison. And\n\n 6 because of that, the first three Lax factors were a more\n\n 7 objective metric to determine financial interest.\n\n 8 We would -- we would proffer that as the exact same\n\n 9 case here. We don't think the LIFO calculation is an -- is a\n\n 10 reliable determination of financial interest because of the\n\n 11 way the stock traded, and because of where Mr. Crippen\n\n 12 purchased it.\n\n 13 THE COURT: Okay.\n\n 14 MR. McCONVILLE: The other point I'll make about the\n\n 15 FirstEnergy case, the Owens case, which counsel for\n\n 16 Mr. Crippen relies on, that case had multiple corrective\n\n 17 disclosures, which entirely eliminates the utility of net\n\n 18 shares. We will concede that. It's just not the scenario\n\n 19 here. Here, is one corrective disclosure.\n\n 20 The final point I'll make, Your Honor, on this idea\n\n 21 of adequacy and way -- and the ways in which individual\n\n 22 investors need to demonstrate adequacy to trigger the prima\n\n 23 facie presumption. I think the reason why courts are really\n\n 24 sort of drilling down and really taking a rigid hard look at\n\n 25 these applications is because individual investors, people are\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1096 Filed 09/17/25 Page 44 of 51\n MOTION HEARING - September 16, 2025 44\n\n\n 1 inherently unpredictable. And you don't want to get in a\n\n 2 situation where you have a case three years down the road\n\n 3 where, God forbid, someone gets sick or something happens.\n\n 4 I'll point to a very recent case in the Southern\n\n 5 District of New York. Christian versus Spectrum\n\n 6 Pharmaceuticals, 2025 West Law 2234041, where the court was\n\n 7 forced to re-open the entire lead plaintiff after three years\n\n 8 of litigation because the individual who was lead plaintiff\n\n 9 was contacting defendants personally, outside the presence of\n\n 10 counsel.\n\n 11 I'm not saying either Mr. Ferrante or Mr. Crippen\n\n 12 would do that. They seem like they have very good intentions\n\n 13 to lead this class action. All I'm doing as counsel for Local\n\n 14 710 and the punitive class, is ensuring that the class is in\n\n 15 the best hands possible to maximize recovery, and ensure that\n\n 16 there is a settlement or some sort of, you know, resolution at\n\n 17 trial for the benefit of the class.\n\n 18 And there's enough data, there's enough statistics\n\n 19 out there to really take a hard look and say, okay, which is\n\n 20 the best option to serve as the lead plaintiff of the class.\n\n 21 THE COURT: Okay. Thank you. Appreciate it.\n\n 22 MR. McCONVILLE: Thank you, Your Honor.\n\n 23 THE COURT: Counsel, before you --\n\n 24 MR. APTON: Hello, Your Honor.\n\n 25 THE COURT: Yeah, before you start, I want to just\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1097 Filed 09/17/25 Page 45 of 51\n MOTION HEARING - September 16, 2025 45\n\n\n 1 get from you, also what your position is in terms of -- as\n\n 2 relates to your client, what do you feel is the appropriate\n\n 3 period for the Court to focus on? What is the appropriate\n\n 4 class period? And to what extent do you think that any of the\n\n 5 material, misstatements, or omissions that have been alleged\n\n 6 in the complaint, do you feel that those support a longer\n\n 7 class period? Do you see a connection between the alleged\n\n 8 misstatements and misrepresentations on behalf of Ford, do you\n\n 9 see any of those being -- providing support for the use of the\n\n 10 Sklodowski period?\n\n 11 MR. APTON: No, based on what's currently in the\n\n 12 papers.\n\n 13 THE COURT: Okay.\n\n 14 MR. APTON: Again, the case could -- could turn a\n\n 15 different way.\n\n 16 THE COURT: Yep.\n\n 17 MR. APTON: Whomever Your Honor appoints as lead\n\n 18 plaintiff may expand or shorten the class period, but based on\n\n 19 what's currently before the Court, Guzman's class period.\n\n 20 THE COURT: Okay.\n\n 21 MR. APTON: Your Honor, counsel for both, especially\n\n 22 Teamsters, is very focused on the notion that my client made\n\n 23 an error. He uses the words \"gross negligence.\" I disagree\n\n 24 fully with that.\n\n 25 Even if there was an error, though, it was promptly\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1098 Filed 09/17/25 Page 46 of 51\n MOTION HEARING - September 16, 2025 46\n\n\n 1 corrected, and the case law says that that's okay.\n\n 2 THE COURT: Mm-hmm.\n\n 3 MR. APTON: The case that Mr. McConville cited,\n\n 4 Methode Electric, that involved a scenario in which the\n\n 5 certification contained errors and was not corrected. The\n\n 6 cases, respectfully, that this Court should look at for\n\n 7 guidance would be Chill v. Green Tree Financial Corp., 181\n\n 8 F.R.D. 398, at 411. That's from Minnesota, in 1998, which is\n\n 9 about 20 years ago, but the same rule still stands to this\n\n 10 day.\n\n 11 I'll refer the Court to Silver Wheaton from CD of\n\n 12 California, 2017. 2017 WL 2039171, at 10. Same holdings\n\n 13 still applies. This is not a novel concept. It is part of\n\n 14 the law on this particular issue. It has been this way for\n\n 15 the past 20 plus years.\n\n 16 Mr. McConville knows this. In the Estee Lauder case\n\n 17 in which he has in Southern District of New York, he just\n\n 18 filed an errata correcting a certification. That's\n\n 19 23-cv-10669, docket entry 55, September 2024.\n\n 20 The point is, is what Mr. Ferrante did was not\n\n 21 grounds to reject his motion. This issue of the expanding\n\n 22 class period came to light, he provided the transactions right\n\n 23 away, there was nothing nefarious about it, and there was\n\n 24 nothing that could create any sort of conflict based on the\n\n 25 information that he did openly disclose.\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1099 Filed 09/17/25 Page 47 of 51\n MOTION HEARING - September 16, 2025 47\n\n\n 1 Mr. Ferrante wants to be the lead plaintiff in this\n\n 2 case. He's been investing in securities for 21 years. He's a\n\n 3 business owner. He owns graphics and pin striping facilities\n\n 4 at auto dealers. He is not a stranger to litigation, for\n\n 5 better or worse. Being in business for that amount of time,\n\n 6 he has dealt with litigation. He also has a significant real\n\n 7 estate portfolio. So he has litigation and transactional\n\n 8 legal experience.\n\n 9 And finally, Your Honor, this is his money, almost a\n\n 10 million dollars that he lost from his personal portfolio. If\n\n 11 anyone in this room is most concerned about getting the money\n\n 12 back, it is him. It is not the representative from the\n\n 13 Teamsters Fund who is treating this as a nine-to-five job,\n\n 14 which is why he's here.\n\n 15 Mr. Ferrante has other issues to deal with,\n\n 16 especially in light of the significant loss that he incurred.\n\n 17 Thank you, Your Honor.\n\n 18 THE COURT: Okay. Let me ask representatives from\n\n 19 Ford, is there anything you would like to place on the record?\n\n 20 MR. SICILIANO: No.\n\n 21 Obviously, we strongly disagree with any class\n\n 22 period, and believe there weren't any false or misleading\n\n 23 statements, nor did the defendant act in that, but the time\n\n 24 for that is later.\n\n 25 THE COURT: Okay. Fair enough.\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1100 Filed 09/17/25 Page 48 of 51\n MOTION HEARING - September 16, 2025 48\n\n\n 1 All right. Let me ask counsel to put their heads\n\n 2 together and think about this. But I would like to know what\n\n 3 you all would consider to be the next step forward. I mean,\n\n 4 obviously, I'll be ruling. So we know that's going to take\n\n 5 place, but once I have rendered my decision as to who should\n\n 6 be appointed as lead plaintiff and counsel, would counsel\n\n 7 prefer to confer and then submit a proposed stipulated order?\n\n 8 Maybe this isn't the right time for you all to do that, or --\n\n 9 you know, with deadlines for the lead plaintiff's filing of\n\n 10 the amended complaint. Because I would assume -- I'm\n\n 11 assuming, maybe that's an assumption I should not make, but --\n\n 12 oh, you all have already talked about it. Look at you.\n\n 13 MR. APTON: Your Honor, we're all going to say the\n\n 14 same thing, Your Honor.\n\n 15 THE COURT: What are you all going to say?\n\n 16 MR. APTON: We're all going to say that we would ask\n\n 17 for 14 days to meet and confer with defense counsel and submit\n\n 18 a stipulation with the schedule.\n\n 19 THE COURT: After my order?\n\n 20 MR. APTON: Correct, Your Honor.\n\n 21 MR. ALBERT: I'm sorry, not to disagree with Mr.\n\n 22 Apton, but I would just like to point, Your Honor, I believe a\n\n 23 stipulation has already been entered.\n\n 24 MR. SICILIANO: That's correct, Your Honor.\n\n 25 THE COURT: Good.\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1101 Filed 09/17/25 Page 49 of 51\n MOTION HEARING - September 16, 2025 49\n\n\n 1 MR. SICILIANO: It's actually Docket Number 6 that\n\n 2 was entered on September 7, 2024.\n\n 3 THE COURT: And what did you all stipulate to?\n\n 4 MR. SICILIANO: It's self-executing, such that when\n\n 5 you do appoint lead plaintiff and lead counsel, that lead\n\n 6 plaintiff will have 60 days to file an amended complaint, --\n\n 7 THE COURT: Okay.\n\n 8 MR. SICILIANO: -- and then we would have 60 days to\n\n 9 file a motion in response.\n\n 10 THE COURT: Okay. Well, I missed that. I would have\n\n 11 to say that in preparing and reading, I missed that. That's\n\n 12 excellent. Very good. I appreciate your having thought that\n\n 13 through.\n\n 14 Okay. Any -- any final thoughts? The mic is open.\n\n 15 Open mic.\n\n 16 MR. ALBERT: Your Honor.\n\n 17 THE COURT: Just state your name again.\n\n 18 MR. ALBERT: Sorry, this is Michael Albert on behalf\n\n 19 of Mr. Crippen.\n\n 20 THE COURT: Yep.\n\n 21 MR. ALBERT: I wasn't happy with the response I gave\n\n 22 you after Mr. Crippen's bonafides, --\n\n 23 THE COURT: Yeah.\n\n 24 MR. ALBERT: -- after looking at his declaration one\n\n 25 more time, and that's Docket Number 33-5, I can confirm that\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1102 Filed 09/17/25 Page 50 of 51\n MOTION HEARING - September 16, 2025 50\n\n\n 1 he is familiar with selecting and overseeing counsel. He has\n\n 2 approximately 30 years of investment experience, and he served\n\n 3 as the Vice Chair of the Stafford County Electrical Board. I\n\n 4 just wanted to close with that.\n\n 5 THE COURT: Okay. Fair enough.\n\n 6 MR. ALBERT: Thank you, Your Honor.\n\n 7 THE COURT: All right. Anyone else? All set?\n\n 8 What was the docket number? You said ECF number 35\n\n 9 for Mr. Crippen's counsel?\n\n 10 MR. ALBERT: 33-5.\n\n 11 THE COURT: Okay. Thank you.\n\n 12 MR. ALBERT: Page ID 674.\n\n 13 THE COURT: Okay. That's the page ID.\n\n 14 LAW CLERK: I'm checking, and it's not listed as\n\n 15 that. 33-5 is Mr. Crippen's declaration.\n\n 16 MR. ALBERT: That's what I was referring to.\n\n 17 LAW CLERK: I'm talking about the proposed order.\n\n 18 MR. SICILIANO: Yeah, it's ECF Number 6, filed on\n\n 19 September 7, 2024.\n\n 20 THE COURT: Okay. Thank you.\n\n 21 I'm sorry.\n\n 22 MR. ALBERT: I apologize.\n\n 23 THE COURT: That was my fault, actually. I thought\n\n 24 we were asking that question as well, yeah.\n\n 25 Is it there, correct?\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 46, PageID.1103 Filed 09/17/25 Page 51 of 51\n MOTION HEARING - September 16, 2025 51\n\n\n 1 You got a note back saying that it was accepted?\n\n 2 MR. SICILIANO: We did.\n\n 3 THE COURT: Okay. That's really all we need to know\n\n 4 then.\n\n 5 All right. Counsel, I appreciate your time here\n\n 6 today, it was informative. And, I will be ruling shortly, all\n\n 7 right?\n\n 8 MR. ALBERT: Thank you, Your Honor.\n\n 9 MR. APTON: Thank you, Your Honor.\n\n 10 THE COURT: All right. Thank you, have a great day.\n\n 11 LAW CLERK: Court's in recess.\n\n 12 (The proceeding was adjourned at 11:09 a.m.)\n\n 13 * * *\n\n 14 C E R T I F I C A T E\n\n 15 I certify that the foregoing is a correct transcription of\n\n 16 the record of proceedings in the above-entitled matter.\n\n 17\n\n 18 S/ Shacara V. Mapp 09/17/2025\n\n 19 Shacara V. Mapp, Date\n\n 20 CSR-9305, RMR, FCRR, CRR\n\n 21 Official Court Reporter\n\n 22\n\n 23\n\n 24\n\n 25\n\n\n Guzman v. Ford Motor Company, et al. - 24-12080\n\f","ocr_status":2,"date_upload":"2026-05-20T02:12:28.084250-07:00","document_number":"46","attachment_number":null,"pacer_doc_id":"097014467179","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"","acms_document_guid":""}],"date_created":"2026-05-08T07:42:13.998369-07:00","date_modified":"2026-05-11T09:56:27.874914-07:00","date_filed":"2025-09-17","time_filed":null,"entry_number":46,"recap_sequence_number":"2025-09-17.001","pacer_sequence_number":195,"description":"TRANSCRIPT of Motion Hearing held on 09/16/2025. (Court Reporter/Transcriber: Shacara Mapp) (Number of Pages: 51) The parties have 21 days to file with the court and Court Reporter/Transcriber a Redaction Request of this transcript. If no request is filed, the transcript may be made remotely electronically available to the public without redaction after 90 days. Redaction Request due 10/8/2025. Redacted Transcript Deadline set for 10/20/2025. Release of Transcript Restriction set for 12/16/2025. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date, the transcript is publicly available. 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(Potrepka, Gregory) (Entered: 03/27/2026)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/458278344/","id":458278344,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/69027187/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/473277586/","id":473277586,"tags":[],"absolute_url":"/docket/69027187/54/guzman-v-ford-motor-company/","date_created":"2026-03-23T17:21:57.383385-07:00","date_modified":"2026-05-11T09:56:28.318374-07:00","sha1":"fe48dbb22a1c2a6fd1696a6d5f2e552c1264735c","page_count":53,"file_size":974543,"filepath_local":"recap/gov.uscourts.mied.378964/gov.uscourts.mied.378964.54.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.mied.378964/gov.uscourts.mied.378964.54.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.1993 Filed 03/23/26 Page 1 of 53\n\n\n\n\nVANOVERBEKE, MICHAUD & TIMMONY, P.C.\nTHOMAS C. MICHAUD (P46787)\n79 Alfred Street\nDetroit, MI 48201\nTelephone: 313/578-1200\ntmichaud@vmtlaw.com\nLocal Counsel\n[Additional counsel appear on signature page.]\n\n UNITED STATES DISTRICT COURT\n EASTERN DISTRICT OF MICHIGAN\n SOUTHERN DIVISION\n\nALBERT GUZMAN, Individually and ) Civ. No. 2:24-cv-12080-LVP-KGA\non Behalf of All Others Similarly ) (Consolidated with Civ. No. 2:24-cv-\nSituated, ) 12492)\n Plaintiff, )\n ) Honorable Linda V. Parker\n vs.\n )\n Magistrate Judge Kimberly G. Altman\nFORD MOTOR COMPANY, et al., )\n ) CLASS ACTION\n Defendants. )\n )\n\n PLAINTIFFS\u2019 OPPOSITION TO DEFENDANTS\u2019 MOTION TO DISMISS\n CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FEDERAL\n SECURITIES LAWS\n\n\n\n\n4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.1994 Filed 03/23/26 Page 2 of 53\n\n\n\n TABLE OF CONTENTS\n\n Page\nI. INTRODUCTION ........................................................................................... 1\n\nII. STATEMENT OF FACTS .............................................................................. 4\n A. Defendants Promised to Improve Warranty Costs ................................ 4\n\n B. Defendants Closely Monitored Warranty Costs ................................... 5\n C. Defendants Delayed Recalls and Concealed the Magnitude of\n Defects to Suppress Reserves and Report Positive Trends ................... 6\n\n D. Defendants Falsely Touted Positive Warranty Trends ......................... 7\n\n E. The Truth Is Revealed that Warranty Costs Remained Sky-High ........ 8\nIII. ARGUMENT ................................................................................................. 10\n\n Legal Standards on a Motion to Dismiss ............................................ 10\n The Complaint Adequately Alleges False and Misleading\n Statements ........................................................................................... 10\n\n 1. Defendants Made False and Misleading Statements\n Portraying Positive Quality and Warranty Trends.................... 11\n\n 2. Defendants Reported Suppressed Reserves in Violation\n of GAAP ................................................................................... 17\n\n 3. Defendants\u2019 Inflation Statements Were Misleading ................. 21\n 4. Defendants Provided False and Misleading Risk\n Disclosures that Failed to Warn Investors of Reality ............... 22\n\n 5. Defendants\u2019 Remaining Arguments Lack Merit....................... 24\n\n a. The Statements Are Not Protected Under the Safe\n Harbor ............................................................................. 24\n b. The Statements Are Not Inactionable Opinions ............. 25\n c. The Statements Are Not Immaterial Puffery .................. 28\n\n -i-\n4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.1995 Filed 03/23/26 Page 3 of 53\n\n\n\n\n Page\n\n\n The Totality of Allegations Sufficiently Plead a Strong\n Inference of Scienter as to Each Defendant ........................................ 30\n\n 1. Defendants\u2019 Admitted Focus, Close Monitoring, and\n Frequent Statements Support Scienter ...................................... 31\n\n 2. The NHTSA Consent Order Supports Scienter ........................ 33\n\n 3. Defendants\u2019 Admissions They Were Aware of Warranty\n Issues Shortly After Vehicle Launch Support Scienter ............ 34\n 4. The Importance of Warranty Costs and Recalls Support\n Scienter...................................................................................... 35\n 5. The Magnitude of the Reserve Increases Supports\n Scienter...................................................................................... 37\n\n 6. Defendants\u2019 Motive Supports Scienter ..................................... 38\n 7. Defendants\u2019 Competing Inference is Implausible .................... 39\n\n The Control Person Claims Should Be Sustained ............................... 40\nIV. CONCLUSION.............................................................................................. 40\n\n\n\n\n - ii -\n4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.1996 Filed 03/23/26 Page 4 of 53\n\n\n\n TABLE OF AUTHORITIES\n\n Page\nCASES\nBerson v. Applied Signal Tech., Inc.,\n 527 F.3d 982 (9th Cir. 2008) .............................................................................. 36\n\nBlatt v. Corn Prods. Int\u2019l, Inc.,\n 2006 WL 1697013 (N.D. Ill. June 14, 2006) ...................................................... 24\n\nBond v. Clover Health Invs., Corp.,\n 587 F. Supp. 3d 641 (M.D. Tenn. 2022) .....................................................passim\n\nBondali v. Yum! Brands, Inc.,\n 620 F. App\u2019x 483 (6th Cir. 2015) ....................................................................... 23\n\nCarpenters Pension Tr. Fund for N. Cal. v. Allstate Corp.,\n 2018 WL 1071442 (N.D. Ill. Feb. 27, 2018) ................................................17, 22\nChapman v. Mueller Water Prods.,\n 466 F. Supp. 3d 382 (S.D.N.Y. 2020) ................................................................ 28\nChow v. Archer-Daniels-Midland,\n 2025 WL 790854 (N.D. Ill. Mar. 12, 2025) ....................................................... 30\nCity of Monroe Emps. Ret. Sys. v. Bridgestone Corp.,\n 399 F.3d 651 (6th Cir. 2005) .............................................................................. 13\nCity of Taylor Gen. Emps. Ret. Sys. v. Astec Indus.,\n 29 F.4th 802 (6th Cir. 2022) ............................................................................... 38\n\nConstr. Indus. & Lab. Joint Pension Tr. v. Carbonite, Inc.,\n 22 F.4th 1 (1st Cir. 2021).................................................................................... 29\n\nFranchi v. Smiledirectclub, Inc.,\n 633 F. Supp. 3d 1046 (M.D. Tenn. 2022) .......................................................... 36\n\nFrank v. Dana Corp.,\n 547 F.3d 564 (6th Cir. 2008) .............................................................................. 30\nFrank v. Dana Corp.,\n 646 F.3d 954 (6th Cir. 2011) ............................................................10, 30, 31, 32\n\n - iii -\n4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.1997 Filed 03/23/26 Page 5 of 53\n\n\n\n\n Page\n\n\nGodinez v. Alere Inc.,\n 272 F. Supp. 3d 201 (D. Mass. 2017) ................................................................. 18\n\nGrae v. Corr. Corp. of Am.,\n 2017 WL 6442145 (M.D. Tenn. Dec. 18, 2017) ..........................................29, 32\n\nGrae v. Corr. Corp. of Am.,\n 2021 WL 1100799 (M.D. Tenn. Mar. 23, 2021) ................................................ 15\n\nHedick v. Kraft Heinz Co.,\n 2021 WL 3566602 (N.D. Ill. Aug. 11, 2021) ...............................................29, 33\n\nHelwig v. Vencor, Inc.,\n 251 F.3d 540 (6th Cir. 2001) (en banc),\n abrogated on other grounds by\n Tellabs, Inc. v. Makor Issues & Rts., Ltd.,\n 551 U.S. 308 (2007) .....................................................................................passim\n\nHills v. BioXcel Therapeutics, Inc.,\n 2025 WL 2777129 (D. Conn. Sept. 29, 2025) .................................................... 27\nIBEW v. Ltd. Brands, Inc.,\n 788 F. Supp. 2d 609 (S.D. Ohio 2011) ............................................................... 17\nIn re BioScrip, Inc. Sec. Litig.,\n 95 F. Supp. 3d 711 (S.D.N.Y. 2015) .................................................................. 33\n\nIn re Cardinal Health Inc. Sec. Litig.,\n 426 F. Supp. 2d 688 (S.D. Ohio 2006) .........................................................36, 38\nIn re Envision Healthcare Corp. Sec. Litig.,\n 2019 WL 6168254 (M.D. Tenn. Nov. 19, 2019) ....................................27, 35, 38\n\nIn re Envision Healthcare Corp. Sec. Litig.,\n 2022 WL 4551876 (M.D. Tenn. Sep. 29, 2022) ...........................................15, 34\n\nIn re Facebook, Inc. Sec. Litig.,\n 87 F.4th 934 (9th Cir. 2023) .........................................................................20, 22\n\n\n - iv -\n4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.1998 Filed 03/23/26 Page 6 of 53\n\n\n\n\n Page\n\n\nIn re Flag Telecom Holdings, Ltd. Sec. Litig.,\n 352 F. Supp. 2d 429 (S.D.N.Y. 2005) ................................................................ 19\n\nIn re Ford Motor Corp. Sec. Litig.,\n 381 F. 3d 563 (6th Cir. 2004) ............................................................................. 29\n\nIn re Heritage Glob. Network L.A., Inc. v. Welch,\n 2024 WL 695772 (M.D. Tenn. Feb. 20, 2024) ................................................... 31\n\nIn re Hertz Glob. Holdings, Sec. Litig.,\n 2017 WL 1536223 (D.N.J. Apr. 27, 2017), aff\u2019d,\n 905 F.3d 106 (3d Cir. 2018) ............................................................................... 28\nIn re Humana, Inc. Sec. Litig.,\n 2009 WL 1767193 (W.D. Ky. June 23, 2009) ................................................... 17\n\nIn re Huntington Bancshares Inc. Sec. Litig.,\n 674 F. Supp. 2d 951 (S.D. Ohio 2009) ............................................................... 28\n\nIn re Kindred Healthcare, Inc. Sec. Litig.,\n 299 F. Supp. 2d 724 (W.D. Ky. 2004) ................................................................ 25\nIn re LDK Solar Sec. Litig.,\n 584 F. Supp. 2d 1230 (N.D. Cal. 2008) .............................................................. 20\nIn re Omnicare, Inc. Sec. Litig.,\n 769 F.3d 455 (6th Cir. 2014) ........................................................................27, 40\n\nIn re Perrigo Co. PLC Sec. Litig.,\n 435 F. Supp. 3d 571 (S.D.N.Y. 2020) ................................................................ 20\n\nIn re Shoals Techs. Grp., Inc. Sec. Litig.,\n 802 F. Supp. 3d 1024 (M.D. Tenn. 2025) .......................................................... 25\n\nIn re Ulta Salon, Cosms. & Fragrance, Inc. Sec. Litig.,\n 604 F. Supp. 2d 1188 (N.D. Ill. 2009) ................................................................ 30\n\nIn re Upstart Holdings, Inc. Sec. Litig.,\n 2023 WL 6379810 (S.D. Ohio Sept. 29, 2023) ................................16, 25, 32, 35\n\n -v-\n4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.1999 Filed 03/23/26 Page 7 of 53\n\n\n\n\n Page\n\n\nIn re Virtu Fin., Inc. Sec. Litig.,\n 770 F. Supp. 3d 482 (E.D.N.Y. 2025) ................................................................ 29\n\nIn re Vivendi Universal, S.A. Sec. Litig.,\n 765 F. Supp. 2d 512 (S.D.N.Y. 2011), aff\u2019d,\n 838 F.3d 223 (2d Cir. 2016) ............................................................................... 34\n\nIn re Walmart Inc., Sec. Litig.,\n 151 F.4th 103 (3d Cir. 2025) .............................................................................. 28\n\nJonna v. GIBF GP, Inc.,\n 617 F. Supp. 3d 789 (E.D. Mich. 2022) ............................................................. 31\nKing v. Whitmer,\n 71 F.4th 511 (6th Cir. 2023) ............................................................................... 27\n\nKnurr v. Orbital ATK Inc.,\n 294 F. Supp. 3d 498 (E.D. Va. 2018) ................................................................. 40\n\nKyrstek v. Ruby Tuesday, Inc.,\n 2016 WL 1274447 (M.D. Tenn. Mar. 31, 2016) ................................................ 32\nLim v. Hightower,\n 2025 WL 2965692 (6th Cir. Oct. 21, 2025) ....................................................... 39\nMakor Issues & Rts., Ltd. v. Tellabs Inc.,\n 513 F.3d 702 (7th Cir. 2008) .......................................................................passim\n\nMalin v. XL Cap.,\n 499 F. Supp. 2d 117 (D. Conn. 2007), aff\u2019d,\n 312 F. App\u2019x 400 (2d Cir. 2009) ........................................................................ 19\n\nMayer v. Mylod,\n 988 F.2d 635 (6th Cir. 1993) .............................................................................. 26\nMJK Fam. LLC v. Corp. Eagle Mgmt. Servs.,\n 2009 WL 4506418 (E.D. Mich. Nov. 30, 2009) ...........................................11, 13\n\n\n\n - vi -\n4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2000 Filed 03/23/26 Page 8 of 53\n\n\n\n\n Page\n\n\nN. Port Firefighters\u2019 Pension-Loc. Option Plan v.\n Fushi Copperweld, Inc.,\n 929 F. Supp. 2d 740 (M.D. Tenn. 2013) ............................................................ 19\nOmnicare, Inc. v. Laborers Dist. Council Constr.\n Indus. Pension Fund,\n 575 U.S. 175 (2015) ............................................................................................ 26\n\nPadilla v. Cmty. Health Sys., Inc.,\n 2022 WL 3452318 (M.D. Tenn. Aug. 17, 2022) .........................................passim\n\nPierrelouis v. Gogo,\n 2021 WL 1608342 (N.D. Ill. Apr. 26, 2021) ................................................16, 40\nPittman v. Unum Grp.,\n 861 F. App\u2019x 51 (6th Cir. 2021) ......................................................................... 36\nPolice & Fire Ret. Sys. City of Detroit v. Argo Grp.\n Int\u2019l Holdings,\n 2024 WL 5089970 (S.D.N.Y. Dec. 12, 2024) .................................................... 28\nReese v. Malone,\n 747 F.3d 557 (9th Cir. 2014), overruled on other grounds by\n City of Dearborn Heights Act 345 Police & Fire Ret Sys. v.\n Align Tech.,\n 856 F.3d 605 (9th Cir. 2017) .............................................................................. 32\n\nRet. Sys. v. Ernst & Young, LLP,\n 622 F.3d 471 (6th Cir. 2010) .............................................................................. 37\n\nRoofers Loc. No. 149 Pen. Fund v. Amgen Inc.,\n 751 F. Supp. 3d 330 (S.D.N.Y. 2024) ................................................................ 15\nRoss v. Abercrombie & Fitch Co.,\n 501 F. Supp. 2d 1102 (S.D. Ohio 2007) ............................................................. 39\n\nRoth v. OfficeMax, Inc.,\n 527 F. Supp. 2d 791 (N.D. Ill. 2007) .................................................................. 27\n\n - vii -\n4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2001 Filed 03/23/26 Page 9 of 53\n\n\n\n\n Page\n\n\nS. Ferry LP #2 v. Killinger,\n 687 F. Supp. 2d 1248 (W.D. Wash. 2009) ......................................................... 33\n\nShulman v. Weston,\n __ F. Supp. 3d __, 2025 WL 3754159 (D.N.J. Dec. 29, 2025) .......................... 24\n\nShupe v. Rocket Cos.,\n 660 F. Supp. 3d 647 (E.D. Mich. 2023) ...........................................14, 31, 34, 38\n\nSilverman v. Motorola, Inc.,\n 2008 WL 4360648 (N.D. Ill. Sept. 23, 2008) ..................................................... 23\n\nSmilovits v. First Solar, Inc.,\n 119 F. Supp. 3d 978 (D. Ariz. 2015), aff\u2019d sub nom. by\n Mineworkers\u2019 Pension Scheme v. First Solar Inc.,\n 881 F.3d 150 (9th Cir. 2018) ........................................................................18, 19\nSmilovits v. First Solar, Inc.,\n 2012 WL 6574410 (D. Ariz. Dec. 17, 2012) ...................................................... 13\n\nTeamsters Loc. 237 Welfare Fund v. ServiceMaster Glob. Holdings,\n 83 F.4th 514 (6th Cir. 2023) ............................................................................... 35\nUnderland v. Alter,\n 2011 WL 4017908 (E.D. Pa. Sept. 9, 2011) .................................................23, 25\n\nWilkof v. Caraco Pharm. Laby\u2019s, Ltd.,\n 2010 WL 4184465 (E.D. Mich. Oct. 21, 2010) ............................................14, 33\n\nWinslow v. BancorpSouth, Inc.,\n 2011 WL 7090820 (M.D. Tenn. Apr. 26, 2011) ....................................24, 25, 32\n\nWoolgar v. Kingstone Cos.,\n 477 F. Supp. 3d 193 (S.D.N.Y. 2020) ................................................................ 19\n\nSTATUTES, RULES, AND REGULATIONS\n15 U.S.C.\n \u00a778j(b) .....................................................................................................10, 14, 40\n\n - viii -\n4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2002 Filed 03/23/26 Page 10 of 53\n\n\n\n\n Page\n\n\n 17 C.F.R.\n \u00a7240.10b-5 .......................................................................................................... 10\n\n Federal Rules of Civil Procedure\n Rule 12(b)(6).................................................................................................10, 13\n\n Private Securities Litigation Reform Act of 1995\n Pub. L. No. 104-67, 109 Stat. 737 (1995) ....................................................16, 24\n\n\n\n\n - ix -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2003 Filed 03/23/26 Page 11 of 53\n\n\n\n\n STATEMENT OF THE ISSUES PRESENTED\n 1. Whether the allegations in the Consolidated Complaint for Violations of\n\n the Federal Securities Laws (ECF 48) (\u201cComplaint\u201d), accepted as true, sufficiently\n\n plead that each defendant made at least one actionable false or misleading statement\n\n or omission within the meaning of \u00a710(b) of the Securities Exchange Act of 1934\n\n (\u201cExchange Act\u201d) and U.S. Securities and Exchange Commission (\u201cSEC\u201d) Rule 10b-5\n\n promulgated thereunder?\n\n 2. Whether the allegations in the Complaint, accepted as true and\n\n considered holistically, raise a strong inference of Defendants\u2019 scienter within the\n\n meaning of \u00a710(b) of the Exchange Act and SEC Rule 10b-5?\n\n 3. Whether the allegations in the Complaint, accepted as true, sufficiently\n\n plead a \u201ccontrol person\u201d claim under \u00a720(a) of the Exchange Act?\n\n\n\n\n -x-\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2004 Filed 03/23/26 Page 12 of 53\n\n\n\n\n CONTROLLING OR MOST APPROPRIATE AUTHORITIES\n 15 U.S.C. \u00a778u-4\n\n 15 U.S.C. \u00a778j(b)\n\n 17 C.F.R. \u00a7240.15b-5\n\n Fed. R. Civ. P. 9(b)\n Fed. R. Civ. P. 12(b)(6)\n\n Tellabs, Inc. v. Makor Issues & Rts., Ltd., 551 U.S. 308 (2007)\n\n Omnicare, Inc. v. Laborers Dist. Council Constr. Indus. Pension Fund, 575 U.S. 175\n (2015)\n City of Monroe Emps. Ret. Sys. v. Bridgestone Corp., 399 F.3d 651 (6th Cir. 2005)\n\n City of Taylor Gen. Emps. Ret. Sys. v. Astec Indus., 29 F.4th 802 (6th Cir. 2022)\n Frank v. Dana Corp., 646 F.3d 954 (6th Cir. 2011)\n\n Helwig v. Vencor, Inc., 251 F.3d 540 (6th Cir. 2001) (en banc)\n\n Makor Issues & Rts., Ltd. v. Tellabs Inc., 513 F.3d 702, 705 (7th Cir. 2008)\n Bond v. Clover Health Invs., Corp., 587 F. Supp. 3d 641 (M.D. Tenn. 2022)\n\n Carpenters Pension Tr. Fund for N. Cal. v. Allstate Corp., 2018 WL 1071442 (N.D.\n Ill. Feb. 27, 2018)\n\n Grae v. Corr. Corp. of Am., 2017 WL 6442145 (M.D. Tenn. Dec. 18, 2017)\n\n In re Upstart Holdings, Inc. Sec. Litig., 2023 WL 6379810 (S.D. Ohio Sept. 29, 2023)\n Padilla v. Cmty. Health Sys., Inc., 2022 WL 3452318 (M.D. Tenn. Aug. 17, 2022)\n\n Shupe v. Rocket Cos., 660 F. Supp. 3d 647 (E.D. Mich. 2023)\n\n Wilkof v. Caraco Pharm. Laby\u2019s, Ltd., 2010 WL 4184465 (E.D. Mich. Oct. 21, 2010)\n\n Winslow v. BancorpSouth, Inc., 2011 WL 7090820 (M.D. Tenn. Apr. 26, 2011), R&R\n adopted, 2012 WL 214635 (M.D. Tenn. Jan. 24, 2012)\n\n\n - xi -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2005 Filed 03/23/26 Page 13 of 53\n\n\n\n\n Plaintiffs respectfully submit this response to Defendants\u2019 Motion to Dismiss\n\n the Complaint (ECF 53) (\u201cMotion\u201d or \u201cMD\u201d).1\n\n I. INTRODUCTION\n Upon being promoted to leadership in 2020, defendants Farley and Lawler\n\n promised to fix Ford\u2019s biggest problem: industry-high warranty costs from poor-\n\n quality vehicles. Ford\u2019s legacy gas vehicles business was strangled by a \u201c$2 billion\n\n headwind\u201d of warranty costs \u2013 a problem so severe it cost Defendants\u2019 predecessors\n\n their jobs. Ford needed to lower repair costs on its gas vehicles to boost profitability\n\n and fund its \u201c$30 billion\u201d pivot to electric vehicles (\u201cEVs\u201d). Defendants promised\n\n they had a \u201cvery concrete plan\u201d and a \u201claser focus\u201d on fixing quality.\n\n In moving to dismiss, Defendants claim they never reported positive quality and\n\n warranty trends, yet, throughout the Class Period, Defendants made false and\n\n misleading claims, such as Lawler touting that \u201clower warranty costs\u201d had contributed\n\n to \u201coffset[ting] production losses and higher commodity costs\u201d and that \u201cwe\u2019re\n\n improving our quality . . . and we saw that come through this year from a year-over-\n\n year warranty standpoint it was down roughly $1.4 billion.\u201d Defendants repeatedly\n\n assured investors that warranty costs were declining, as new technologies were\n\n\n 1\n Citations to \u201c\u00b6__\u201d or \u201c\u00b6\u00b6__\u201d are to paragraphs of the Complaint. Unless\n otherwise indicated, emphasis is added, internal citations are omitted, and capitalized\n terms shall have the same meaning as in the Complaint. Bold and italics have been\n added to identify the specific statements alleged as false and misleading statements.\n\n -1-\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2006 Filed 03/23/26 Page 14 of 53\n\n\n\n\n reducing repair costs because dealers were \u201cmaking much more frequent use of over-\n\n the-air updates [\u201cOTA\u201d] [a]nd boy, has that worked for us.\u201d These misleading\n\n words were backed by misleading numbers, as Ford reported inflated profits by\n\n recording much lower warranty reserve increases than in years prior. E.g., \u00b68.\n\n In truth, Ford was facing massive unreserved liabilities from widespread,\n\n expensive defects on older vehicles \u2013 including failing rear axles on the flagship F-\n\n 150 dating back to 2020, catastrophic oil pump failures on vehicles dating back to\n\n 2016, and defective rearview cameras dating back to 2019, none of which were\n\n repairable through OTAs. In order to suppress reserves, Defendants engaged in a\n\n scheme in which they concealed the defects, delayed recalls, and misled their\n\n regulator (the NHTSA) about recalls, leading to a historic $165 million fine. Since\n\n Ford\u2019s reserves were calculated based on historical costs, by excluding defects and\n\n delaying recalls, they delayed booking the necessary reserve increases, thereby\n\n inflating profits. Such a scheme does not happen by accident, especially since\n\n Defendants had promised investors that they had a granular focus on warranties,\n\n discussed costs at weekly meetings, had real-time access to warranty and cost data,\n\n and were under NHTSA investigation throughout the Class Period.\n\n The truth emerged through disclosures in October 2023 and July 2024,\n\n apparently forced by the ongoing NHTSA investigation, when Ford shocked investors\n\n by recording billions of dollars in warranty charges that Defendants admitted were\n\n\n -2-\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2007 Filed 03/23/26 Page 15 of 53\n\n\n\n\n from long-existing issues on Ford\u2019s \u201colder models,\u201d not new cars or unforeseen issues.\n\n Booking these old liabilities caused the short-term boost in profits to reverse and the\n\n stock price to crash.\n\n Unable to muster grounds to dismiss such a coordinated scheme, Defendants\n\n inject alternate facts that have no place at the pleading stage. For example,\n\n Defendants point to irrelevant disclosures to claim investors were fully informed of\n\n the warranty problems (MD PageID.1277-78), yet that is refuted by the massive stock\n\n drop when the warranty troubles were belatedly disclosed. \u00b6\u00b6133-142. Defendants\n\n offer unsworn speculation about their auditors and cite multiple exhibits. See MD\n\n PageID.1284-85. Not only are these disputed facts inappropriate for consideration on\n\n a motion to dismiss, but they are unpersuasive because auditors have frequently been\n\n misled by management in frauds, just as Ford misled regulators here. Defendants\n\n even claim they did not \u201cparticipate[] in setting warranty accruals\u201d (MD PageID.1264-\n\n 65), which is contrary to their SOX certifications and signatures attesting to the\n\n accuracy of the financial statements and their admissions that they held weekly \u201cdeep\n\n dive[]\u201d meetings specifically to monitor costs. \u00b6\u00b648, 146-147.\n\n In short, because the Complaint details Defendants\u2019 specific, corroborated fraud\n\n to misleadingly portray success in controlling Ford\u2019s warranty problems while\n\n suppressing the true defects and costs, Defendants\u2019 Motion should be denied.\n\n\n\n\n -3-\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2008 Filed 03/23/26 Page 16 of 53\n\n\n\n\n II. STATEMENT OF FACTS\n\n A. Defendants Promised to Improve Warranty Costs\n Ford incurs costs for repairs or replacements to address: (i) problems covered\n\n by warranties; and (ii) recalls and fixes outside of warranty coverage, called Field\n\n Service Actions (\u201cFSA\u201d). \u00b6\u00b632-33, 126. Ford estimates these collective costs as\n\n warranty reserves at the time of sale, and purportedly adjusts those reserves \u201con a\n\n regular basis\u201d based on \u201cactual experience.\u201d \u00b6\u00b634-37. So, as more defects arise,\n\n \u201cactual experience\u201d of repairs increases, which under Ford\u2019s formula results in\n\n increases to the reserves, and, if a costly recall of all affected vehicles is issued, then\n\n reserve increases will be substantial. E.g., \u00b6\u00b675(c), 138. Conversely, delaying or\n\n failing to issue recalls will limit the costs in the \u201cactual experience,\u201d which results in\n\n artificially reduced warranty reserves far below reality. \u00b636. Since reserves are\n\n charged against income, suppressing reserves is a way to artificially boost reported\n\n profitability. \u00b6\u00b67, 119.\n\n Before the Class Period, Ford faced a profitability crisis driven by industry-\n\n leading warranty costs \u2013 a \u201c~$2 [billion] headwind\u201d that had plagued Ford since 2017\n\n and made it lag behind rival General Motors. \u00b6\u00b63, 38-40, 42. Farley and Lawler were\n\n promoted in 2020 to reverse Ford\u2019s \u201cunacceptably high\u201d costs. \u00b6\u00b643-44. They\n\n promised investors they had a \u201cvery concrete plan\u201d and were \u201claser focused\u201d on\n\n reducing the warranty costs that were hindering Ford. \u00b6\u00b63, 6, 43-45.\n\n\n -4-\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2009 Filed 03/23/26 Page 17 of 53\n\n\n\n\n Reducing these costs was also necessary to fund Farley and Lawler\u2019s \u201cFord+\u201d\n\n strategy. Launched in May 2021, Ford+ was a $30 billion pivot to EVs that Farley\n\n touted as Ford\u2019s \u201c\u2018biggest opportunity for growth\u2019\u201d since the Model T. \u00b6\u00b64, 29-30.\n\n Defendants, media, and analysts understood that reducing warranty costs was Ford\u2019s\n\n only viable lever to generate the billions in necessary capital, creating immense\n\n pressure on Defendants to demonstrate immediate progress. \u00b6\u00b64-6, 46, 83, 85.\n\n B. Defendants Closely Monitored Warranty Costs\n Defendants established the goal and then personally participated in the\n\n processes to try to lower warranty costs. \u00b6\u00b644-46. Farley confirmed his and Lawler\u2019s\n\n granular focus, stating they \u201clook at the root causes\u201d of warranty issues and \u201cgo\n\n through . . . hundreds\u201d of them. \u00b647. Senior management, including Farley and\n\n Lawler, attended weekly cost meetings where they dedicated \u201cTuesday once a month\n\n on costs\u201d and the remaining Tuesdays to \u201cdoing deep dives\u201d into specific cost issues.\n\n \u00b648. Defendants also employed a Critical Concern Review Group (\u201cCCRG\u201d) tasked\n\n with reviewing potential defects and safety issues. Id.\n\n Defendants monitored progress utilizing sophisticated data, including Ford\u2019s\n\n Global Warranty Measurement System (\u201cGWMS\u201d), which provided real-time\n\n warranty claims, costs, and trends from dealers \u201cin aggregate on a weekly basis\u201d to\n\n \u201cgauge if the dealer network [was] on track to meet Ford\u2019s quality improvement\n\n goals.\u201d \u00b6\u00b649-50. Ford also received \u201cservice details, repair history, applicable recall\n\n\n -5-\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2010 Filed 03/23/26 Page 18 of 53\n\n\n\n\n repairs\u201d and \u201cwarranty . . . information\u201d from dealers and monitored the internet for\n\n defect issues. \u00b6\u00b651-52. Farley and Lawler were directly involved in analyzing the\n\n data to set reserves and monitor warranty trends. Farley contacted Ford\u2019s Executive\n\n Director of Quality \u201cseveral times a week\u201d to engage on quality efforts. \u00b652. Farley\n\n and Lawler conducted quarterly reserve reviews \u201cas the actual claims [we]re incurred\u201d\n\n to \u201ccompare this experience with the historic spend and the trends\u201d to identify issues.\n\n \u00b6152. Defendants later acknowledged they had tracked \u201cinternal data\u201d on the relevant\n\n warranty and reliability issues \u201cfor quite some time,\u201d and that \u201cif these things come\n\n through . . . we\u2019re made aware of them,\u201d confirming their knowledge of issues with\n\n older models as they arose in the field. \u00b6\u00b6169, 172.\n\n C. Defendants Delayed Recalls and Concealed the Magnitude\n of Defects to Suppress Reserves and Report Positive Trends\n Ford was facing specific and costly defects in certain \u201colder\u201d vehicles that were\n\n concealed from investors. See \u00b6\u00b613, 138. First, a defective rear axle bolt design for\n\n Ford\u2019s flagship F-150 pickup truck (launched in 2020), caused the bolt to shear off.\n\n \u00b6\u00b659-64, 75(a)-(b), 138. This dangerous design failure, impacting more than 200,000\n\n vehicles, could render the truck \u201cundriveable.\u201d \u00b675(a). Farley admitted knowing such\n\n repairs were \u201csuper expensive\u201d and \u201ccomplicated\u201d (\u00b653), and indeed, the defect\n\n required a complete redesign (\u00b675(b)). By January 2022, the defect had reached\n\n internet forums, where Ford communicated with numerous F-150 owners impacted by\n\n the axle bolt issue. \u00b6\u00b658-61. As early as June 2022, Ford dealers were attempting\n\n -6-\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2011 Filed 03/23/26 Page 19 of 53\n\n\n\n\n fixes and NHTSA met twice with Ford about the issue. \u00b6\u00b659-61, 64, 75(c). Yet, Ford\n\n continued to sell F-150s with the defective design, while failing to issue a recall (until\n\n December 15, 2023) and book adequate reserves. \u00b675(c).\n\n Second, a catastrophic oil pump design defect impacted more than 100,000\n\n vehicles, beginning with \u201c2016 launched vehicles\u201d equipped with the 1.0L EcoBoost\n\n engine. \u00b6\u00b658, 65-66, 75(d), 138. This defect clogged the oil pump, often leading to\n\n engine failure and requiring engine replacement costing $7,000 or more per vehicle.\n\n \u00b6\u00b654, 65-67, 75(d)-(f). Customers from at least June 2020 onward complained of, and\n\n Ford\u2019s CCRG investigated by early 2022, the oil pump issue. \u00b6\u00b666, 68. Yet,\n\n Defendants failed to issue a recall (until December 22, 2023) (see \u00b665 n.17) or accrue\n\n necessary reserves for these \u201clong-standing\u201d liabilities. \u00b6\u00b613, 65-68, 138-139.\n\n Third, hundreds of thousands of Ford vehicles had defective rear-view cameras\n\n (\u201cRVCs\u201d). \u00b6\u00b669, 75(g). While Defendants touted their ability to fix issues cheaply\n\n via OTA updates, the RVC defect required physical replacement of the camera. \u00b6\u00b69\n\n n.5, 34, 69. Defendants delayed RVC recalls since late 2020, leading to a historic\n\n $165 million NHTSA penalty and finding that Ford was aware of defects but failed to\n\n timely recall vehicles and misled NHTSA and the public. \u00b6\u00b6175-179.\n\n D. Defendants Falsely Touted Positive Warranty Trends\n Before the Class Period, in 2019 and 2020, Ford had booked reserve increases\n\n of $1.9 billion and $2.4 billion, respectively, to address defects in \u201colder\u201d vehicles.\n\n\n -7-\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2012 Filed 03/23/26 Page 20 of 53\n\n\n\n\n See \u00b6\u00b68, 84. After the Class Period began, Defendants delayed recalls and concealed\n\n the magnitude of existing defects on hundreds of thousands of older vehicles. \u00a7II.C.\n\n By removing costs of defects and recalls from Ford\u2019s \u201cactual experience\u201d to set\n\n warranty reserves, Defendants were able to record significantly smaller reserve\n\n increases in 2021 and 2022, which signaled that quality was improving and warranty\n\n costs were going down. See, e.g., \u00b6\u00b677, 80, 84, 86, 88-89, 93, 101. Leaving no doubt\n\n what the numbers meant, Defendants boasted of \u201cimprovement in warranty costs\u201d of\n\n \u201cabout $1.4 billion\u201d (\u00b6\u00b678, 82), which they claimed \u201cmore than offset the effects of\n\n production losses and higher commodity costs\u201d (\u00b681), drawing positive reactions\n\n from analysts regarding the purported success of the Ford+ plan (\u00b6\u00b683, 85).\n\n Defendants also claimed that warranty costs were improving due to Ford\u2019s\n\n \u201cquality improvements\u201d (e.g., \u00b6\u00b690, 99, 102) and technological advancements like\n\n OTA updates (e.g., \u00b6\u00b69, 82(b), 87). They claimed Ford could use remote OTA\n\n updates, which reduced repair costs by 95%, to quickly and cheaply resolve quality\n\n issues, stating, \u201cboy, has that worked for us.\u201d \u00b6\u00b69, 87. However, dealerships were\n\n continuing to opt for physical repairs rather than OTAs, and the concealed defects\n\n plaguing Ford were not fixable by cheaper OTAs. \u00b6\u00b658, 69, 71, 91(b), 139.\n\n E. The Truth Is Revealed that Warranty Costs Remained Sky-\n High\n As the NHTSA investigation progressed, Ford began to disclose the truth when,\n\n on October 26, 2023, the Company reported a $1.2 billion increase in warranty costs\n\n -8-\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2013 Filed 03/23/26 Page 21 of 53\n\n\n\n\n for the third quarter \u2013 more than double the first two quarters combined. \u00b6\u00b610, 133.\n\n Ford\u2019s stock price declined by 12%, wiping out more than $5 billion in market\n\n capitalization, and analysts attributed the decline to a \u201cQ3 miss driven by more\n\n warranty issues.\u201d \u00b6\u00b610, 133-134. In discussing the increased warranty costs, Farley\n\n stated that Ford\u2019s RVCs were a \u201chuge burden,\u201d but did not disclose RVC recalls had\n\n been delayed or the full extent of the problems. \u00b6133.\n\n The full truth was revealed on July 24, 2024, when Defendants again shocked\n\n investors by reporting that Ford Blue\u2019s EBIT had plummeted nearly 50%, as\n\n \u201c[p]rofitability was affected by\u201d a $1.4 billion increase in warranty reserves. \u00b6\u00b6136-\n\n 137. Defendants admitted this was due to long-standing issues in \u201colder model[]\u201d\n\n vehicles, not new cars or unforeseen defects. \u00b6\u00b613, 58, 138. Lawler said the \u201clargest\u201d\n\n impact was from the \u201caxle bolt [issue]\u201d and the \u201coil pump issue\u201d in vehicles launched\n\n as far back as 2016. \u00b6138. These admissions confirmed that Ford was facing \u201csuper\n\n expensive\u201d physical repairs for which they had failed to adequately reserve. \u00b6\u00b613, 53,\n\n 58-75. Following the July 24, 2024 admissions, Ford\u2019s stock price sank by 18%, the\n\n largest one-day decline since the 2008 financial crisis. \u00b6\u00b615, 140.\n\n Shortly after these disclosures and the conclusion of the NHTSA investigation,\n\n Ford announced in November 2024 it had entered a Consent Order with NHTSA,\n\n paying a $165 million fine. \u00b6175. The Consent Order revealed that Ford had failed to\n\n comply with federal regulations for its defective RVCs, provided inaccurate\n\n\n -9-\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2014 Filed 03/23/26 Page 22 of 53\n\n\n\n\n information regarding RVCs and other defects dating back to late 2020, and delayed\n\n needed RVC recalls. \u00b6\u00b6177-179. This regulatory finding, combined with Defendants\u2019\n\n promises that they \u201clook at the root causes\u201d of warranty issues (\u00b647), make clear\n\n Defendants acted with scienter, not neglect. See also \u00b6\u00b647, 52, 148-150.\n\n III. ARGUMENT\n Legal Standards on a Motion to Dismiss\n The Complaint alleges violations of \u00a710(b) of the Exchange Act and SEC Rule\n\n 10b-5. \u00b6\u00b6206-210. Defendants only contest falsity and scienter, conceding all other\n\n elements of a \u00a710(b)/Rule 10b-5 claim were adequately pled. Although the Private\n\n Securities Litigation Reform Act (\u201cPSLRA\u201d) requires specific pleading standards for\n\n \u00a710(b) claims, they \u201care still pleading standards \u2013 not evidentiary ones\u201d and \u201cdo[] not\n\n override the principle that, when a court considers a Rule 12(b)(6) motion, it must\n\n \u2018accept plaintiff\u2019s allegations as true and construe the complaint in its favor.\u2019\u201d Bond\n\n v. Clover Health Invs., Corp., 587 F. Supp. 3d 641, 667 (M.D. Tenn. 2022) (emphasis\n\n in original); see also Frank v. Dana Corp., 646 F.3d 954, 958 (6th Cir. 2011) (\u201cDana\n\n II\u201d) (holding \u201c[a]ll facts in the complaint must be accepted as true\u201d).\n\n The Complaint Adequately Alleges False and Misleading\n Statements\n Corporate actors must \u201c\u2018provide complete and non-misleading information with\n\n respect to the subjects on which [they] undertake[] to speak.\u2019\u201d Helwig v. Vencor, Inc.,\n\n 251 F.3d 540, 560-61 (6th Cir. 2001) (en banc) (reversing dismissal), abrogated on\n\n\n - 10 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2015 Filed 03/23/26 Page 23 of 53\n\n\n\n\n other grounds by Tellabs, Inc. v. Makor Issues & Rts., Ltd., 551 U.S. 308 (2007)\n\n (\u201cTellabs II\u201d). \u201cWhen determining whether an omission renders prior statements\n\n misleading, context matters\u201d because \u201c\u2018[s]ome statements, although literally accurate,\n\n can become, through their context and manner of presentation, devices which mislead\n\n investors.\u2019\u201d MJK Fam. LLC v. Corp. Eagle Mgmt. Servs., 2009 WL 4506418, at *7\n\n (E.D. Mich. Nov. 30, 2009) (alteration in original).\n\n 1. Defendants Made False and Misleading Statements\n Portraying Positive Quality and Warranty Trends\n The following chart (\u00b656) shows Defendants reported drastically improved (and\n\n suppressed) warranty reserves during the Class Period, boosting profitability:\n\n\n\n\n This purportedly positive reversal of prior trends in Ford\u2019s \u201cpre-existing\u201d\n\n warranty reserves signaled that warranty costs for older vehicles were significantly\n\n improving,2 which matched Defendants\u2019 words. For example, Ford claimed that\n\n\n 2\n Defendants reported favorable comparative metrics such as, in October 2021,\n reporting \u201cchanges in accrual related to pre-existing warranties\u201d of only $44\n million, compared to the $1.4 billion increase in the prior year. \u00b677; see also \u00b678\n (Lawler emphasizing \u201cour warranty will improve in the fourth quarter and full year\u201d\n - 11 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2016 Filed 03/23/26 Page 24 of 53\n\n\n\n\n \u201clower warranty costs\u201d had \u201cmore than offset the effects of production losses and\n\n higher commodity costs\u201d (\u00b681), and Lawler likewise touted that Ford achieved\n\n \u201cimprovement in warranty costs\u201d that \u201coffset commodity headwinds and supply\n\n chain-related production losses\u201d (\u00b682(a)) and \u201ccontribution costs improved by about\n\n 4 points driven by . . . warranty\u201d (\u00b694).\n\n Defendants attributed the positive trend of lower warranty costs to improved\n\n quality and increased OTA usage. For example, Lawler said \u201cwe\u2019re improving our\n\n quality . . . . We saw that come through this year, from a year-over-year warranty\n\n standpoint was down roughly $1.4 billion\u201d and Ford was \u201cleveraging what we have\n\n from the connected vehicle [OTAs] to improve warranty even further.\u201d \u00b682(b).\n\n Similarly, Farley assured investors costs were declining because Ford identifies\n\n defects and \u201ctakes actions quickly to resolve them\u201d with \u201cmuch more frequent use of\n\n OTAs\u201d which had \u201cworked for us\u201d (\u00b687), and Defendants had \u201coverhauled\u201d Ford\u2019s\n\n \u201centire enterprise quality operating system\u201d and were \u201cseeing improvements in\n\n initial quality\u201d (\u00b690).3 In early 2024, Lawler assured investors that \u201cfrom a warranty\n\n\n and \u201cwe expect to be good by about $1.4 billion\u201d). In February 2022, Defendants\n reported \u201cchanges in accrual related to pre-existing warranties\u201d of $221 million, a\n $2.2 billion improvement. \u00b680. Lawler stated that for warranty costs, \u201cin 2021, we\n improved by about $1 billion\u201d and \u201cwe were about flat\u201d in 2022. \u00b692(a).\n 3\n Farley also said \u201cour quality is making real progress\u201d and \u201cinitial quality is\n 10% better\u201d (\u00b6102), that \u201con warranty . . . you\u2019ll see very quick progress on initial\n quality\u201d because \u201cour fitness . . . will show up there first\u201d (\u00b692(b)), and that Ford \u201cso\n far . . . avoided about 12 recalls on F-150\u201d (\u00b6102).\n\n - 12 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2017 Filed 03/23/26 Page 25 of 53\n\n\n\n\n standpoint, costs are probably going to be about flat\u201d because \u201cwe\u2019re starting to see\n\n green shoots [positive signs] in the quality improvements.\u201d \u00b699.\n\n The chart (\u00b656) and Defendants\u2019 prior statements refute their present claim that\n\n they accurately disclosed negative trends and increasing warranty costs (MD\n\n PageID.1277-79). See \u00a7\u00a7II.B.-D.; Helwig, 251 F. 3d at 565 (rejecting defense\n\n interpretation because \u201c[f]act-splitting is hardly persuasive or appropriate considering\n\n the Rule 12(b)(6) posture of this case\u201d). Defendants\u2019 statements were misleading\n\n because they omitted to disclose that there was no billion-dollar improvement in\n\n warranty costs. Rather, Defendants artificially suppressed the warranty reserve\n\n calculation by delaying recalls on then-existing costly defects plaguing older vehicles\n\n (and could not be remedied with OTAs). See \u00a7\u00a7II.C.-E.; Padilla v. Cmty. Health Sys.,\n\n Inc., 2022 WL 3452318, at *20 (M.D. Tenn. Aug. 17, 2022) (upholding statements\n\n concealing understatement of bad debt because plaintiffs \u201cplausibly alleged that\n\n [d]efendants distorted certain figures disclosed to the public and stated what the\n\n practices were and how they allegedly distorted the data\u201d); MJK, 2009 WL 4506418,\n\n at *8 (finding incomplete disclosures of some conflicts were actionable because they\n\n concealed other, serious conflicts).4\n\n\n 4\n See also City of Monroe Emps. Ret. Sys. v. Bridgestone Corp., 399 F.3d 651,\n 669-81 (6th Cir. 2005) (reversing dismissal of statement that misleadingly understated\n exposure to claims for defective tires); Smilovits v. First Solar, Inc., 2012 WL\n 6574410, at *4 (D. Ariz. Dec. 17, 2012) (holding statements that concealed product\n defects to understate reserves were actionable).\n\n - 13 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2018 Filed 03/23/26 Page 26 of 53\n\n\n\n\n Defendants cannot undermine their plain words with fact disputes. First, they\n\n claim investors were not misled because Ford reported increased reserves in some\n\n quarters. MD PageID.1277-78. This \u201ctruth-on-the-market\u201d defense is \u201c\u2018intensely\n\n fact-specific and is rarely an appropriate basis for dismissing a \u00a710(b) complaint.\u2019\u201d\n\n Wilkof v. Caraco Pharm. Laby\u2019s, Ltd., 2010 WL 4184465, at *4 (E.D. Mich. Oct. 21,\n\n 2010) (upholding statements that failed to \u201cshare complete information\u201d about\n\n company problems and rejecting argument that market knew of concealed facts).\n\n Moreover, those relatively smaller quarter-over-quarter increases in Ford\u2019s warranty\n\n reserves in 2021-2023 represented a positive reversal from the drastically higher (up\n\n to 10x larger) increases in 2018-2020 and do nothing to explain why warranty costs\n\n and reserves increased by over $2 billion at the end of the Class Period (in 3Q23 and\n\n 2Q24) for old-car issues. See \u00a7\u00a7II.D.-E.; \u00b6\u00b68, 133-138; Shupe v. Rocket Cos., 660 F.\n\n Supp. 3d 647, 670-71 (E.D. Mich. 2023) (upholding statements that concealed\n\n negative cost exposure from rising interest rates and rejecting argument that investors\n\n were \u201cnitwits\u201d if they were misled).5 Defendants attempt to demonstrate their honesty\n\n\n 5\n As Defendants concede, Ford did not report the quarterly metrics in their chart.\n MD PageID.1270 n.2. This is because Ford has admitted that seasonality impacts\n reserves and, thus, quarter-over-quarter is not an accurate comparison. See Ford\n Motor Company, Annual Report at 43 (Form 10-K) (Feb. 5, 2025). Rather, when\n each quarter in 2021 and 2022 is properly compared to the same quarters in 2019 and\n 2020, it shows a dramatic decrease, falsely portraying positive warranty trends. See\n \u00b6\u00b677, 80, 84, 86, 88; see also \u00b6165 (comparing suppressed first half 2021-2023 reserve\n increases with true increases revealed by the 2Q24 corrective disclosure).\n\n - 14 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2019 Filed 03/23/26 Page 27 of 53\n\n\n\n\n by pointing to the year-over-year reserve increase of \u201c2000%\u201d in Q3 2023 (MD\n\n PageID.1271, 1277-78), but that increase is one of the corrective disclosures that came\n\n during the NHTSA investigation and shocked investors, causing a 12% stock decline.\n\n See \u00b6\u00b6133-134; Roofers Loc. No. 149 Pen. Fund v. Amgen Inc., 751 F. Supp. 3d 330,\n\n 348-49 (S.D.N.Y. 2024) (holding omission of fact was not offset by disclosure of\n\n other related facts where the \u201c[c]ompany\u2019s share price declined appreciably\u201d after\n\n omitted fact was revealed).\n\n Second, Defendants continue their improper truth-on-the-market defense by\n\n pointing to other statements that Ford was \u201cnumber one in recalls\u201d and had \u201cmore\n\n work to do\u201d on quality to suggest investors were fully informed of the concealed facts.\n\n MD PageID.1279, 1288-89. But saying Ford has lots of recalls on disclosed defects\n\n did not inform investors that Ford was facing massively higher costs on the\n\n undisclosed defects and delaying even more required recalls to suppress reserves and\n\n boost profits, or that OTA usage was not improving warranty costs. E.g., \u00b6\u00b691, 97,\n\n 105, 112, 114. If telling half the story were enough, Defendants could never be liable.\n\n See Grae v. Corr. Corp. of Am., 2021 WL 1100799, at *23 (M.D. Tenn. Mar. 23,\n\n 2021) (rejecting truth-on-the market defense at summary judgment where \u201cbits and\n\n pieces\u201d disclosed to public about \u201cquality issues\u201d failed to \u201cpaint[] the whole\n\n picture\u201d). That analysts interpreted Defendants\u2019 statements to indicate quality and\n\n warranty costs were improving refutes Defendants\u2019 argument. See, e.g., \u00b6\u00b679, 83; In\n\n\n - 15 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2020 Filed 03/23/26 Page 28 of 53\n\n\n\n\n re Envision Healthcare Corp. Sec. Litig., 2022 WL 4551876, at *8 (M.D. Tenn. Sep.\n\n 29, 2022) (adopting interpretation of statement corroborated by analysts).\n\n Third, Defendants claim Plaintiffs must back-cast the over $2 billion in belated\n\n warranty costs and reserve increases to each quarter of the Class Period. MD\n\n PageID.1281. But that level of detail, which also requires experts, is not required, as\n\n the PSLRA would not serve its \u201cpurpose \u2018to protect investors\u2019\u201d if it \u201cbec[a]me a\n\n choke-point for meritorious claims\u201d at the pleading stage, particularly given the\n\n \u201csuspension of all discovery pending a motion to dismiss.\u201d Helwig, 251 F.3d at 553.\n\n Thus, those details can await fact and expert discovery. See id.; In re Upstart\n\n Holdings, Inc. Sec. Litig., 2023 WL 6379810, at *14 (S.D. Ohio Sept. 29, 2023)\n\n (\u201c[C]ourts must be cautious when considering . . . hindsight arguments at the motion\n\n to dismiss stage because there has been little if any discovery and the court has no\n\n visibility into the evidence that was available to the corporate [defendants].\u201d);\n\n Pierrelouis v. Gogo, 2021 WL 1608342, at *6-*7, *11 (N.D. Ill. Apr. 26, 2021)\n\n (assessing pleadings in light of \u201cthe limited information available to plaintiff\n\n concerning . . . internal deliberations\u201d); Bond, 587 F. Supp. 3d at 667.\n\n Here, Plaintiffs sufficiently detail that the over $2 billion increases in warranty\n\n costs and reserves at the end of the Class Period were attributed primarily to pre-\n\n existing defects well-known and discussed within Ford and among its dealers and\n\n customers, for which the touted OTAs were useless. See \u00a7\u00a7II.C., II.E., III.B.2. For\n\n\n - 16 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2021 Filed 03/23/26 Page 29 of 53\n\n\n\n\n example, Defendants admitted in 2Q24 the increased costs were driven by the\n\n longstanding defects in older-model vehicles and dealers were not using OTAs,\n\n contrary to their prior claims. \u00b6\u00b6138-139. Fraud by hindsight is when unforeseeable\n\n defects arise to make prior reserve and warranty statements inadequate, not when\n\n known, old defects are concealed and recalls are delayed and suppressed.6\n\n 2. Defendants Reported Suppressed Reserves in\n Violation of GAAP\n Ford\u2019s financial statements were false and misleading because they did not\n\n comply with GAAP, including violating ASC 450, governing disclosure of a \u201closs\n\n contingency.\u201d \u00b6\u00b6116-131. ASC 450 required that Ford accrue a charge to income\n\n when: (i) the Company has information indicating a loss was probable (i.e., \u201clikely\u201d to\n\n occur) before the financial statements were issued; and (ii) the amount of the loss can\n\n be reasonably estimated. \u00b6122. Here, Defendants were required to book appropriate\n\n reserves under ASC 450 for the defects plaguing Ford during the Class Period, which\n\n\n 6\n See also Carpenters Pension Tr. Fund for N. Cal. v. Allstate Corp., 2018 WL\n 1071442, at *6 (N.D. Ill. Feb. 27, 2018) (rejecting \u201c\u2018fraud by hindsight\u2019\u201d argument\n because defendant\u2019s admission \u201cdoes not merely indicate\u201d his statements \u201cwere\n incorrect in retrospect; it suggests that they were incorrect when made\u201d). The facts\n here are distinct from those cited by Defendants. See, e.g., IBEW v. Ltd. Brands, Inc.,\n 788 F. Supp. 2d 609, 635 (S.D. Ohio 2011) (dismissing where defendants disclosed\n company\u2019s specific underlying problems and plaintiffs failed to plead facts\n undermining defendants\u2019 claims that they were working hard to fix them); In re\n Humana, Inc. Sec. Litig., 2009 WL 1767193, at *16-*17 (W.D. Ky. June 23, 2009)\n (finding statements regarding sales for one program were not rendered misleading for\n failing to disclose pricing issues for a different program).\n\n - 17 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2022 Filed 03/23/26 Page 30 of 53\n\n\n\n\n were widespread and consistent (\u00b6\u00b659-61, 65-66, 69, 74-75), expensive (\u00b6\u00b653-54, 67,\n\n 69, 75(b), 75(e)-(h), 133, 138), closely monitored (\u00b6\u00b643-54, 62-63, 68-69, 75(c), 169,\n\n 172), and under regulatory noncompliance review (\u00b6\u00b664-66, 69, 176-177), making the\n\n high costs to fix them clearly probable and estimable. But Defendants delayed recalls,\n\n suppressing historic costs and the reported reserves based on those understated costs,\n\n only to belatedly (as the NHTSA probe neared completion) issue recalls, requiring\n\n them to pay increased warranty costs and book increased reserves at the end of the\n\n Class Period. See \u00a7\u00a7II.C.-E.; \u00b6\u00b6126-128; Godinez v. Alere Inc., 272 F. Supp. 3d 201,\n\n 217 (D. Mass. 2017) (rejecting that defendants would \u201cnot have known before July\n\n 2016\u201d that a recall was sufficiently probable to require accrual of a loss under ASC\n\n 450 because later-disclosed \u201closs was attributed to circumstances in existence before\n\n the end of 2015\u201d); Smilovits v. First Solar, Inc., 119 F. Supp. 3d 978, 1005-06 (D.\n\n Ariz. 2015) (upholding under-accrual claims on summary judgment), aff\u2019d sub nom.\n\n by Mineworkers\u2019 Pension Scheme v. First Solar Inc., 881 F.3d 150 (9th Cir. 2018).\n\n Defendants\u2019 fact disputes and speculation (MD PageID.1280-85) have no place\n\n in a motion to dismiss and do not conclusively refute the allegations (\u00a7III.B.1). First,\n\n Defendants speculate that their external auditors approved the delayed recalls and\n\n suppressed reserves. MD PageID.1269-71, 1284. But there are no allegations, and\n\n Defendants do not even suggest, that the auditors were informed of the older-model\n\n vehicle defects, delayed recalls, and inaccurate information provided to the NHTSA.\n\n\n - 18 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2023 Filed 03/23/26 Page 31 of 53\n\n\n\n\n See MD PageID.1284. Whether the auditors approved the scheme, as Defendants\n\n suggest, or were provided inaccurate information like the regulators, must await trial.\n\n See Helwig, 251 F.3d at 553 (holding inferences \u201c\u2018must be construed in the plaintiff\u2019s\n\n favor\u2019\u201d); First Solar, 119 F. Supp. 3d at 1005-06 (rejecting reliance on auditor defense\n\n on warranty reserve issue at summary judgment because of questions of fact over\n\n whether company withheld or misstated facts to auditors).7\n\n Second, Defendants again argue Plaintiffs must reconstruct the quarterly\n\n reserves that \u201cFord should have accrued instead.\u201d MD PageID.1277 (emphasis in\n\n original). However, investors need not be CPAs to pursue recovery under the\n\n securities laws and can rely on expert discovery to back-cast when the over $2 billion\n\n in belated reserve increases and costs should have been reserved. See In re Flag\n\n Telecom Holdings, Ltd. Sec. Litig., 352 F. Supp. 2d 429, 467 (S.D.N.Y. 2005)\n\n (holding no requirement to plead specific dates or \u201cprecisely quantify\u201d financial\n\n\n 7\n See also N. Port Firefighters\u2019 Pension-Loc. Option Plan v. Fushi Copperweld,\n Inc., 929 F. Supp. 2d 740, 785 & n.7 (M.D. Tenn. 2013) (\u201cAssertions that\n [Defendants] employed an independent accounting firm\u2019s assessment on these issues\n does not confer immunity nor can such an issue be decided at pleading stage.\u201d).\n Unlike in Defendants\u2019 cases, there is evidence here that Ford misled regulators,\n supporting an inference the auditors were also misled, and the errors here did not arise\n from mere \u201caccounting deficiencies\u201d (Malin v. XL Cap., 499 F. Supp. 2d 117, 127,\n 143, 148 (D. Conn. 2007), aff\u2019d, 312 F. App\u2019x 400 (2d Cir. 2009)), or valuation of\n claims already subject to reserves (Woolgar v. Kingstone Cos., 477 F. Supp. 3d 193,\n 228-29 (S.D.N.Y. 2020)), but arose from Defendants failing to accurately bring\n existing, significant defects into the reserve assessment, which an auditor would not\n have known. See \u00a7\u00a7II.C.-E.; MD PageID.1348.\n\n - 19 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2024 Filed 03/23/26 Page 32 of 53\n\n\n\n\n misstatements).8 It is enough at this stage that billions clearly related, by Defendants\u2019\n\n admission, primarily to pre-existing defects and, by Ford\u2019s reported reserve formula,\n\n delaying recalls would suppress historical costs and reduce reported reserves.9\n\n Finally, Defendants\u2019 argument that they complied with GAAP by disclosing\n\n \u201cpossible costs in excess of our accruals\u201d (MD PageID.1283 (emphasis in original)) is\n\n both subject to expert testimony and incorrect. GAAP does not permit below-the-line\n\n reporting of \u201cpossible\u201d costs as a substitute for above-the-line costs and reserves that\n\n reduce profit (\u00b6\u00b6122-124), and Defendants cite no authority suggesting otherwise. If\n\n anything, Defendants\u2019 argument that they accounted for the concealed defects at issue\n\n by adding \u201c$700 million to $1.5 billion in the Class Period\u201d for \u201cpossible costs\u201d (MD\n\n 8\n See also In re Perrigo Co. PLC Sec. Litig., 435 F. Supp. 3d 571, 582-87\n (S.D.N.Y. 2020) (finding violation of ASC 450 sufficiently pled even though there\n had been \u201cno final determination\u201d on precise amount of liability); In re Facebook, Inc.\n Sec. Litig., 87 F.4th 934, 950 (9th Cir. 2023) (holding statements \u201ccould be misleading\n even if the magnitude of the ensuing harm was still unknown\u201d). In a parenthetical,\n Defendants suggest their unilateral decision not to restate reserves negates Plaintiffs\u2019\n claimed GAAP violations (MD PageID.1284-85), but that is not true. See In re LDK\n Solar Sec. Litig., 584 F. Supp. 2d 1230, 1245 (N.D. Cal. 2008) (\u201c[T]he lack of a\n restatement did not mean that [Defendants] only engaged in legitimate conduct.\u201d);\n Padilla, 2022 WL 3452318, at *38; Bond, 587 F. Supp. 3d at 674.\n 9\n For example, Defendants had identified RVC defects in October 2020 (\u00b669),\n and the oil pump defect was causing expensive damage in 2020 and 2021 (\u00b666), yet\n they increased reserves only $44 million (versus $1.4 billion in prior year) (\u00b677). As\n another example, as NHTSA pressed on Ford\u2019s inadequate RVC recalls and the oil\n pump defect wreaked havoc (\u00b6\u00b666-68, 176-178), the expensive rear-axle defect on\n Ford\u2019s flagship F-150 was clear in 2021 and 2022, with NHTSA meeting twice with\n Ford by June 2022. \u00b6\u00b659-64, 75(a)-(c), 75(g)-(h). Yet, in 1Q-3Q 2022, Defendants\n reported only small reserve increases that did not match reality. \u00b6\u00b684-88.\n\n - 20 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2025 Filed 03/23/26 Page 33 of 53\n\n\n\n\n PageID.1283-84) concedes they knew they had an over $2 billion problem during the\n\n Class Period but tried to minimize (and understate) it as possible, not probable. As\n\n discussed, the allegations show those costs were in fact probable (i.e., likely) and\n\n being delayed. \u00a7\u00a7II.C.-D. Thus, the costs were required to be booked in the financial\n\n statements as a reserve that lowered profits. \u00b6\u00b6126-128. Defendants\u2019 words are again\n\n undercut by their actions since, at the end of the Class Period, they were forced to\n\n increase costs and reserves above the line and decrease profits to comply with GAAP,\n\n rather than continue footnoting only \u201cpossible\u201d costs. MD PageID.1642.10\n\n 3. Defendants\u2019 Inflation Statements Were Misleading\n Defendants misleadingly attributed certain warranty cost increases to temporary\n\n \u201cinflation\u201d rather than the quality defects they needed to fix. In July 2023, Lawler\n\n stated Ford was seeing increased warranty costs due to \u201csome inflationary pressures\u201d\n\n and dealerships \u201cincreasing their costs\u201d (\u00b695), but, in truth, as later admitted in\n\n October 2023, 75% of the increased costs (i.e., $900 million) in 3Q 2023 was \u201cdriven\n\n by recalls\u201d and \u201cwarranties.\u201d \u00b6\u00b6133-134. It was misleading to publicly blame the\n\n 25% cause (inflation), while concealing the 75% cause (warranty problems).\n\n Thereafter, the market understood the 3Q23 warranty problems would be non-\n\n 10\n Defendants claim Plaintiffs did not include the \u201cpossible costs\u201d disclosure in the\n Complaint (id. 1284), as if to suggest it is Plaintiffs\u2019 burden to refute every\n conceivable weak argument Defendants might advance. That has never been a rule of\n advocacy, but if it were, Defendants committed a far bigger violation by ignoring in\n their Motion Plaintiffs\u2019 most compelling allegations.\n\n - 21 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2026 Filed 03/23/26 Page 34 of 53\n\n\n\n\n recurring (\u00b6134), and Defendants misleadingly affirmed that perception by again\n\n citing only inflation as a source of increased warranty costs in 2024, with Defendants\n\n claiming in February 2024 that \u201cour warranty costs have increased, in part, due to\n\n inflationary cost pressures\u201d (\u00b6115), and Lawler saying in June 2024 that Ford was\n\n only \u201cseeing . . . inflation in the warranty space, the cost per repairs going up\u201d\n\n (\u00b6104). These statements concealed that 2024 costs were increasing because of the\n\n massive warranty problems Defendants were failing to contain, as admitted in July\n\n 2024. \u00b6\u00b6136-138. By choosing to speak about the supposed source of increased\n\n warranty costs, Defendants were required to tell the whole truth. See Allstate, 2018\n\n WL 1071442, at *4 (holding by \u201celect[ing]\u201d to discuss one cause of increased claims\n\n (weather), defendants had \u201cto do so in a manner that was not misleading; that is, by\n\n disclosing [the company\u2019s] reduction in underwriting standards\u201d).\n\n 4. Defendants Provided False and Misleading Risk\n Disclosures that Failed to Warn Investors of Reality\n Defendants\u2019 claim that their \u201crisk warnings\u201d fully informed investors (MD\n\n PageID.1290-92) fails because those were also false and misleading. For example,\n\n they claimed only that vehicles \u201ccould be affected by defects that result in . . . recall\n\n campaigns, or increased warranty costs\u201d and such costs \u201ccould be substantial\u201d and\n\n \u201chave an adverse effect on\u201d Ford\u2019s financial condition and reputation. \u00b6\u00b6107-111.\n\n Defendants did not warn that recalls on existing defects were being delayed, and costs\n\n were being concealed, to suppress reserves and inflate profits. See Facebook, 87 F.4th\n\n - 22 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2027 Filed 03/23/26 Page 35 of 53\n\n\n\n\n at 949 (finding risk statements presented \u201cas purely hypothetical when that exact risk\n\n had already transpired\u201d were inadequate).\n\n Defendants\u2019 citation to Bondali v. Yum! Brands, Inc., 620 F. App\u2019x 483, 491\n\n (6th Cir. 2015) (MD PageID.1291), is unavailing because the Yum! court recognized\n\n that \u201cthere may be circumstances under which a risk disclosure might support [\u00a7]10(b)\n\n liability.\u201d Id. This is such a case. In Yum!, plaintiffs only alleged that eight batches\n\n out of thousands of chicken tested positive for antibiotic residues, with no context to\n\n show these \u201cwere so severe that they would have resulted in financial loss for Yum.\u201d\n\n Id. By contrast, here, the existing defects and delayed recalls caused over $2 billion of\n\n reserve increases and costs. See \u00a7III.E.11 Similarly, Defendants\u2019 statements that they\n\n purportedly \u201cassess our obligation for [FSAs] on a regular basis\u201d to \u201cupdate our\n\n estimates as necessary\u201d (\u00b6113(b)) were clearly false and misleading because\n\n Defendants were not doing that and instead were hiding defects and delaying recalls to\n\n avoid updating their estimates. \u00a7II.C.; see also Underland v. Alter, 2011 WL\n\n 4017908, at *9 (E.D. Pa. Sept. 9, 2011) (\u201cBecause Plaintiffs have sufficiently alleged\n\n 11\n Under these facts, \u201ca reasonable investor would be []likely to infer\u201d (Yum!, 620\n F. App\u2019x at 491) Ford was not delaying recalls or facing massive costs on concealed\n defects. See also Silverman v. Motorola, Inc., 2008 WL 4360648, at *10 (N.D. Ill.\n Sept. 23, 2008) (finding statements that product launches were \u201con track\u201d were false\n in light of \u201comissions regarding the problems plaguing the 3G rollout\u201d). Notably,\n Ford has conceded its risk warnings were inadequate during most of the Class Period\n by changing them on October 26, 2023, the first corrective disclosure date. See MD\n PageID.1291. Even this belated revision still did not inform investors that warranty\n costs were not improving and continued to plague Ford\u2019s financial results.\n\n - 23 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2028 Filed 03/23/26 Page 36 of 53\n\n\n\n\n that Defendants departed from their claimed methodology to calculate the loan loss\n\n reserve, they have sufficiently alleged . . . loan loss reserves were misstated.\u201d).\n\n 5. Defendants\u2019 Remaining Arguments Lack Merit\n\n a. The Statements Are Not Protected Under the\n Safe Harbor\n Defendants incorrectly suggest that warranty reserves are forward-looking\n\n estimates protected by the PSLRA\u2019s safe harbor. MD PageID.1285-87. However,\n\n \u201c\u2018reserves and their adequacy are not per se forward-looking\u2019\u201d under the PSLRA.\n\n Winslow v. BancorpSouth, Inc., 2011 WL 7090820, at *18 (M.D. Tenn. Apr. 26,\n\n 2011) (denying motion to dismiss), R&R adopted, 2012 WL 214635 (M.D. Tenn. Jan.\n\n 24, 2012). Instead, reserve statements are not protected if they, for example: (i) \u201c\u2018\u201care\n\n directed to the then-present state of the Company\u2019s financial condition\u201d\u2019\u201d (id.); (ii) are\n\n misleading \u201c\u2018based upon omissions of existing facts or circumstances\u2019\u201d (Shulman v.\n\n Weston, __ F. Supp. 3d __, 2025 WL 3754159, at *8 (D.N.J. Dec. 29, 2025)); (iii) lack\n\n a reasonable basis (Blatt v. Corn Prods. Int\u2019l, Inc., 2006 WL 1697013, at *4 (N.D. Ill.\n\n June 14, 2006)); or (iv) are \u201cmixed present/future\u201d statements that are misleading as to\n\n \u201cthe part of the statement that refers to the present\u201d (Makor Issues & Rts., Ltd. v.\n\n Tellabs Inc., 513 F.3d 702, 705 (7th Cir. 2008) (\u201cTellabs III\u201d)).\n\n Here, the reserves and quality statements were directed at the condition of\n\n Ford\u2019s present financial condition and were publicly stated to be based on historical\n\n cost experience. But Defendants suppressed them by delaying recalls on existing\n\n - 24 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2029 Filed 03/23/26 Page 37 of 53\n\n\n\n\n defects, and OTA usage was low. \u00a7\u00a7II.C.-E. That is far different than claiming\n\n Defendants failed to predict future events, as the concealed facts had nothing to do\n\n with the future. See Winslow, 2011 WL 7090820, at *18 (upholding statements where\n\n plaintiff claimed \u201cthe reserves were insufficient in light of the existing risks\u201d).12\n\n b. The Statements Are Not Inactionable Opinions\n Defendants claim their reported warranty reserves and unspecified \u201crelated\n\n statements about warranty costs\u201d are inactionable opinions. MD PageID.1279-84.\n\n However, Ford\u2019s reserves are not alleged to be misleading opinions about the future,\n\n but to have contained the false factual assertion that Ford\u2019s reported positive trends\n\n reflected improved historical information (e.g., \u00b6113) when, in reality, Defendants\n\n were manipulating historical results by excluding the costs of recalling and fixing\n\n then-existing costly defects impacting hundreds of thousands of vehicles. See \u00a7\u00a7II.C.-\n\n E.; Shoals, 802 F. Supp. 3d at 1043-44 (finding warranty cost statements actionable\n\n given concealment of existing liabilities); Underland, 2011 WL 4017908, at *9\n\n 12\n See also In re Shoals Techs. Grp., Inc. Sec. Litig., 802 F. Supp. 3d 1024, 1043\n (M.D. Tenn. 2025) (rejecting forward-looking argument that \u201cignores [p]laintiffs\u2019\n allegations that [defendants] shielded the market from learning about real, calculable\n liabilities that had already accrued\u201d); Padilla, 2022 WL 3452318, at *38 (holding\n statements not forward-looking where \u201cone could determine\u201d when \u201cthe statements\n were spoken, whether relevant evidence was excluded\u201d); Upstart, 2023 WL 6379810,\n at *15, *17 (upholding statements about \u201cexpectations\u201d that were \u201cinconsistent\u201d with\n existing omitted facts). Defendants\u2019 cases are unavailing, as the reserves were not\n verifiable until \u201cliability claims were actually filed\u201d (MD PageID.1285-86 (citing,\n e.g., In re Kindred Healthcare, Inc. Sec. Litig., 299 F. Supp. 2d 724, 738 (W.D. Ky.\n 2004)), but here the defects existed and the high costs were clear. \u00a7\u00a7II.C.-E.\n\n - 25 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2030 Filed 03/23/26 Page 38 of 53\n\n\n\n\n (upholding reserve statements as misleading where company \u201crefused to incorporate,\n\n among other things, current losses into its calculations\u201d (emphasis in original));\n\n Omnicare, Inc. v. Laborers Dist. Council Constr. Indus. Pension Fund, 575 U.S. 175,\n\n 188-89 (2015) (misleading \u201cembedded facts\u201d within opinions are actionable).\n\n Even if viewed as opinions, Defendants\u2019 reserve statements are actionable\n\n because Plaintiffs adequately allege: (i) Defendants did not believe the opinion; and\n\n (ii) the statements omitted material facts that would \u201cconflict with what a reasonable\n\n investor would take from the statement itself.\u201d Omnicare, 575 U.S. at 188-89.\n\n First, Defendants could not believe the reserves were accurate because they\n\n were delaying recalls and the resulting belated over $2 billion in increases were for\n\n preexisting defects for older models monitored during the Class Period. \u00a7\u00a7III.C.-E.\n\n Likewise, the NHTSA Consent Order concerned delayed RVC recalls as early as\n\n September 2020 and the investigation, which they attempted to thwart with inaccurate\n\n information, began in August 2021 \u2013 before the Class Period. \u00b6\u00b6175-178. Moreover,\n\n in 1Q21, Defendants began manipulating profits by putting over $1 billion below the\n\n line in \u201cpossible costs in excess of\u201d reserves (MD PageID.1283 (emphasis in\n\n original)), while simultaneously reducing reported warranty reserves by nearly the\n\n same figure, demonstrating scienter. See \u00a7III.B.2. Engaging in a scheme to suppress\n\n reserves, delay recalls, and provide false information to a regulator, shows Defendants\n\n did not believe reported warranty reserves were adequate. See Mayer v. Mylod, 988\n\n\n - 26 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2031 Filed 03/23/26 Page 39 of 53\n\n\n\n\n F.2d 635, 639-40 (6th Cir. 1993) (holding \u201cstatements of opinion, if not truly believed\n\n and not supported by available facts, are actionable under [\u00a7]10(b)\u201d).13\n\n Second, Defendants\u2019 statements omitted to disclose the costly existing defects\n\n and that they delayed recalls to suppress the historical costs of repairing the defects,\n\n which suppressed warranty reserves under their publicly stated accounting policy.\n\n \u00a7\u00a7II.C.-E.; \u00a7\u00a7III.B.1.-2. Those omitted facts \u201c\u2018conflict with what a reasonable\n\n investor would take\u2019\u201d from Defendants\u2019 positive warranty trends and were necessary\n\n to make their statements not misleading. Padilla, 2022 WL 3452318, at *23-*24\n\n (holding opinions about receivables actionable for \u201comitt[ing] that there were growing\n\n problems with [the company\u2019s] aged receivables\u201d); In re Envision Healthcare Corp.\n\n Sec. Litig., 2019 WL 6168254, at *12 (M.D. Tenn. Nov. 19, 2019) (holding\n\n\n\n\n 13\n Kai Spande\u2019s expert opinion adds further support because it was based on\n objective data and industry experience and provided details regarding the timing,\n widespread nature, and expense of the defects. See Hills v. BioXcel Therapeutics,\n Inc., 2025 WL 2777129, at *9 (D. Conn. Sept. 29, 2025) (citing cases) (\u201c\u2018[I]t is\n permissible for a plaintiff to bolster a complaint by including a nonconclusory opinion\n to which an expert may potentially testify.\u2019\u201d). Defendants\u2019 cases rejecting expert\n opinions are distinguishable because those opinions were \u201cnot based on any facts\n whatsoever\u201d (Roth v. OfficeMax, Inc., 527 F. Supp. 2d 791, 801-02 (N.D. Ill. 2007)),\n but on \u201cbaseless\u201d assumptions (King v. Whitmer, 71 F.4th 511, 523 (6th Cir. 2023)).\n Moreover, the totality of facts here, including Defendants\u2019 admissions of monitoring\n and the pervasiveness of the identified defects, negatively impacting financials and\n thousands of vehicles (see \u00a7III.C.), are not like In re Omnicare, Inc. Sec. Litig., 769\n F.3d 455, 482-83 (6th Cir. 2014), where the complaint failed to identify the \u201cspecific\n irregularities\u201d or \u201cnature of the concerns\u201d undermining defendants\u2019 statements.\n\n - 27 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2032 Filed 03/23/26 Page 40 of 53\n\n\n\n\n \u201c[w]hether stated as an opinion or fact,\u201d a reasonable person could view statements as\n\n misleading for omitting material information).\n\n Defendants suggest no reasonable investor \u201cwould believe that Ford promised\n\n that warranty accruals would not increase.\u201d MD PageID.1282. But Plaintiffs do not\n\n claim Defendants misrepresented the future, rather they misrepresented the present, as\n\n reasonable investors did believe Defendants were succeeding in reversing the negative\n\n trend of warranty costs, only to learn otherwise, shocking the market and causing\n\n Ford\u2019s stock to crash. See \u00a7III.B.1.; \u00b6\u00b679, 83, 103, 133, 143.14\n\n c. The Statements Are Not Immaterial Puffery\n Defendants fail in challenging four statements as immaterial puffery. MD\n\n PageID.1290. \u201cThe Sixth Circuit has made clear that even superficially broad\n\n 14\n Again, Defendants\u2019 claim that the reserve increases were in the range of\n \u201cpossible costs in excess of\u201d reserves (MD PageID.1283 (emphasis in original)) only\n supports that Defendants knew of the defects, which combined with the delayed\n recalls, shows they knew they were probable, not just possible costs. These facts do\n not exist in Defendants\u2019 cases, where a new event or third-party act caused reserves to\n increase. See, e.g., Police & Fire Ret. Sys. City of Detroit v. Argo Grp. Int\u2019l Holdings,\n 2024 WL 5089970, at *6-*7 (S.D.N.Y. Dec. 12, 2024) (reserves increased due to\n newly \u201ctighten[ed] underwriting . . . and exposures going forward\u201d); In re Hertz Glob.\n Holdings, Sec. Litig., 2017 WL 1536223, at *7, *11-*12 (D.N.J. Apr. 27, 2017)\n (errors arose from, in part, \u201cchallenges related to managing complex, inefficient\n legacy systems\u201d), aff\u2019d, 905 F.3d 106 (3d Cir. 2018); In re Walmart Inc., Sec. Litig.,\n 151 F.4th 103, 120 (3d Cir. 2025) (no duty to predict potential outcome of ongoing\n government investigation); In re Huntington Bancshares Inc. Sec. Litig., 674 F. Supp.\n 2d 951, 964-65 (S.D. Ohio 2009) (\u201c[n]o information suggests\u201d acquiring company\n was aware of deteriorating portfolio of acquiree); Chapman v. Mueller Water Prods.,\n 466 F. Supp. 3d 382, 393 (S.D.N.Y. 2020) (reserves increased based on a \u201c\u2018new\n analysis of [company\u2019s] warranty expense experience\u2019\u201d).\n\n - 28 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2033 Filed 03/23/26 Page 41 of 53\n\n\n\n\n statements of corporate self-praise must be evaluated in context to determine if they\n\n convey more than just a generalized optimism.\u201d Grae v. Corr. Corp. of Am., 2017\n\n WL 6442145, at *14 (M.D. Tenn. Dec. 18, 2017). Here, all four statements were\n\n material because they concerned Ford\u2019s concrete efforts to improve quality and the\n\n purported positive impact of those efforts (\u00b6\u00b682(b), 87, 99, 102), which were critical\n\n to Defendants funding their highly-touted Ford+ strategy (\u00b6\u00b627-55). See also Constr.\n\n Indus. & Lab. Joint Pension Tr. v. Carbonite, Inc., 22 F.4th 1, 8-9 (1st Cir. 2021)\n\n (finding materiality where CFO stated product was \u201c\u2018really important . . . for us\u2019\u201d).15\n\n Materiality is also shown by the fact that two of the misstatements (\u00b6\u00b682(b), 99)\n\n were in direct response to analyst questions about Ford\u2019s \u201cwarranty coming down\u201d\n\n and how Ford was \u201cimprov[ing] margins.\u201d See In re Virtu Fin., Inc. Sec. Litig., 770 F.\n\n Supp. 3d 482, 502 (E.D.N.Y. 2025) (finding statements responding to analyst\n\n questions \u201cmaterially misleading\u201d); Hedick v. Kraft Heinz Co., 2021 WL 3566602, at\n\n\n 15\n Defendants remove the statements from their context to suggest they are only\n vague claims, like those in In re Ford Motor Corp. Sec. Litig., 381 F. 3d 563, 570 (6th\n Cir. 2004) (dismissing isolated statements such as \u201c\u2018quality comes first\u2019\u201d and \u201c\u2018[w]e\n aim to be the quality leader\u2019\u201d). MD PageID.1290. But in context, the statements were\n both tied to their progress of lowering warranty costs (to fund Ford+) and quantified,\n which made them material to investors assessing Ford\u2019s success in achieving those\n goals. For example, the statement, \u201cwe\u2019re improving our quality\u201d continues \u201c[w]e\n saw that come through this year . . . [with warranties] down roughly $1.4 billion.\u201d\n \u00b682(b); see also \u00b687 (connecting Ford \u201ctakes actions quickly to resolve [issues]\u201d with\n \u201cmore frequent use of OTAs . . . [which have] worked for us\u201d); \u00b699 (claiming \u201cgreen\n shoots in the quality improvements\u201d would result in \u201cflat\u201d warranty costs); \u00b6102\n (tying \u201cour quality is making real progress\u201d to \u201cquality is 10% better\u201d).\n\n - 29 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2034 Filed 03/23/26 Page 42 of 53\n\n\n\n\n *10 (N.D. Ill. Aug. 11, 2021) (finding statements \u201cin response to questions from\n\n analysts\u201d material). Further, the \u201cfact that the price of the stock plummeted shortly\n\n after disclosure demonstrates\u201d materiality of the concealed information. In re Ulta\n\n Salon, Cosms. & Fragrance, Inc. Sec. Litig., 604 F. Supp. 2d 1188, 1196 (N.D. Ill.\n\n 2009). And, materiality is a question of fact that should not be decided on a motion to\n\n dismiss. See Helwig, 251 F.3d at 563 (citing cases).\n\n The Totality of Allegations Sufficiently Plead a Strong\n Inference of Scienter as to Each Defendant\n Scienter may be alleged by: (i) \u201cknowing and deliberate intent to manipulate,\n\n deceive, or defraud\u201d; or (ii) \u201crecklessness,\u201d meaning \u201c\u201c\u2018highly unreasonable conduct\n\n which is an extreme departure from the standards of ordinary care.\u2019\u201d\u201d Dana II, 646\n\n F.3d at 958-59. In evaluating scienter, courts must consider \u201cwhether all of the facts\n\n alleged, taken collectively, give rise to a strong inference of scienter.\u201d Tellabs II, 551\n\n U.S. at 322-23, 326 (emphasis in original). The inference must be \u201ccogent and at least\n\n as compelling as any opposing inference of nonfraudulent intent,\u201d but \u201cneed not be . .\n\n . the \u2018most plausible of competing inferences.\u2019\u201d Id. at 314, 324; see also Frank v.\n\n Dana Corp., 547 F.3d 564, 571 (6th Cir. 2008) (\u201cdraw\u201d goes to the plaintiffs). Direct\n\n evidence is not required, as circumstantial allegations are sufficient. See Chow v.\n\n Archer-Daniels-Midland, 2025 WL 790854, at *3 (N.D. Ill. Mar. 12, 2025).\n\n Before Tellabs II, the Sixth Circuit set forth a \u201cnot exhaustive\u201d list of factors to\n\n consider in assessing scienter. See Helwig, 251 F.3d at 552 (listing factors). Post-\n\n - 30 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2035 Filed 03/23/26 Page 43 of 53\n\n\n\n\n Tellabs II, courts in this Circuit have found scienter adequately pled without the\n\n Helwig factors or where only certain factors were present.16 Here, the totality of facts\n\n alleged, \u201ccollectively,\u201d establish the inference of scienter is at least as compelling as\n\n the competing inference that Defendants were fed misinformation. See Tellabs III,\n\n 513 F.3d at 709-11 (finding inference that executives were fed misinformation on\n\n critical matter \u201cis conceivable,\u201d but \u201cexceedingly unlikely\u201d).\n\n 1. Defendants\u2019 Admitted Focus, Close Monitoring, and\n Frequent Statements Support Scienter\n Defendants\u2019 admissions of monitoring, and detailed discussions of the relevant\n\n issues, strongly support scienter. See \u00a7II.B.; Shupe, 660 F. Supp. 3d at 678 (holding\n\n \u201cself-admitted monitoring infers scienter\u201d). Farley and Lawler specifically claimed\n\n they would reduce warranty costs and improve quality. \u00b6\u00b63, 6, 38-44. They placed\n\n \u201clower[ing] our warranty spending\u201d at the top of \u201cthe four things that we need to fix\u201d\n\n at Ford and were \u201claser focused\u201d with \u201ca very concrete plan\u201d on reducing warranty\n\n costs, and had made quality \u201ca key metric\u201d for \u201cour management team.\u201d \u00b6\u00b643-45.\n\n\n 16\n See, e.g., Dana II, 646 F.3d at 961-62 (eschewing Helwig factor approach for\n \u201cholistic\u201d scienter analysis under Tellabs II). Defendants\u2019 contention that the absence\n of some Helwig factors \u201cindicates the absence of scienter,\u201d based on a narrow reading\n of one case predating Tellabs II (MD PageID.1293-94), is clearly wrong. See Jonna v.\n GIBF GP, Inc., 617 F. Supp. 3d 789, 807 (E.D. Mich. 2022) (not referencing factors\n in finding scienter pled under Tellabs II); Bond, 587 F. Supp. 3d at 676 (Helwig\n factors are not a \u201cpleading requirement\u201d); In re Heritage Glob. Network L.A., Inc. v.\n Welch, 2024 WL 695772, at *13 (M.D. Tenn. Feb. 20, 2024) (noting most Helwig\n factors \u201cinvolve situational circumstances with little bearing on many types of fraud\u201d).\n\n - 31 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2036 Filed 03/23/26 Page 44 of 53\n\n\n\n\n As such, Defendants closely monitored warranty cost and quality issues,\n\n including through weekly \u201cdeep dive[]\u201d cost meetings, frequent discussions with\n\n Ford\u2019s head of Quality, looking at the \u201croot causes\u201d of \u201chundreds\u201d of warranty issues,\n\n monitoring granular repair data from Ford\u2019s GWMS, monitoring message boards and\n\n social media to identify quality and warranty issues (including those at issue here),\n\n and performing quarterly analyses on existing issues impacting reserves. See \u00a7II.B.\n\n Farley and Lawler also signed certifications that the financial statements reporting\n\n reserves were investigated and accurate (\u00b6\u00b6152-153), stated reserves were based on an\n\n accounting policy that accounted for historical costs (\u00b6\u00b633-34), and made repeated and\n\n detailed statements demonstrating knowledge of these topics and their then-existing\n\n status (\u00b6\u00b653, 78, 82, 87, 90, 92, 94-95, 99, 102, 104). All these facts support a strong\n\n inference of scienter. See Grae, 2017 WL 6442145, at *20 (holding defendant\u2019s \u201cown\n\n public statements . . . go a long way toward\u201d showing scienter); Kyrstek v. Ruby\n\n Tuesday, Inc., 2016 WL 1274447, at *9 (M.D. Tenn. Mar. 31, 2016) (finding scienter\n\n where defendants\u2019 \u201cstatements allegedly confirm that the Company was monitoring\n\n Lime Fresh\u2019s performance\u201d); Winslow, 2011 WL 7090820, at *23 (finding admissions\n\n of monitoring supported scienter).17\n\n\n 17\n See also Dana II, 646 F.3d at 962 (defendants\u2019 roles and statements supported\n scienter); Reese v. Malone, 747 F.3d 557, 572 (9th Cir. 2014) (finding it \u201cunlikely that\n [defendant] was not aware of\u201d issue she discussed), overruled on other grounds by\n City of Dearborn Heights Act 345 Police & Fire Ret Sys. v. Align Tech., 856 F.3d 605\n (9th Cir. 2017); Upstart, 2023 WL 6379810, at *23 (defendants \u201cvoluntarily and\n - 32 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2037 Filed 03/23/26 Page 45 of 53\n\n\n\n\n 2. The NHTSA Consent Order Supports Scienter\n The NHTSA fine and Consent Order support that Defendants were engaged in a\n\n scheme to delay recalls and suppress reserves, supporting scienter. See In re BioScrip,\n\n Inc. Sec. Litig., 95 F. Supp. 3d 711, 733 (S.D.N.Y. 2015) (holding knowledge pled\n\n where regulatory demand sent to company). After the NHTSA probe started in 2021,\n\n Ford filed expanded recalls in 2022 and 2024 for RVCs and filed belated recalls for\n\n the long-standing oil pump and rear axle defects in 2023, and NHTSA imposed a $165\n\n million penalty on Ford. \u00a7II.C. NHTSA found Ford committed regulatory violations,\n\n including providing inaccurate information to NHTSA, failing to publicly disclose\n\n information about recalls, failing to timely recall vehicles and address defects, and\n\n understating the scope of recalls. \u00b6\u00b6175-179. Such pattern of delaying recalls and\n\n misleading a regulator is not accidental, but shows Defendants were purposely\n\n delaying recalls to suppress historical costs and, by their publicly stated accounting\n\n policy, suppress reported reserves and inflated profits to support their EV pivot.18\n\n\n\n\n repeatedly discussing\u201d topics supported scienter); Hedick, 2021 WL 3566602, at *13\n (similar); S. Ferry LP #2 v. Killinger, 687 F. Supp. 2d 1248, 1260 (W.D. Wash. 2009)\n (\u201cIf [Defendants] did not in fact have such knowledge, it would be at least actionably\n reckless to reassure the public about these matters at all.\u201d); Wilkof, 2010 WL 4184465,\n at *6 (certifications \u201cindicating that the information in the [SEC filing] fairly presents\n the financial conditions and results of operations\u201d supported scienter).\n 18\n These facts also support Helwig factors 5 (existence of pertinent lawsuit), 2\n (divergence from internal reports), and 6 (disregard of \u201ccurrent information\u201d).\n Defendants\u2019 claim that the Consent Order did not discuss warranty reserves or name\n - 33 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2038 Filed 03/23/26 Page 46 of 53\n\n\n\n\n 3. Defendants\u2019 Admissions They Were Aware of\n Warranty Issues Shortly After Vehicle Launch\n Support Scienter\n Defendants\u2019 admissions that they were made aware of warranty issues on older\n\n vehicles in real-time also strongly support scienter. See Shupe, 660 F. Supp. 3d at\n\n 678-79 (admitted access to real-time data and its significance supported scienter);\n\n Envision, 2022 WL 4551876, at *12 (alleged \u201cdivergence between external statements\n\n and internal information\u201d supported scienter). Here, Lawler admitted Defendants\n\n \u201cstart to see the warranty issues coming in\u201d for vehicles \u201c12 to 18 months\u201d after\n\n launch. \u00b653. Because Defendants later admitted the spike in warranty costs at the end\n\n of the Class Period was from \u201colder models\u201d that were \u201cin the field for quite a while\u201d\n\n \u2013 i.e., 2016-2020-launched models (\u00b6\u00b6138-139) \u2013 during their quarterly reviews of\n\n \u201cactual claims . . . incurred\u201d to set reserves (\u00b6152), there is a strong inference they\n\n knew of the warranty issues before and during the Class Period. In re Vivendi\n\n Universal, S.A. Sec. Litig., 765 F. Supp. 2d 512, 553-54 (S.D.N.Y. 2011) (finding\n\n scienter pled where admissions of liquidity crisis supported inference it did not arise\n\n overnight), aff\u2019d, 838 F.3d 223 (2d Cir. 2016).\n\n In fact, Farley admitted that Ford management had \u201cinternal data\u201d on warranty\n\n and reliability issues they tracked \u201cfor quite some time\u201d and Lawler admitted that \u201cif\n\n\n\n Farley and Lawler (MD PageID.1298-99) is inapt, as it is a scathing indictment of\n Ford\u2019s conduct done in furtherance of Defendants\u2019 stated goals. \u00a7II.A.\n\n - 34 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2039 Filed 03/23/26 Page 47 of 53\n\n\n\n\n [defects] come through at a higher time in service, we\u2019re made aware of them.\u201d\n\n \u00b6\u00b6169, 172; see also \u00b649 (Ford warranty manager stating Ford \u201c\u2018always had data on\n\n actual costs\u2019\u201d). Farley also knew axle repairs, such as those comprising the reserve\n\n spike, were \u201csuper expensive\u201d and \u201ccomplicated.\u201d \u00b653.19\n\n 4. The Importance of Warranty Costs and Recalls\n Support Scienter\n The critical importance of warranty costs to Ford\u2019s results, and intense focus of\n\n Defendants and market analysts thereon, strongly supports scienter. See Envision,\n\n 2019 WL 6168254, at *22 (\u201c\u2018Courts may presume that high-level executives are\n\n aware of matter[s] related to their business\u2019s operations where the misrepresentations\n\n and omissions pertain to\u2019\u201d facts \u201c\u2018critical to a business\u2019s core management.\u2019\u201d); Bond,\n\n 587 F. Supp. 3d at 677 (similar).\n\n As noted, warranty costs were a notorious \u201cheadwind\u201d for Ford that directly\n\n impacted profits, Farley and Lawler were promoted to reduce them, they claimed it\n\n\n 19\n These facts also support Helwig factors 2 (divergence from internal reports) and\n 6 (disregard of \u201ccurrent information\u201d). Defendants\u2019 demand for more \u201csmoking gun\u201d\n details is not required. Tellabs II, 551 U.S. at 324; Upstart, 2023 WL 6379810, at\n *22-*23 (rejecting that scienter cannot be pled without \u201c\u2018confidential witnesses, . . .\n accounts of conversations or meetings, [or] internal documents or reports\u2019\u201d as such\n details would \u201crequire[] a degree of omniscience that is unrealistic at the preliminary\n stages of the litigation process\u201d). Defendants\u2019 citation to Teamsters Loc. 237 Welfare\n Fund v. ServiceMaster Glob. Holdings, 83 F.4th 514, 520-21, 529-30 (6th Cir. 2023)\n (MD PageID.1296), is inapposite because the defendants there promptly disclosed a\n sudden termite crisis, unlike Defendants\u2019 concealment and suppression of\n longstanding defects and warranty costs in this case. \u00a7\u00a7II.C.-D.\n\n - 35 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2040 Filed 03/23/26 Page 48 of 53\n\n\n\n\n was a top priority, and Ford\u2019s warranty reserves and quality issues were the topic of\n\n frequent discussion by Defendants and analysts. See \u00a7II.A., \u00a7III.B.1.; \u00b6\u00b6155-159.\n\n Moreover, one of the main defects concerned the axle on Ford\u2019s flagship F-150, which\n\n Farley called the \u201cmost important vehicle at Ford globally\u201d and \u201cfundamental to the\n\n Company.\u201d \u00b6160. Given the Individual Defendants\u2019 \u201claser focus\u201d on warranty and\n\n quality issues, and frequent detailed discussion and acknowledged critical importance\n\n thereof, it would be \u201cabsurd to suggest\u201d they were unaware of Ford\u2019s true defects and\n\n warranty costs being significantly deferred. See Berson v. Applied Signal Tech., Inc.,\n\n 527 F.3d 982, 987-89 (9th Cir. 2008) (finding scienter where \u201cit would be \u2018absurd to\n\n suggest\u2019 that top management was unaware\u201d of omitted facts that would have\n\n \u201cdevastating effect\u201d on company\u2019s revenue); In re Cardinal Health Inc. Sec. Litig.,\n\n 426 F. Supp. 2d 688, 726 (S.D. Ohio 2006) (finding scienter where statements and\n\n omissions concerned \u201cprimary area of focus\u201d and market scrutiny). 20\n\n\n\n\n 20\n Pittman v. Unum Grp., 861 F. App\u2019x 51, 55 (6th Cir. 2021) (MD PageID.1297),\n is inapposite, as Plaintiffs here do not rely on Defendants\u2019 alleged familiarity merely\n with a business line in general (there, \u201clong-term-care\u201d policies), but on a specific\n critical problem \u2013 defects and high warranty costs. \u00a7\u00a7II.A.; II.E. Courts after Pittman\n have reiterated that \u201ccore operations\u201d allegations are \u201crelevant in the holistic Tellabs\n scienter analysis.\u201d Padilla, 2022 WL 3452318, at *28-*29; see also Franchi v.\n Smiledirectclub, Inc., 633 F. Supp. 3d 1046, 1086 (M.D. Tenn. 2022) (same and\n finding scienter adequately pled where it was \u201creasonably inferable\u201d that the\n defendants \u201cwould be aware of core financial metrics\u201d).\n\n - 36 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2041 Filed 03/23/26 Page 49 of 53\n\n\n\n\n 5. The Magnitude of the Reserve Increases Supports\n Scienter\n That the belated warranty increases were several billion dollars for defects from\n\n \u201colder [2016-2020-launched] models\u201d (\u00b6\u00b6138-139, 167) and, severe, dangerous, and\n\n costly to fix (\u00b6\u00b675(a)-(h)), supports scienter. See Bond, 587 F. Supp. 3d at 677\n\n (finding it \u201chighly implausible\u201d for defendants to be unaware of \u201cwidespread\u201d issue).\n\n Indeed, among other things, the defects rendered vehicles \u201cundriveable,\u201d caused\n\n engine seizure, created unsafe and expensive \u201cwalk home\u201d situations, and involved\n\n issues management would typically easily \u201cread across\u201d other models and platforms\n\n with similar parts to know they were widespread. \u00b675; see also \u00b6\u00b658-74, 138-139.\n\n Ford ultimately booked a warranty reserve increase at June 30, 2024 that was\n\n $2.7 billion higher than the prior year period, and a 60% increase to reserves related\n\n to pre-existing warranties (older vehicles) from 2Q 2023 ($880 million) to 2Q 2024\n\n ($1.44 billion), causing Ford\u2019s gas-powered business to suffer a near-50% decline in\n\n year-over-year EBIT \u2013 for \u201colder\u201d 2016-2020 launched vehicles. \u00b6\u00b6163-165. The\n\n severe magnitude of Ford\u2019s underlying defects and costs (and resulting impact on\n\n Ford\u2019s financials) are the \u201ctypes of \u2018in your face\u2019 (alleged) circumstances that are so\n\n extreme that they reasonably should have been obvious to Defendant.\u201d Padilla, 2022\n\n WL 3452318, at *29-*31; see also \u00b6\u00b6166-174.21 The closeness in time of the sudden\n\n\n 21\n Defendants\u2019 citation to La. Sch. Emps.\u2019 Ret. Sys. v. Ernst & Young, LLP, 622\n F.3d 471, 484 (6th Cir. 2010) (MD PageID.1298), is misplaced because it addressed\n - 37 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2042 Filed 03/23/26 Page 50 of 53\n\n\n\n\n spike in reserves (\u00b6\u00b6133, 136-137), and Defendants\u2019 prior reassurances (e.g., \u00b6\u00b693-95,\n\n 99, 101-102, 104, 115), further supports scienter. See Helwig, 251 F.3d at 552\n\n (factors 3 and 6); Shupe, 660 F. Supp. 3d at 681.\n\n 6. Defendants\u2019 Motive Supports Scienter\n While motive is not required (Tellabs II, 551 U.S. at 325), where present, it\n\n supports scienter (Envision, 2019 WL 6168254, at *22). Here, Farley and Lawler\n\n were under tremendous pressure to reduce Ford\u2019s reported warranty costs to increase\n\n earnings to fund their \u201cFord+\u201d strategy and avoid the fate of their predecessors. See\n\n \u00b6\u00b64-5, 14, 28-30, 40-45; Cardinal Health, 426 F. Supp. 2d at 725-26 (finding strategic\n\n pressure to show growth may support scienter); Helwig, 251 F.3d at 552 (listing factor\n\n 9 as motivation to save salaries or jobs). In addition, \u201cinsider trading at a suspicious\n\n time or in an unusual amount\u201d supports scienter. Helwig, 251 F.3d at 552. Whereas\n\n Farley sold no Ford stock in 2020 or 2021 and Lawler sold no Ford stock in 3 years\n\n before the Class period, after they made false positive statements portraying reversal\n\n of Ford\u2019s negative warranty trends (\u00b6\u00b677-78, 80-82), Farley sold approximately\n\n 265,000 shares for about $4.3 million and Lawler sold nearly 30,000 shares, for\n\n almost $390,000 (\u00b6181). Such insider sales out of line with prior patterns and while\n\n adverse facts were concealed, are suspicious and unusual. City of Taylor Gen. Emps.\n\n\n auditor defendants. In the Sixth Circuit, although the magnitude of errors does not\n generally support scienter for outside auditors, the opposite is true for corporate\n officers running the company. Padilla, 2022 WL 3452318 at *29-*31 (citing cases).\n\n - 38 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2043 Filed 03/23/26 Page 51 of 53\n\n\n\n\n Ret. Sys. v. Astec Indus., 29 F.4th 802, 814 (6th Cir. 2022) (finding CEO\u2019s $3.1\n\n million of class-period stock sales after years of no sales supported scienter).22\n\n 7. Defendants\u2019 Competing Inference is Implausible\n Defendants\u2019 argued inference that they were playing \u201ccatch-up\u201d on these\n\n defects (MD PageID.1300) is not persuasive because: (i) the defects preceded the\n\n Class Period; (ii) Defendants\u2019 stated goal was to lower warranty costs, which they\n\n assured investors they were monitoring at a granular level; (iii) Defendants quickly\n\n flipped a negative warranty trend to a purportedly positive despite the omitted facts\n\n (low OTA usage and costly defects on hundreds of thousands of vehicles)\n\n demonstrating such a reversal was baseless; (iv) the NHTSA investigation preceded\n\n the Class Period and found Ford had delayed recalls (on thousands of vehicles) and\n\n provided inaccurate information; and (v) Defendants pushed costs below the line to\n\n \u201cpossible,\u201d but had to admit they belonged above the line as they massively increased\n\n reserves and belatedly issued multiple recalls. See \u00a7\u00a7II.A.-E. It is \u201cexceedingly\n\n unlikely\u201d Defendants were fed misinformation, and Plaintiffs\u2019 inference that they\n\n\n 22\n Unlike in Lim v. Hightower, 2025 WL 2965692, at *11-*12 (6th Cir. Oct. 21,\n 2025) (MD PageID.1295), Farley and Lawler profited from actual Ford stock sales.\n That Farley and Lawler later \u201cacquired\u201d shares (MD PageID.1294) is irrelevant, as\n they were granted as compensation \u201cwithout payment\u201d (e.g., MD PageID.1672, 1682),\n not purchased at inflated market prices. Nor is it a defense at this stage that\n Defendants did not sell more of their stock, which creates a factual dispute. Ross v.\n Abercrombie & Fitch Co., 501 F. Supp. 2d 1102, 1117 (S.D. Ohio 2007) (stock sales\n favored scienter even though \u201c[d]efendants retained the majority of their holdings\u201d).\n\n - 39 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2044 Filed 03/23/26 Page 52 of 53\n\n\n\n\n knew or recklessly disregarded the misleading nature of their statements is \u201cat least as\n\n compelling\u201d as Defendants\u2019 \u201ccatch-up\u201d theory. See Tellabs III, 513 F. 3d at 707, 709-\n\n 11; Gogo, 2021 WL 1608342, at *11 (finding \u201cit is hard to imagine\u201d defendants were\n\n unaware product defect \u201cwas serious enough to require a reassessment of their\n\n expectations for the company\u2019s financial performance on some level\u201d).\n\n Because Plaintiffs have alleged Farley and Lawler\u2019s scienter, they have\n\n established Ford\u2019s scienter as well. See Bond, 587 F. Supp. at 675-76.23\n\n The Control Person Claims Should Be Sustained\n Because Plaintiffs have stated primary claims under \u00a710(b), their control person\n\n claims under \u00a720(a) should be upheld as well. Cf. MD PageID.1300.\n\n IV. CONCLUSION\n For the foregoing reasons, Defendants\u2019 Motion should be denied.\n\n DATED: March 23, 2026 VANOVERBEKE, MICHAUD\n & TIMMONY, P.C.\n THOMAS C. MICHAUD (P46787)\n\n\n s/ Thomas C. Michaud\n THOMAS C. MICHAUD\n\n\n\n\n 23\n Alternatively, Ford\u2019s corporate scienter may be imputed from the Ford\n employees (GWMS managers, Principal Accounting Officers) who supplied the\n information regarding defects and warranty costs for inclusion in statements to\n investors. See Knurr v. Orbital ATK Inc., 294 F. Supp. 3d 498, 514-15 (E.D. Va.\n 2018) (citing Omnicare, 769 F.3d, at 476-77).\n\n - 40 -\n 4927-4048-6553.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 54, PageID.2045 Filed 03/23/26 Page 53 of 53\n\n\n\n\n 79 Alfred Street\n Detroit, MI 48201\n Telephone: 313/578-1200\n tmichaud@vmtlaw.com\n\n Local Counsel\n ROBBINS GELLER RUDMAN\n & DOWD LLP\n JAMES E. BARZ\n FRANK A. RICHTER\n MICHAEL J. STRAMAGLIA\n 200 South Wacker Drive, 31st Floor\n Chicago, IL 60606\n Telephone: 630/696-4107\n jbarz@rgrdlaw.com\n frichter@rgrdlaw.com\n mstramaglia@rgrdlaw.com\n Lead Counsel for Lead Plaintiff\n\n LEVI & KORSINSKY, LLP\n SHANNON L HOPKINS\n GREGORY M. POTREPKA\n 1111 Summer Street, Suite 403\n Stamford, CT 06905\n Telephone: 203/992-4523\n 212/363-7171 (fax)\n shopkins@zlk.com\n gpotrepka@zlk.com\n\n Counsel for Additional Named Plaintiff\n Ronald A. Ferrante\n\n\n\n\n - 41 -\n 4927-4048-6553.v1\n\f","ocr_status":2,"date_upload":"2026-05-08T07:45:15.875873-07:00","document_number":"54","attachment_number":null,"pacer_doc_id":"097014786843","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Response to Motion","acms_document_guid":""},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/478554151/","id":478554151,"tags":[],"absolute_url":"/docket/69027187/54/1/guzman-v-ford-motor-company/","date_created":"2026-05-08T07:43:04.623286-07:00","date_modified":"2026-05-08T07:43:04.623301-07:00","sha1":"","page_count":398,"file_size":7117400,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"54","attachment_number":1,"pacer_doc_id":"097014786844","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":2,"description":"Unpublished Cases","acms_document_guid":""}],"date_created":"2026-03-23T17:21:57.349597-07:00","date_modified":"2026-05-11T09:56:28.287110-07:00","date_filed":"2026-03-23","time_filed":"19:31:25","entry_number":54,"recap_sequence_number":"2026-03-23.001","pacer_sequence_number":218,"description":"RESPONSE to 53 MOTION to Dismiss Consolidated Complaint for Violations of the Federal Securities Laws filed by Clark D. Crippen, Ronald Ferrante. (Attachments: # 1 Unpublished Cases) (Michaud, Thomas) (Entered: 03/23/2026)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/450934501/","id":450934501,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/69027187/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/465765769/","id":465765769,"tags":[],"absolute_url":"/docket/69027187/53/guzman-v-ford-motor-company/","date_created":"2026-01-20T19:25:07.704415-08:00","date_modified":"2026-05-11T09:56:28.261520-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"53","attachment_number":null,"pacer_doc_id":"097014677352","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Dismiss","acms_document_guid":""}],"date_created":"2026-01-20T19:25:07.678501-08:00","date_modified":"2026-05-11T09:56:28.239064-07:00","date_filed":"2026-01-20","time_filed":"21:30:48","entry_number":53,"recap_sequence_number":"2026-01-20.001","pacer_sequence_number":216,"description":"MOTION to Dismiss Consolidated Complaint for Violations of the Federal Securities Laws by James D. Farley, Jr., Ford Motor Company, John T. Lawler. (Attachments: # 1 Declaration of Nicholas J. Siciliano, # 2 Index of Exhibits, # 3 Exhibit 1 - 4Q24 Earnings Call Transcript, # 4 Exhibit 2 - FY 2023 Form 10-K, # 5 Exhibit 3 - 2Q22 Form 10-Q, # 6 Exhibit 4 - 3Q23 Form 10-Q, # 7 Exhibit 5 - 3Q20 Earnings Call Transcript, # 8 Exhibit 6 -FY 2022 Form 10-K, # 9 Exhibit 7 - 1Q22 Form Earnings Call Transcript, # 10 Exhibit 8 - 1Q22 Form 10-Q, # 11 Exhibit 9 - 2Q22 Earnings Call Transcript, # 12 Exhibit 10 - 3Q22 Form 10-Q, # 13 Exhibit 11 - 2Q23 Form 10-Q, # 14 Exhibit 12 - 2Q23 Earnings Call Transcript, # 15 Exhibit 13 - 4Q23 Earnings Call Transcript, # 16 Exhibit 14 - 1Q24 Earnings Call Transcript, # 17 Exhibit 15 - 2Q24 Earnings Call Transcript, # 18 Exhibit 16 - 2Q21 Form 10-Q, # 19 Exhibit 17 - 3Q21 Form 10-Q, # 20 Exhibit 18 - FY 2021 Form 10-K, # 21 Exhibit 19 - 1Q23 Form 10-Q, # 22 Exhibit 20 - 1Q24 Form 10-Q, # 23 Exhibit 21 - 2Q24 Form 10-Q, # 24 Exhibit 22 - 3Q23 Earnings Call Transcript, # 25 Exhibit 23 - James Farley Forms 4, # 26 Exhibit 24 - John Lawler Forms 4, # 27 Exhibit 25 - Unpublished Cases) (Clubok, Andrew) (Entered: 01/20/2026)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/450608191/","id":450608191,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/69027187/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/465427497/","id":465427497,"tags":[],"absolute_url":"/docket/69027187/52/guzman-v-ford-motor-company/","date_created":"2026-01-16T11:21:16.729625-08:00","date_modified":"2026-05-11T09:56:28.211793-07:00","sha1":"","page_count":null,"file_size":null,"filepath_local":null,"filepath_ia":"","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"","ocr_status":null,"date_upload":null,"document_number":"52","attachment_number":null,"pacer_doc_id":"097014672666","is_available":false,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Appearance","acms_document_guid":""}],"date_created":"2026-01-16T11:21:16.702463-08:00","date_modified":"2026-05-11T09:56:28.190654-07:00","date_filed":"2026-01-16","time_filed":"13:22:30","entry_number":52,"recap_sequence_number":"2026-01-16.001","pacer_sequence_number":213,"description":"NOTICE of Appearance by Michael Stramaglia on behalf of Clark D. 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(Barz, James) (Entered: 12/02/2025)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/445041919/","id":445041919,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/69027187/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/459724813/","id":459724813,"tags":[],"absolute_url":"/docket/69027187/48/guzman-v-ford-motor-company/","date_created":"2025-11-21T15:26:47.691940-08:00","date_modified":"2026-05-11T09:56:28.012799-07:00","sha1":"031f6e415839703cd7d90a94878569ace135044e","page_count":103,"file_size":965193,"filepath_local":"recap/gov.uscourts.mied.378964/gov.uscourts.mied.378964.48.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.mied.378964/gov.uscourts.mied.378964.48.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1133 Filed 11/21/25 Page 1 of 103\n\n\n\n\n VANOVERBEKE, MICHAUD & TIMMONY, P.C.\n THOMAS C. MICHAUD (P46787)\n 79 Alfred Street\n Detroit, MI 48201\n Telephone: 313/578-1200\n tmichaud@vmtlaw.com\n Local Counsel\n [Additional counsel appear on signature page.]\n\n UNITED STATES DISTRICT COURT\n EASTERN DISTRICT OF MICHIGAN\n SOUTHERN DIVISION\n\n ALBERT GUZMAN, Individually and ) Civ. No. 2:24-cv-12080-LVP-KGA\n on Behalf of All Others Similarly ) (Consolidated with Civ. No. 2:24-cv-\n Situated, ) 12492)\n Plaintiff, ) Honorable Linda V. Parker\n vs. )\n ) CLASS ACTION\n FORD MOTOR COMPANY, et al., )\n )\n Defendants. )\n ) DEMAND FOR JURY TRIAL\n\n\n CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FEDERAL\n SECURITIES LAWS\n\n\n\n\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1134 Filed 11/21/25 Page 2 of 103\n\n\n\n TABLE OF CONTENTS\n\n Page\n INTRODUCTION ..................................................................................................... 1\n\n JURISDICTION AND VENUE .............................................................................. 11\n PARTIES.................................................................................................................. 12\n\n Plaintiffs ......................................................................................................... 12\n\n Defendants ..................................................................................................... 12\n FACTUAL BACKGROUND .................................................................................. 13\n\n Ford\u2019s Business and Financial Reporting ...................................................... 13\n\n Ford\u2019s Warranty Costs ................................................................................... 15\n\n The Individual Defendants Placed Warranty Costs at the Center of\n Their Executive Goals and Focus........................................................ 17\n\n Defendants Closely Monitored Warranty Costs and Inputs .......................... 21\n Warranty Costs Continued to Drastically Increase During the Class\n Period................................................................................................... 25\n Expert Insight Corroborates the Allegations ................................................. 35\n\n DEFENDANTS\u2019 FALSE AND MISLEADING CLASS PERIOD\n STATEMENTS ............................................................................................. 41\n\n Defendants\u2019 False and Misleading Statements Claiming Positive\n Trends in Ford\u2019s Warranty Costs and Quality Improvements ............ 42\n\n Defendants\u2019 False and Misleading Risk Warnings and Reserves\n Disclosures .......................................................................................... 55\n\n FORD\u2019S CLASS PERIOD FINANCIAL STATEMENTS WERE\n MATERIALLY FALSE AND MISLEADING ............................................ 60\n\n THE TRUTH EMERGES ........................................................................................ 65\n October 2023 Disclosures .............................................................................. 65\n\n\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1135 Filed 11/21/25 Page 3 of 103\n\n\n\n\n July 2024 Disclosures .................................................................................... 67\n ADDITIONAL SCIENTER ALLEGATIONS ........................................................ 71\n\n The Individual Defendants\u2019 Public Statements Support a Strong\n Inference of Scienter ........................................................................... 71\n\n Defendants Closely Monitored Ford Warranty Costs and Financial\n Performance, Which Were Critical to Ford ........................................ 74\n\n The Scope and Severity of the Massive Spike in Ford\u2019s Warranty\n Costs Support a Strong Inference of Scienter ..................................... 78\n Ford\u2019s Consent Order with the NHTSA Supports a Strong Inference\n of Scienter............................................................................................ 83\n\n Insider Stock Sales Support a Strong Inference of Scienter .......................... 85\n LOSS CAUSATION AND ECONOMIC LOSS ..................................................... 87\n\n PRESUMPTION OF RELIANCE ........................................................................... 91\n\n NO SAFE HARBOR ............................................................................................... 92\n CLASS ACTION ALLEGATIONS ........................................................................ 93\n\n PRAYER FOR RELIEF .......................................................................................... 98\n JURY DEMAND ..................................................................................................... 99\n\n\n\n\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1136 Filed 11/21/25 Page 4 of 103\n\n\n\n\n Lead Plaintiff Clark D. Crippen and additional named plaintiff Ronald A.\n\n Ferrante (together, \u201cPlaintiffs\u201d), individually and on behalf of all others similarly\n\n situated, allege the following based upon personal knowledge as to Plaintiffs\u2019 own\n\n acts and upon information and belief as to all other matters based on the investigation\n\n conducted by and through Plaintiffs\u2019 attorneys. This investigation included, among\n\n other things, review and analysis of: (i) U.S. Securities and Exchange Commission\n\n (\u201cSEC\u201d) filings by Ford Motor Company (\u201cFord\u201d or the \u201cCompany\u201d); (ii) Ford press\n\n releases, quarterly earnings call transcripts, and other analyst or investor conference\n\n call transcripts; (iii) statements made by Ford executives during speeches or in online\n\n videos; (iv) analyst reports and media reports about Ford; (v) information released\n\n by the National Highway Transportation Safety Administration (\u201cNHTSA\u201d), an\n\n operating administration of the United States Department of Transportation\n\n (\u201cDOT\u201d); and (vi) other public information regarding Ford, including information\n\n posted on the Ford website, as well as consultation with an automotive\n\n manufacturing and operations expert. Plaintiffs believe that substantial additional\n\n evidentiary support will exist for the allegations set forth herein after a reasonable\n\n opportunity for discovery.\n\n INTRODUCTION\n 1. This securities fraud class action is brought on behalf of purchasers of\n\n Ford common stock from October 28, 2021 through July 24, 2024, inclusive (the\n\n\n -1-\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1137 Filed 11/21/25 Page 5 of 103\n\n\n\n\n \u201cClass Period\u201d). The claims are alleged against: (i) Ford; (ii) Ford\u2019s Chief Executive\n\n Officer (\u201cCEO\u201d) and President, James D. Farley, Jr. (\u201cFarley\u201d); and (iii) Ford\u2019s\n\n former Chief Financial Officer (\u201cCFO\u201d) and current Vice Chair, John T. Lawler\n\n (\u201cLawler\u201d) (collectively, \u201cDefendants\u201d). The claims assert violations of \u00a7\u00a710(b) and\n\n 20(a) of the Securities Exchange Act of 1934 (\u201cExchange Act\u201d) (15 U.S.C. \u00a778j(b)\n\n and \u00a778(t)(a)), and SEC Rule 10b-5 promulgated thereunder (17 C.F.R. \u00a7240.10b-\n\n 5).\n\n 2. This case arises because during the Class Period, Defendants made false\n\n and misleading statements that claimed the Company was reducing warranty costs\n\n through improved quality and understated Ford\u2019s warranty reserves, which inflated\n\n its reported operating income, and also its stock price. At the end of the Class Period,\n\n investors were shocked when Ford reported massively increased warranty costs and\n\n reserves for automobile defects that had existed for years, causing the stock price to\n\n decline and investors to suffer massive losses. Rather than having experienced a\n\n positive trend of lowering warranty costs, the massive reserve increase signaled that\n\n Ford\u2019s long struggle with quality problems and warranty costs had continued\n\n throughout the Class Period.\n\n 3. By way of background, leading into the Class Period, Ford\u2019s stock price\n\n languished amid high warranty costs that stifled profits, with analysts reporting in\n\n 2020 that \u201c[w]arranty has been a ~$2bn headwind [for Ford] since 2017.\u201d Such\n\n\n -2-\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1138 Filed 11/21/25 Page 6 of 103\n\n\n\n\n \u201cwarranty\u201d costs reported by Ford typically included not only costs from repairing\n\n issues under warranty, but additional costs for \u201cfield service actions\u201d (\u201cFSAs\u201d) that\n\n were required to address defects in Ford\u2019s automobiles.1 In October 2020,\n\n defendants Farley and Lawler were appointed to lead Ford and they promised to\n\n reverse course by lowering warranty costs through improved quality.\n\n 4. It was critical to lower warranty costs to fund innovation. In May 2021,\n\n Ford launched an overhauled \u201cFord+\u201d strategy that Defendants claimed was the\n\n \u201c\u2018biggest opportunity for growth and value creation since Henry Ford started to scale\n\n the Model T.\u2019\u201d The strategy included \u201ctransforming\u201d Ford from a \u201cbuild and sell\u201d\n\n cars model \u201cto a lifelong, always on customer relationship.\u201d This transformation\n\n was based on making significant investments in electric vehicles and software. For\n\n example, Ford announced that the Ford+ strategy would accelerate investments in\n\n electric vehicles and battery development technologies to $30 billion by 2025.\n\n 5. This strategy put defendants Farley and Lawler under pressure to\n\n improve profitability. Analysts noted that Ford had to secure \u201csuccess on the \u2018near\u2019\n\n (i.e., today\u2019s revenue)\u201d to \u201cenable[] adequate resource allocation to the \u2018far\u2019 (i.e.,\n\n [electric vehicles]).\u201d Analysts reported it was \u201ccrucial\u201d that Defendants improve\n\n Ford\u2019s performance to finance \u201cits increased funding environments.\u201d In other\n\n\n 1\n Unless otherwise stated herein, references to Ford\u2019s warranty costs, issues, or\n reserves include those related to both warranty and FSAs.\n\n -3-\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1139 Filed 11/21/25 Page 7 of 103\n\n\n\n\n words, analysts noted, Ford\u2019s \u201ccore business pillars\u201d \u2013 including traditional gas-\n\n powered offerings \u2013 would have to \u201cfund [Ford\u2019s] future business.\u201d To that end,\n\n Ford emphasized target EBIT2 margins of 8% (compared to less than 5% margins\n\n reported in 2020), which analysts wrote implied that the Company\u2019s core business\n\n would be \u201ceven stronger than initially anticipated.\u201d\n\n 6. To improve profitability, the Company had to lower its very high\n\n warranty costs and improve quality. Leading up to the Class Period, in May 2021,\n\n defendant Farley assured investors that he and defendant Lawler were \u201crunning a\n\n much tighter ship,\u201d \u201cmak[ing] a lot of progress,\u201d and \u201c[m]aking the tough choices\n\n and decisions to restructure and redesign our business.\u201d Acknowledging that high\n\n warranty costs had burdened Ford in the past, defendant Lawler claimed Ford had\n\n \u201ctaken lasting actions to continuously improve quality and costs,\u201d including actions\n\n to \u201creduce warranty costs\u201d such as \u201cchanges in design, vehicle inspection and\n\n supplier management.\u201d Another Ford executive stated that Ford could \u201cimprove our\n\n future warranty expense by about 8%.\u201d At around the same time, defendant Farley\n\n touted a \u201c$400 million improvement in our warranty expense,\u201d and explained that\n\n he and defendant Lawler were \u201cattacking warranty\u201d costs by \u201cwork[ing] with\n\n\n\n 2\n \u201cEBIT\u201d is a commonly-used profitability metric that represents Ford\u2019s earnings\n before interest and taxes, and excludes interest on debt (excluding Ford Credit debt\n (defined infra n.7)), taxes, and pre-tax special items.\n\n -4-\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1140 Filed 11/21/25 Page 8 of 103\n\n\n\n\n suppliers on their quality,\u201d taking an \u201cenhanced design approach\u201d on vehicle\n\n development to \u201censure the absolute highest quality,\u201d and \u201cusing connected data to\n\n identify issues early and drive quality to improvement.\u201d Thus, investors were led to\n\n believe that positive trends were developing and Ford\u2019s leaders were finally\n\n targeting the massive \u201cheadwind\u201d of poor quality and high warranty costs.\n\n 7. To comply with Generally Accepted Accounting Principles (\u201cGAAP\u201d)\n\n and Ford\u2019s accounting policy, Ford was required to both account for the current costs\n\n of repairs and also create (and report) a fair and accurate reserve for future costs of\n\n repairs. This was required so that income and losses could be fairly measured in the\n\n current period, rather than, for example, when costly repairs were made in future\n\n years. However, reserves are notoriously an area presenting increased risk of\n\n manipulation since management can be tempted to understate reserves, which would\n\n inflate short-term profitability, and allow them to \u201ckick the can down the road\u201d and\n\n book the increased costs in the future.3\n\n\n\n\n 3\n See Daniel Cohen, et al., Warranty Reserve: Contingent Liability, Information\n Signal, or Earnings Management Tool?, 82 No. 2 Accounting Review 569, 571\n (2011) (noting that \u201copportunistic accounting decisions can be achieved through\n changes in the assumptions and estimates underlying warranty accruals\u201d in order to\n \u201cachieve specific financial reporting objectives\u201d); SEC v. Dell Inc., Litigation\n Release No. 21599, 98 SEC Docket 3375 (July 22, 2010) (SEC announcing consent\n order with company arising from, in part, company\u2019s manipulation of reserves to\n misstate financial metrics).\n\n -5-\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1141 Filed 11/21/25 Page 9 of 103\n\n\n\n\n 8. Here, when defendants Farley and Lawler took over in 2020 amidst\n\n significant warranty headwinds, Ford\u2019s reported warranty payments were\n\n approximately 3.4% of auto sales. In the years that followed, Defendants reported\n\n warranty reserves that reflected a positive trend, signaling to investors that their\n\n \u201ctransformative\u201d Ford+ strategy, \u201ctough decisions,\u201d and \u201cattack[s]\u201d on warranty\n\n costs were working. During the Class Period, Defendants represented, both in their\n\n statements and by booking lower warranty reserves, that warranty costs and trends\n\n were improving. For example, leading up to the Class Period in 2019 and 2020,\n\n Ford had been booking massive increases in warranty reserves related to pre-existing\n\n (older) cars. Then, during the Class Period, Defendants reported a drastic reversal\n\n of that negative trend with much smaller increases in the reserves in 2021 and 2022:\n\n\n\n\n 9. At the same time, Defendants reported warranty payments that dropped\n\n to 3.1% and 2.8% as a percentage of auto sales in 2021 and 2022, respectively.\n\n -6-\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1142 Filed 11/21/25 Page 10 of 103\n\n\n\n\n Defendants reinforced the positive trend reflected in the reported numbers with their\n\n statements to investors and analysts. For example, in early 2022, defendant Lawler\n\n falsely and misleadingly stated that \u201clower warranty costs [helped] more than offset\n\n [certain] production losses and higher commodity costs\u201d to positively contribute to\n\n Ford\u2019s higher reported EBIT, and claimed that \u201c[w]e\u2019re improving our quality . . .\n\n [and] [w]e saw that come through this year from a year-over-year warranty\n\n standpoint it was down roughly $1.4 billion.\u201d4 Defendants claimed they were able\n\n to use technology to quickly and more cheaply address \u201crecalls and customer\n\n satisfaction actions\u201d by \u201ctak[ing] actions [to] quickly . . . resolve\u201d quality issues and\n\n \u201cmaking much more frequent use of over-the-air updates[,] [a]nd boy, has that\n\n worked for us.\u201d5\n\n 10. However, unbeknownst to the investing public, in truth there was no\n\n positive trend in quality or warranty costs, as Defendants concealed that Ford\n\n continued to be plagued with the same quality problems that existed leading up to\n\n\n\n\n 4\n Bold and italics have been added to identify the specific statements being alleged\n as false and misleading statements. See also \u00b6\u00b677-115.\n 5\n With over-the-air updates or \u201cOTAs,\u201d Ford remotely delivers software updates\n to vehicles that have cellular and/or Wi-Fi capabilities, which is cheaper than\n replacing hardware. A Ford executive recently stated that, when available, \u201cOTAs\n cost over 95% less than physical repairs.\u201d Ford began equipping vehicles with\n advanced OTA functionality in 2020, and started issuing OTA updates late in the\n same year.\n\n -7-\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1143 Filed 11/21/25 Page 11 of 103\n\n\n\n\n the Class Period. The truth began to be partially revealed when the warranty costs\n\n skyrocketed in October 2023, partially indicating that reserves had been artificially\n\n suppressed. On October 26, 2023, Ford reported warranty costs had increased $1.2\n\n billion for 3Q 2023, more than double the first and second quarter of 2023 combined.\n\n These increased costs, inconsistent with the lower reserve increases Ford had been\n\n booking, began to partially reveal that Ford\u2019s warranty trends were not as\n\n Defendants portrayed, and Ford\u2019s stock price declined by 12%, wiping out more than\n\n $5 billion in market capitalization. Analysts reported that Ford shares had declined\n\n \u201con [the] Q3 miss driven by more warranty issues.\u201d\n\n 11. However, Defendants treated it as a blip rather than a trend, as they\n\n continued to conceal the true state of Ford\u2019s warranty problems by recording\n\n understated reserves and claiming to be adequately fixing the problems from 3Q\n\n 2023. For example, in February 2024, defendant Lawler assured analysts that \u201cfrom\n\n a warranty standpoint, costs are probably going to be about flat this year\u201d because\n\n \u201c[w]e\u2019re starting to see green shoots [i.e., positive developments] in the quality\n\n improvements.\u201d In April, Ford again reported a small change in reserves for pre-\n\n existing warranties in 1Q 2024 of $397 million, and defendant Farley continued to\n\n tout that \u201c[o]ur quality is making real progress.\u201d\n\n 12. The full truth was finally revealed when the continually high warranty\n\n costs forced Defendants to massively increase the reserves. More specifically, on\n\n\n -8-\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1144 Filed 11/21/25 Page 12 of 103\n\n\n\n\n July 24, 2024, after market close, Defendants shocked investors, revealing that rather\n\n than quality improving, the Company\u2019s \u201c[p]rofitability was affected by an increase\n\n in warranty reserves\u201d so significant that they caused Ford\u2019s core gas-engine business\n\n to suffer a near 50% decline in year-over-year EBIT from $2.3 billion to $1.2 billion.\n\n Ford reported that the change in reserves related to pre-existing warranties had\n\n skyrocketed to $1.4 billion, a 60% increase from prior year, and that the Company\n\n paid $2.8 billion in warranty claims in the first half of 2024, a 40% increase from\n\n prior year. As a percentage of sales in the first half of 2024, Ford\u2019s warranty\n\n payments were 3.4%, exactly where they had been in 2020 when defendants Farley\n\n and Lawler took over, negating any notion of the purported positive trend.\n\n 13. Significantly, Defendants admitted the increased costs did not relate to\n\n new problems or new car sales that suddenly arose at the end of the Class Period,\n\n rather, they were driven largely by long-standing issues that had been impacting the\n\n Company\u2019s \u201colder model[]\u201d vehicles for years. For example, defendant Lawler\n\n admitted in July 2024 that the \u201clargest\u201d impact was from \u201ca rear axle bolt for vehicles\n\n that were engineered for the 2021 model year.\u201d But, the 2021 models of its flagship\n\n Ford F-150 pickup truck were sold beginning in the fall of 2020, prior to the Class\n\n Period, and had defective rear axle bolts that would \u201cshear off\u201d even at low mileages.\n\n This defect could not be remedied by simply replacing the bolt, but instead required\n\n an entire redesign of the axle components. Defendant Farley admitted that warranty\n\n\n -9-\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1145 Filed 11/21/25 Page 13 of 103\n\n\n\n\n repairs to the \u201crear axle\u201d are \u201csuper expensive\u201d and \u201ccomplicated.\u201d Defendants also\n\n blamed costs from oil pump defects in \u201c2016 launched vehicles,\u201d which had been\n\n prevalent for years but Ford failed to account for in reporting warranty costs. And,\n\n defendant Farley lamented increased costs from dealerships unnecessarily replacing\n\n computer modules in vehicles, rather than using OTA software fixes, contrary to\n\n Defendants\u2019 earlier claim that OTA updates were working well.6\n\n 14. In short, investors were shocked to learn that Ford stood exactly at the\n\n end of the Class Period where it stood before it, suffering from massive headwinds\n\n to profitability from quality issues that caused high warranty costs. Defendants\u2019\n\n purported positive trend of lowering warranty costs during the Class Period was a\n\n fa\u00e7ade: the Company continued to be plagued by significant and expensive vehicle\n\n defects that threatened Ford\u2019s ability to fund the Ford+ strategy. Defendants had\n\n simply underreported the warranty reserves, providing a short term and illusory\n\n boost to profitability during the Class Period to inflate their prospects and success in\n\n carrying out the Ford+ strategy.\n\n 15. After the truth was fully revealed by the negative July 24, 2024\n\n disclosures, Ford\u2019s stock declined by another 18%, or $2.51 per share, reportedly\n\n\n 6\n Similarly, when Defendants announced the significantly increased warranty costs\n in October 2023, defendant Farley tied the warranty issues to \u201ctechnology that we\n rolled out like cameras,\u201d and Ford had been suffering from costly defective rear-\n view-cameras for several years.\n\n - 10 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1146 Filed 11/21/25 Page 14 of 103\n\n\n\n\n marking the stock\u2019s largest one-day percentage decline in over 15 years, i.e., since\n\n the 2008 financial crisis. Analysts and media attributed Ford\u2019s historic stock decline\n\n to the shocking \u201csurge in warranty repair costs for older vehicles\u201d and Ford\u2019s\n\n \u201cnumber of field service actions (FSAs) on older product[s].\u201d In total, this single-\n\n day stock decline wiped out nearly $10 billion in market capitalization, adding to the\n\n more than $5 billion in market investor losses suffered in October 2023.\n\n 16. This lawsuit seeks to recover the significant losses suffered by investors\n\n as a result of Defendants\u2019 false and misleading statements that artificially inflated\n\n the stock price, as permitted under the securities laws.\n\n JURISDICTION AND VENUE\n 17. The claims asserted herein arise under and pursuant to \u00a7\u00a710(b) and\n\n 20(a) of the Exchange Act, 15 U.S.C. \u00a7\u00a778j(b) and 78t(a), and Rule 10b-5\n\n promulgated thereunder by the SEC, 17 C.F.R. \u00a7240.10b-5.\n\n 18. This Court has subject matter jurisdiction pursuant to 28 U.S.C. \u00a7\u00a71331\n\n and 1337, and \u00a727 of the Exchange Act, 15 U.S.C. \u00a778aa.\n\n 19. Venue is proper in this District pursuant to 28 U.S.C. \u00a71391(b)-(c), and\n\n \u00a727 of the Exchange Act, 15 U.S.C. \u00a778aa. Ford maintains its principal place of\n\n business in this District, and certain of the acts and conduct complained of herein,\n\n including the dissemination of materially false and misleading information to the\n\n investing public, occurred in this District.\n\n\n - 11 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1147 Filed 11/21/25 Page 15 of 103\n\n\n\n\n 20. In connection with the acts alleged in this complaint, Defendants,\n\n directly or indirectly, used the means and instrumentalities of interstate commerce,\n\n including, but not limited to, the mails, interstate telephone communications, and the\n\n facilities of the national securities markets.\n\n PARTIES\n\n Plaintiffs\n 21. Lead Plaintiff Clark D. Crippen purchased shares of Ford common\n\n stock during the Class Period and was damaged thereby. See ECF 33-3.\n\n 22. Named Plaintiff Ronald A. Ferrante purchased shares of Ford common\n\n stock during the Class Period and was damaged thereby. See ECF 36-2, ECF 39-4.\n\n Defendants\n 23. Defendant Ford is a multinational company headquartered in Dearborn,\n\n Michigan. The Company\u2019s stock trades on the New York Stock Exchange\n\n (\u201cNYSE\u201d) under the ticker symbol \u201cF.\u201d\n\n 24. Defendant Farley has served as Ford\u2019s President and CEO since\n\n October 2020. Upon originally joining Ford in 2007, Farley has served in multiple\n\n senior leadership roles, including most recently as Ford\u2019s Chief Operating Officer\n\n (\u201cCOO\u201d) from March 2020 to September 2020.\n\n 25. Defendant Lawler served as Ford\u2019s CFO from October 2020 to January\n\n 2025, and has served as Vice Chair since February 2025. After originally joining\n\n Ford in 1990, Lawler has served in multiple senior leadership roles.\n - 12 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1148 Filed 11/21/25 Page 16 of 103\n\n\n\n\n 26. Defendants Farley and Lawler are collectively referred to herein as the\n\n \u201cIndividual Defendants.\u201d\n\n FACTUAL BACKGROUND\n\n Ford\u2019s Business and Financial Reporting\n 27. Ford is primarily in the business of designing, manufacturing, and\n\n selling automobiles under its \u201cFord\u201d and \u201cLincoln\u201d brands. Substantially all of\n\n Ford\u2019s vehicles, parts, and accessories are sold through dealerships, which are\n\n largely independently owned.\n\n 28. After trading at prices that at times exceeded $35 per share in the late\n\n 1990s, Ford\u2019s stock price has suffered since the early 2000s. From 2002 up until the\n\n start of the Class Period, Ford stock failed to reach $20 per share for nearly two\n\n decades, as it operated in a competitive market with rising costs and increased\n\n competition from both legacy automakers and new, electric-vehicle-focused\n\n automakers. As reported by The Detroit News, defendant Farley\u2019s ascension to Ford\n\n CEO in October 2020 came \u201camid persistent dissatisfaction with Ford\u2019s languishing\n\n share price, which is down by about one-third over [former CEO Jim] Hackett\u2019s\n\n tenure.\u201d In other words, defendant Farley and defendant Lawler, who was named\n\n CFO at the same time, came in to boost Ford\u2019s financial performance and stock price\n\n and reverse the longstanding negative trends.\n\n\n\n\n - 13 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1149 Filed 11/21/25 Page 17 of 103\n\n\n\n\n 29. On May 26, 2021, during Ford\u2019s 2021 Capital Markets Day, Ford\n\n officially announced its \u201cFord+\u201d business strategy, with defendant Farley claiming\n\n it was the \u201c\u2018biggest opportunity for growth and value creation since Henry Ford\n\n started to scale the Model T, and we\u2019re grabbing it with both hands.\u2019\u201d Under this\n\n strategy, Ford was going to leverage its existing gas vehicles to finance its advanced\n\n technology and movement into electric vehicles and connective software services.\n\n 30. During its Capital Markets Day conference call, defendant Farley\n\n described Ford+ as \u201cFord\u2019s approach to the auto revolution\u201d that would result in \u201ca\n\n new, much better experience that pairs [Ford\u2019s] world-classic, iconic[,] and what we\n\n would say[,] passionate vehicles with a whole new connected human-centered\n\n solutions that improve every day all the time.\u201d Defendant Lawler claimed that\n\n \u201c\u2018[w]e\u2019re fueling Ford+ by further strengthening our core automotive operations and\n\n generating consistently healthy cash flow that will fund growth and create value.\u2019\u201d\n\n 31. As part of the Ford+ plan, Ford subsequently announced a new financial\n\n reporting structure, resulting in the formation of three distinct business segments:\n\n \uf0b7 The \u201cFord Blue\u201d segment primarily includes the design and retail sales\n of Ford and Lincoln internal combustion engine (\u201cICE\u201d) and hybrid\n vehicles, including Bronco, F-150, Mustang, and Navigator.\n\n \uf0b7 The \u201cFord Model e\u201d segment primarily includes the design and retail\n sales of electric vehicles (\u201cEVs\u201d), including F-150 Lightning and\n Mach-E. The Ford Model e segment also develops and provides\n software and connected vehicle technologies for the entire Company,\n including Ford Blue.\n\n\n - 14 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1150 Filed 11/21/25 Page 18 of 103\n\n\n\n\n \uf0b7 The \u201cFord Pro\u201d segment primarily includes the sale of Ford and Lincoln\n vehicles, service parts, accessories, and services for commercial\n customers. The Ford Pro segment does not produce or manufacture its\n own vehicles. Instead, the segment reflects Ford Blue and Ford Model\n e automobiles sold to commercial customers.7\n\n Ford\u2019s Warranty Costs\n 32. Ford provides warranties on its vehicles. Pursuant to these warranties,\n\n Ford will repair, replace, or adjust parts on a vehicle that are defective in factory-\n\n supplied materials or workmanship during the specified warranty period. For\n\n example, Ford provides a \u201cnew vehicle limited warranty\u201d (commonly understood as\n\n a \u201cbumper-to-bumper warranty\u201d) for its Ford Blue offerings, which lasts for three\n\n years or 36,000 miles, whichever comes first. Ford also offers other types of\n\n warranties, such as the \u201cpowertrain warranty\u201d which covers the engine,\n\n transmission, and drivetrain, and is for 5 years or 60,000 miles.\n\n 33. In addition to the costs associated with Ford\u2019s warranty coverages\n\n provided on its vehicles, the Company also incurs costs as a result of FSAs. FSAs\n\n include safety and emission recalls as well as various customer satisfaction programs\n\n and campaigns that may occur during or after the base warranty coverage period.\n\n 34. At the time a vehicle is sold, Ford records a reserve of estimated\n\n warranty coverages and FSAs \u2013 collectively, warranty reserves. The Company\n\n\n\n 7\n Additionally, the Company provides financial services through Ford Motor\n Credit Company LLC, which is referred to as the \u201cFord Credit\u201d segment.\n\n - 15 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1151 Filed 11/21/25 Page 19 of 103\n\n\n\n\n establishes such estimates by using estimation models based on historical\n\n information regarding the nature, frequency, and average cost of claims for each\n\n vehicle line by model year. More recently, software updates have increasingly\n\n become a component of vehicle service and may be performed during warranty\n\n coverage repairs, through FSAs, or through OTA updates. See supra n.5.\n\n 35. In July 2016, when he was Ford\u2019s Corporate Controller, defendant\n\n Lawler participated in a conference call where he \u201cdiscuss[ed] [Ford\u2019s] process for\n\n handling warranty reserves.\u201d During this call, defendant Lawler explained that\n\n \u201c[r]eserves are established by vehicle lines, by model year, and by market\u201d and that\n\n Ford \u201ccalculate[s] the cost per unit by vehicle, by model year, and by market.\u201d\n\n Defendant Lawler added that for FSA reserves, which are a component of the\n\n warranty reserves, \u201cwe book an estimated lifetime cost per unit at the time of\n\n wholesale. The cost per unit is based upon several years of historical data, as\n\n determined by the model and the market.\u201d In a slide presentation accompanying the\n\n call, Ford confirmed that it takes \u201c[a]n average of the most recent seven model years\n\n of history to develop [c]ost [p]er [u]nit\u201d when calculating its reserves for FSAs.\n\n And, for warranty coverages and FSAs, Ford\u2019s warranty reserve is simply these costs\n\n per unit multiplied by the volume of cars sold.8\n\n\n 8\n Ford\u2019s publicly-disclosed policies for setting and updating reserves, as set forth\n in its SEC filings, have not substantively changed since 2016.\n\n - 16 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1152 Filed 11/21/25 Page 20 of 103\n\n\n\n\n 36. These initial estimates are purportedly updated based on current\n\n information. For example, while a new model reserve might be based on historical\n\n estimates of similar vehicles, as data comes in, the reserves are supposed to be\n\n updated. As to warranty reserves, Ford states that:\n\n Experience has shown that initial data for any given model year may be\n volatile; therefore, our process relies on long-term historical averages\n until sufficient data are available. With actual experience, we use the\n data to update the historical averages. We then compare the resulting\n accruals with present spending rates to assess whether the balances are\n adequate to meet expected future obligations. Based on this data, we\n update our estimates as necessary.\n\n 37. Likewise, as to FSAs, Ford states, \u201c[w]e assess our obligation for field\n\n service actions on a regular basis using actual claims experience and update our\n\n estimates as necessary.\u201d In short, Ford claims to monitor actual data and if such data\n\n shows costs are higher than expected, Ford\u2019s policy requires that such increased\n\n costs are accounted for in that period and that reserves are increased to account for\n\n the estimated costs of future repairs.\n\n The Individual Defendants Placed\n Warranty Costs at the Center of\n Their Executive Goals and Focus\n 38. The automobile industry is highly competitive and operates on thin\n\n profit margins, and at times manufacturers have suffered significant losses. In the\n\n earlier years of defendant Farley\u2019s tenure with Ford, in 2012 and 2013 for example,\n\n Ford\u2019s warranty payments as a share of sales were below 2% every quarter. But by\n\n\n - 17 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1153 Filed 11/21/25 Page 21 of 103\n\n\n\n\n the end of 2018, it had increased to 3%. Comparatively, Ford\u2019s historical competitor\n\n General Motor Company\u2019s (\u201cGM\u201d) reported warranty claims in 2018 that, as a share\n\n of sales, were slightly above 2%.\n\n 39. Indeed, in 2018, GM reported that it paid $2.9 billion in warranty\n\n payments, which was $226 million less than the previous year, and its fourth straight\n\n year of declining warranty payments.9 For Ford, in 2018, its payments rose by over\n\n $900 million, from nearly $3.5 billion to over $4.3 billion (despite selling fewer\n\n vehicles than GM), and represented Ford\u2019s third consecutive annual increase of\n\n warranty payments.\n\n 40. Prior leadership struggled to contain warranty costs. In October 2019,\n\n Ford reported that it had been \u201cexperiencing more headwinds than expected in our\n\n fourth quarter, especially higher warranty,\u201d and, as a result, was reducing its 2019\n\n EBIT guidance by up to $1 billion, from $7 to $7.5 billion down to $6.5 to $7 billion.\n\n Ford executives explained that \u201cthe bulk of the guidance change is really warranty\n\n related.\u201d\n\n 41. In response to analyst questions about the warranty costs, then-Ford\n\n CEO James Hackett made clear that \u201cwarranty is getting a lot of attention.\u201d His\n\n\n\n 9\n According to a July 18, 2019 report from Warranty Week, GM\u2019s 2018 warranty\n payments were its \u201clowest of the past 16 years, and . . . [its] first publicly-reported\n annual total below $3 billion.\u201d\n\n - 18 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1154 Filed 11/21/25 Page 22 of 103\n\n\n\n\n colleague, then-Ford Automotive President Joseph Hinrichs, added that \u201cthe bulk of\n\n the warranty cost increases are in North America\u201d with:\n\n [2018] model year and before that are the model years where [we]\u2019ve\n seen an increase in the higher time and service, warranty claims than\n we had accrued for and have been planning for. That\u2019s largely driven\n by some powertrain actions. Some of [our] suppliers, some of them our\n own. As Jim [Hackett] suggested, we\u2019ve done a lot of rework on our\n product development process to make sure we\u2019ve learned from this.\n\n * * *\n\n The way our process works, of course, we accrue for Ford\n models based on the experience we\u2019ve been having. And so it takes a\n little while for that to work its way through the system.10\n 42. In a November 2019 report on Ford investor meetings, Credit Suisse\n\n reported that \u201c[w]arranty was one of the most central topics in the discussions given\n\n it was the largest of the three factors driving Ford\u2019s recent guidedown for \u201819.\u201d\n\n Likewise, Credit Suisse reported in 2020, \u201c[w]arranty has been a ~$2bn headwind\n\n [for Ford] since 2017.\u201d\n\n 43. As noted, defendants Farley and Lawler assumed leadership roles and\n\n made reducing warranty costs a central focus. Shortly after being appointed COO,\n\n during a February 26, 2020 conference call, defendant Farley stated \u201cwe need to\n\n\n 10\n Hinrichs was viewed as a fall guy for Ford\u2019s botched 2019 rollout of the 2020\n Explorer, which suffered production issues, recalls, higher warranty costs, and\n disappointing sales. In February 2020, CNN Business reported that Ford would\n \u201creplace the president of its auto unit [Hinrichs], three days after it announced a\n disappointing earnings outlook and financial results,\u201d largely due to the Explorer.\n At the same time, defendant Farley was announced as the Company\u2019s new COO.\n\n - 19 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1155 Filed 11/21/25 Page 23 of 103\n\n\n\n\n lower our warranty spending\u201d and placed it at the top of his list of \u201c[t]he four things\n\n that we need to fix\u201d at Ford. He claimed that Ford had \u201ca very concrete plan now\u201d\n\n to reduce warranty costs, which included using new connectivity capabilities and\n\n resolving problems quickly. Notably, defendant Farley explained that Ford\u2019s\n\n warranty problems were not \u201ca total mystery,\u201d adding \u201c[t]here are issues that people\n\n knew about that just weren\u2019t being resolved.\u201d\n\n 44. A few months later, defendant Farley was elevated to CEO and, during\n\n an October 28, 2020 conference call, he acknowledged that \u201cwe know we haven\u2019t\n\n fixed the issues that have held us back in our automotive business. They include\n\n warranty costs, which remain unacceptably high.\u201d When an analyst asked about\n\n warranty costs, defendant Farley stated that the Company had taken steps to improve\n\n warranty costs, including becoming \u201cpunitive\u201d with suppliers that send bad parts and\n\n making quality \u201ca key metric that we drive our management team to.\u201d\n\n 45. Like defendant Farley, defendant Lawler emphasized his focus on\n\n addressing Ford\u2019s warranty problems and attempting to lower warranty costs upon\n\n his appointment as CFO. During a November 2, 2020 conference call, he stated that\n\n \u201cwe\u2019re laser focused on improving our costs in a couple of areas, in particular around\n\n warranty and then [also] in material costs.\u201d\n\n 46. At the same time, the media also reported on the Individual Defendants\u2019\n\n focus on reining in Ford\u2019s warranty costs and fixing quality issues. On November\n\n\n - 20 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1156 Filed 11/21/25 Page 24 of 103\n\n\n\n\n 24, 2020, Reuters published an article titled \u201cFocus: Ford\u2019s new CEO tackles\n\n warranty costs in bid to boost profit\u201d and emphasized that defendant Farley \u201cis\n\n aiming to rein in rising warranty repair costs that are a key reason\u201d why Ford\u2019s\n\n \u201cfinancial performance in North America has lagged that of its archrival, General\n\n Motors Co.\u201d The article highlighted Ford\u2019s increasing warranty costs compared to\n\n GM, stating that \u201cfor Ford investors, action to shrink\u201d the Company\u2019s \u201coutlays for\n\n vehicle defects is overdue\u201d as \u201cFord\u2019s warranty costs for the first nine months of\n\n 2020 were more than $2 billion higher than those of GM.\u201d\n\n Defendants Closely Monitored Warranty\n Costs and Inputs\n 47. As part of the Individual Defendants\u2019 \u201claser focus\u201d on warranty costs,\n\n defendant Farley has made clear that Ford executives \u201clook at the root causes\u201d of\n\n such cost issues and \u201cgo through . . . hundreds\u201d of them. Defendant Lawler has\n\n likewise confirmed that, with respect to FSAs and \u201colder model[]\u201d vehicles, Ford\n\n executives are \u201cout looking at all the data we can\u201d in order to \u201ctry to get out in front\n\n of any of those.\u201d\n\n 48. When asked about \u201ccontribution [cost] margin,\u201d which includes\n\n warranty costs, defendant Farley confirmed that Ford\u2019s senior management,\n\n including defendant Lawler, \u201cspend Tuesday once a month on costs, material costs\n\n and supplier costs.\u201d In addition to the Tuesday monthly meetings, defendant Lawler\n\n stated that during \u201cthe other 3 weeks in the month on Tuesday,\u201d he and other senior\n\n - 21 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1157 Filed 11/21/25 Page 25 of 103\n\n\n\n\n executives are \u201cdoing deep dives\u201d into costs issues. Ford also monitors warranty\n\n reports and employs a Critical Concern Review Group (\u201cCCRG\u201d) that reviews and\n\n investigates potential defects and safety issues with Ford vehicles.\n\n 49. The Company also gathers, analyzes, and monitors warranty data and\n\n service information submitted by Ford dealerships. For example, before the Class\n\n Period, Ford made enhancements to the Company\u2019s Global Warranty Measurement\n\n System (the \u201cGWMS\u201d). The GWMS helps thousands of Ford dealerships monitor\n\n warranty costs and warranty claim trends, presented in dashboards made available\n\n to Ford dealers on their computers. As stated by a Global Systems Manager in\n\n Ford\u2019s Global Warranty Operations division, \u201c\u2018[we] have always had data on actual\n\n costs\u2019\u201d and, thanks to enhancements to the GWMS, Ford even started \u201c\u2018show[ing]\n\n [dealers] how they compare monetarily to other dealers within their measurement\n\n groups for each type of repair.\u2019\u201d Stated differently, following these enhancements,\n\n Ford started \u201c\u2018accessing the same data as before, but . . . have presented and\n\n visualized it in new ways for a different audience.\u2019\u201d\n\n 50. As reported in a profile regarding Ford\u2019s use of GWMS from before the\n\n Class Period:\n\n Ford can analyze the warranty data to ensure that critical repairs are\n conducted on each vehicle on the dealership service lot in a timely\n fashion. With more electronic systems on board today\u2019s cars and\n trucks, this foresight is especially valuable for software updates. Ford\n knows where all the vehicles are and which ones need which updates,\n since this type of service is logged as a warranty repair. Analyzing this\n\n - 22 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1158 Filed 11/21/25 Page 26 of 103\n\n\n\n\n data in aggregate on a weekly basis helps the company gauge if the\n dealer network is on track to meet Ford\u2019s quality improvement goals.\n\n 51. Moreover, Ford\u2019s U.S. Privacy Notice (the \u201cPrivacy Notice\u201d), which is\n\n published on the Company\u2019s website, expressly states that the Company gathers\n\n service and warranty data from dealerships.11 Namely, the Privacy Notice states\n\n Ford \u201ccollect[s] vehicle service history from you [the consumer] when you provide\n\n it to us on our sites,\u201d such as a Ford dealership. Ford also \u201creceive[s] information in\n\n connection with vehicle sales and service.\u201d Specifically, \u201c[w]hen you service or\n\n repair your vehicle with a Ford or Lincoln dealer,\u201d Ford obtains the vehicle\u2019s service\n\n history, \u201cwhich includes history of repairs and may include information such as . . .\n\n service details, repair history, applicable recall repairs\u201d as well as \u201cwarranty and\n\n extended service plan information.\u201d\n\n 52. In addition to analyzing service data from dealers and mechanics, Ford\n\n has long monitored message boards regarding their vehicles.12 During the Class\n\n Period, Ford employed \u201cteams within each vehicle line that monitor social media\n\n sites looking for trends,\u201d in an effort to purportedly identify issues early rather than\n\n \u201cwaiting for problems to snowball.\u201d According to Ford\u2019s Executive Director of\n\n\n 11\n See https://www.ford.com/help/privacy/.\n 12\n See Richard Read, Taking your car complaint online? Chrysler, GM, and Ford\n will see it, Christian Science Monitor (Aug. 21, 2012),\n https://www.csmonitor.com/Business/In-Gear/2012/0827/Taking-your-car-\n complaint-online-Chrysler-GM-and-Ford-will-see-it.\n\n - 23 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1159 Filed 11/21/25 Page 27 of 103\n\n\n\n\n Quality, defendant Farley was directly involved in monitoring and addressing\n\n quality, stating defendant Farley \u201cpings me several times a week, so do most of his\n\n direct reports, all asking how they can support and how they can engage to make\n\n sure that we have a culture focused around quality.\u201d\n\n 53. As defendant Lawler admitted, Ford executives \u201cstart to see the\n\n warranty [issues] coming in\u201d for new vehicles at around \u201c12 to 18 months\u201d after\n\n launch. Beyond just the number of FSA or warranty issues, Defendants knew that\n\n the nature of any defect issue could have a significant impact on the Company\u2019s\n\n financial results. For example, during a podcast interview on September 21, 2023,\n\n defendant Farley acknowledged generally the high costs associated with axle issues,\n\n stating that with ICE cars, the \u201ctransmission and rear axle \u2013 you move all that, that\u2019s\n\n all the stuff that goes bad. And when it does it\u2019s super expensive. And it\u2019s\n\n complicated.\u201d Defendant Farley further stated during a conference call on April 27,\n\n 2022 that \u201c[w]e\u2019re going to attack complexity in areas such as powertrain\u201d \u2013 of\n\n which the rear axle is a part.\n\n 54. Likewise, issues requiring full-scale engine replacements, for example,\n\n are typically the highest cost repairs an automobile can undergo. In materials\n\n published in October 2022, Ford outlined that, using the Ford Edge as an example,\n\n\n\n\n - 24 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1160 Filed 11/21/25 Page 28 of 103\n\n\n\n\n the average estimated cost for an engine repair in the United States is nearly $7,000.13\n\n The materials state that repairing an engine \u2013 a \u201cmajor component\u201d in the vehicle \u2013\n\n can be \u201csignificant\u201d and easily eclipse the costs of repairing other \u201cmajor\n\n components\u201d in the vehicle, such as the steering gear ($2,367) and the headlamp &\n\n tail lamp assembly ($2,739).\n\n 55. In summary, warranty issues not only affect Ford\u2019s reputation for\n\n quality, but they are a massive cost and key business issue, which is why so much\n\n attention was directed at monitoring and improving warranty costs.\n\n Warranty Costs Continued to Drastically\n Increase During the Class Period\n 56. During the Class Period, Defendants understated warranty reserves and\n\n overstated Ford\u2019s success in containing warranty costs, as Ford continued to be\n\n plagued by long-standing warranty and FSA issues. As set forth in the chart below,\n\n the stark divergence of Defendants\u2019 purported changes in reserves in 2021 and 2022\n\n from the years leading up to and following that time period support that they did not\n\n reflect reality, and instead were artificially suppressed by Defendants.\n\n\n\n\n 13\n See https://jarrettscottfordprotect.com/pdf/PremiumCARE_Ford_ESP.pdf.\n\n - 25 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1161 Filed 11/21/25 Page 29 of 103\n\n\n\n\n 57. Indeed, when Defendants belatedly revealed the true nature of Ford\u2019s\n\n underlying warranty issues and costs, they did not identify any new problems that\n\n recently arose or anything related to new product launches that could not have been\n\n anticipated.\n\n 58. Instead, Defendants attributed the skyrocketing warranty costs to: (i) \u201ca\n\n rear axle bolt for vehicles that were engineered for the 2021 model year\u201d (see \u00b6138);\n\n (ii) \u201ca failed oil pump issue\u201d for \u201c2016 launched vehicles\u201d (see \u00b6138); (iii) \u201ccameras\u201d\n\n that were included in Ford\u2019s vehicles in years prior that \u201cput[] a huge burden on th[e]\n\n electric architecture with a lot of extra modules and software\u201d (see \u00b6133); and (iv)\n\n dealers opting to replace in-vehicle computer modules, rather than rely on OTA\n\n\n\n\n - 26 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1162 Filed 11/21/25 Page 30 of 103\n\n\n\n\n updates and fixes (see \u00b6139).14 But none of that was new, and, in fact, the issues\n\n were prevalent before and during the Class Period.\n\n 59. First, in the Fall of 2020, Ford launched the MY 2021 Ford F-150\n\n pickup truck with the Trailer Tow Max Duty Package. Shortly thereafter, owners\n\n began experiencing broken rear axle bolts that required complete replacement of the\n\n axle, the same type of repair defendant Farley knew was \u201csuper expensive\u201d and\n\n \u201ccomplicated.\u201d \u00b653. For example, by January 2022, the defect had become the\n\n subject of online discussion, with an owner of a 2021 Ford F-150 with \u201cthe max\n\n trailer tow package\u201d posting in an online forum that at a \u201c10K mile [checkup],\u201d the\n\n rear axle \u201cbolt came off with the tire.\u201d The user reported that \u201c[t]he dealership was\n\n unable to remove the broken bolt and indicated that they\u2019ll need to replace the\n\n axle.\u201d15 Another user responded around the same time, \u201cI just pulled my same tire\n\n off to rotate tires and the bolt was sheared,\u201d adding later the same month that after\n\n\n\n\n 14\n Ford\u2019s \u201cSYNC\u201d system is the Company\u2019s in-vehicle infotainment system, which\n allows drivers and passengers to, among other things, make hands-free phone calls,\n access navigation services, play music, and connect to a user\u2019s cell phone. Starting\n with Ford\u2019s SYNC 4 system, introduced in 2020, Ford vehicles could receive\n advanced OTA software updates.\n 15\n The posts referenced in \u00b6\u00b659-63, and more, are available at\n https://www.f150forum.com/f129/2021-powerboost-rear-rotor-axle-bolt-sheared-\n 515460/.\n\n - 27 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1163 Filed 11/21/25 Page 31 of 103\n\n\n\n\n contacting the dealership, his new axle \u201cis supposed to be in on Friday possibly\n\n Monday.\u201d\n\n 60. Other F-150 owners and users reported the same (and even worse)\n\n issues, providing multiple comments and sharing their experiences in the same\n\n forum. For example, in February 2022, one user stated that a \u201cpassenger rear bolt\n\n sheared off\u201d after he \u201cpopped the wheel off\u201d after hearing a \u201cscraping sound\u201d the\n\n night prior. The user added that his parts \u201cwere ordered on [February] 4th\u201d and he\n\n \u201cwas told there were 11 axles available,\u201d but then \u201c[t]he following Monday [he] was\n\n told they were on back order until February 18th.\u201d In April 2022, another user stated\n\n that the \u201cright rear axel [sic] bolt sheared\u201d at 12,500 miles. In June 2022, a user\n\n stated that he experienced \u201cthe same issues as everyone\u201d else as \u201c[b]oth [a]xles\n\n [b]olts [sic] [s]heared!\u201d In another June 2022 post, another used stated that the\n\n \u201c[p]assenger rear bolt sheared cleanly at the end of the axle shaft\u201d and commented\n\n that \u201c[b]ased on the smoothness and weathering of the sheared piece, it had been that\n\n way for sometime [sic].\u201d And, in August 2022, a user stated that he found the axle\n\n \u201cbolt sheared off\u201d on the \u201c[r]ear passenger side,\u201d providing the following photo:\n\n\n\n\n - 28 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1164 Filed 11/21/25 Page 32 of 103\n\n\n\n\n 61. Some users reported multiple attempts at a fix by Ford dealerships. For\n\n example, in June 2022, one user stated that \u201cmonths\u201d after experiencing a \u201csheared\n\n axle bolt,\u201d which was \u201creplaced\u201d by a local Ford dealership, the replaced bolt started\n\n to \u201cwork[] itself loose.\u201d In July 2022, one user stated that the \u201cright rear axle bolt\n\n sheared\u201d for the \u201c2nd time\u201d which was roughly \u201c4000 miles since the first time.\u201d 16\n\n 62. The posts in this online forum, as well as posts in other online forums,\n\n were monitored by the Company. See \u00b652. For example, in response to a user saying\n\n the repair could not be completed \u201csince the parts are on backorder,\u201d the Official\n\n Ford Account of Ford Motor Co. provided a response. Rather than dispute the defect\n\n or the nature of the repair necessary \u2013 i.e., replacement of the axle \u2013 Ford stated\n\n \u201c[t]his doesn\u2019t sound like an experience we want you to have with your F-150.\n\n Could you please send us a PM [private message] with your VIN [vehicle\n\n identification number] and the name and location of your Ford dealer?\u201d\n\n\n\n 16\n Given the scale of this issue, one user in this online forum tracked and noted that\n over 100 users reported failures with respect to the rear axle bolt in this thread alone.\n\n - 29 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1165 Filed 11/21/25 Page 33 of 103\n\n\n\n\n 63. The Official Ford Account of Ford Motor Co. provided other responses\n\n as well. In response to a user\u2019s post about the \u201cright rear axle shaft\u201d and the\n\n \u201ccondition of the retainer bolt\u201d on his F-150 \u2013 and a \u201cback order\u201d of necessary parts\n\n \u2013 Ford once again did not dispute the defect. Instead, Ford stated: \u201c[w]ould you send\n\n over a private message with your VIN [vehicle identification number] and the name\n\n and location of your Ford dealer so I can look into this axle delay concern on my\n\n end?\u201d In another post, where the user commented that the \u201cbolt sheared off\u201d on the\n\n \u201c[r]ear passenger side\u201d of the user\u2019s F-150, Ford similarly responded that \u201c[t]his axle\n\n concern doesn\u2019t sound like something we want you to experience with your F-150.\n\n Could you please send us a PM [private message] with your VIN [vehicle\n\n identification number] and the name and location of your Ford dealer?\u201d\n\n 64. By June 2022, NHTSA contacted Ford regarding \u201creports of broken\n\n rear axle hub bolts on 2021-2022 model year F-150 vehicles equipped with the 9.75-\n\n inch HD 3/4 float axle\u201d \u2013 the axle used for the Trailer Tow Max Duty Package. Ford\n\n met with NHTSA twice in June 2022 to discuss the Vehicle Owner\u2019s Questionnaires\n\n and \u201cto provide responses to NHTSA\u2019s requests for information.\u201d\n\n 65. Second, starting in the Fall of 2015, Ford equipped certain vehicles with\n\n a 1.0L EcoBoost engine, including the 2016 through 2018 Ford Focus and the 2018\n\n through 2022 Ford EcoSport and Ford Fiesta. Many such vehicles equipped with\n\n the 1.0L EcoBoost engine began to fail due to the same issue \u2013 a defective oil pump\n\n\n - 30 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1166 Filed 11/21/25 Page 34 of 103\n\n\n\n\n belt system that would cause the oil pump drive belt to degrade and lose teeth,\n\n resulting in a loss of oil pressure.17 Oil pumps, located inside the engine, are critical\n\n to ICEs because they pump oil through the engine, which is necessary for engine\n\n cooling and lubrication.18 Without proper oil circulation, the engine will suffer\n\n damage and eventually lock up and cease to be able to move, typically meaning\n\n engine failure.\n\n 66. The oil pump failure in Ford\u2019s 1.0L EcoBoost engine was widespread,\n\n with customers repeatedly reporting severe issues associated with the engine. For\n\n example:19\n\n \uf0b7 In June 2020, a customer reported that their 2017 Ford Focus engine\n experienced \u201cFAILURE.\u201d The \u201cvehicle was towed\u201d to the dealership\n and \u201cthe manufacturer was notified of the failure.\u201d The \u201cmechanic told\n the consumer there were issues with timing/oil pump belt (located\n inside the engine) broke/shred. Oil pressure dropped and pieces of belt\n clogged oil pump and also circulated through the engine.\u201d The\n customer was presented with a complete engine replacement that cost\n approximately $7,100. The same month, a customer reported that their\n 2017 Ford Focus had to be towed to a dealer, which said \u201cprobably the\n\n\n 17\n See, e.g., NHTSA Recall No. 23V-905 and Ford Recall No. 23S64.\n 18\n See Dustin Hawley, What is an Oil Pump?, J.D. Power (July 19, 2023),\n https://www.jdpower.com/cars/shopping-guides/what-is-an-oil-pump.\n 19\n The reports referenced in \u00b6\u00b666-67, and more, are available on the NHTSA\u2019s\n website dedicated to \u201c[t]rack[ing] recalls & safety issues,\u201d\n https://www.nhtsa.gov/?nhtsaId. The NHTSA Safety Issue ID Numbers for the\n referenced reports are: 11330569, 11330943, 11342142, 11373258, 11440950,\n 11441806, 11464002, 11473126, 11481834, 11510755, and 11497226.\n Capitalization has been modified for certain reports.\n\n - 31 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1167 Filed 11/21/25 Page 35 of 103\n\n\n\n\n timing/oil pump belt broke or shredded and clogged up the oil pump\u201d\n and it \u201cwould cost $800 to find out the actual problem and if the\n [mechanic] was right the engine would have to be replaced costing\n $7400.\u201d\n\n \uf0b7 In July 2020, a customer reported that their 1.0L EcoBoost engine\n experienced \u201cengine trouble at 62,000 miles \u2013 metal shavings in the\n oil.\u201d\n\n \uf0b7 In November 2020, a customer reported that their 2018 Ford Ecosport,\n had \u201ca loss of engine oil pressure\u201d and had to be towed, at which point\n the customer was told \u201cthe block is damaged and looks like the oil belt\n tensioner broke and damaged engine.\u201d\n\n \uf0b7 In November 2021, a customer reported that their 2018 Ford Ecosport\n \u201clost all acceleration\u201d and the dealer told them \u201cpieces of [the] timing\n belt were in the oil,\u201d meaning the customer \u201cneeded a new engine and\n long block.\u201d The customer stated that they contacted Ford, which was\n \u201cwilling to provide some assistance\u201d and the \u201cdealer also had an\n EcoSport in [the] service dep[artment] . . . with the same issue.\u201d The\n same month, another customer reported for their 2016 Ford Focus,\n \u201c[o]il pump failure 2 times in a ro[w] within 75,000 miles. Had to have\n a brand new engine replacement each time.\u201d\n\n \uf0b7 In May 2022, a customer reported that the engine on their 2019 Ford\n Ecosport went out \u201cwithout warning at 62,000 miles causing complete\n engine failure\u201d and a \u201cFord representative told [the customer] that the\n belt for the oil pump shredded and caused loss of oil pressure which\n le[d] to a complete loss of power.\u201d\n\n \uf0b7 In August 2022, a customer reported that the engine on their 2019 Ford\n Ecosport experienced issues, requiring an \u201cemergency pullover,\u201d and\n that the dealer stated there was a \u201closs of engine oil pressure.\u201d\n\n \uf0b7 In December 2022, a customer reported oil pump problems on their\n 2020 Ford EcoSport, stating that the \u201cwet belt and the rubber teeth\n c[a]me off stopping up the oil pump and causing it not to work proper,\u201d\n adding that \u201cI am left with no choice but to replace the engine at a cost\n of $5,000.00.\u201d\n\n\n\n - 32 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1168 Filed 11/21/25 Page 36 of 103\n\n\n\n\n 67. Consistent with the average estimated costs provided by Ford (see \u00b654),\n\n customers reported that the engine replacements due to oil pump failures,\n\n recommended by Ford dealerships, would cost thousands of dollars (e.g., \u201c$7500,\u201d\n\n \u201c$7400,\u201d \u201c$7100,\u201d \u201c$6500,\u201d \u201c5,000\u201d).\n\n 68. By early 2022, Ford\u2019s CCRG had investigated the oil pump issue but\n\n decided to take no action to fix it because \u201c[t]here were no accident or injury\n\n allegations related to the concern at the time.\u201d However, regardless of the safety\n\n impact of the oil pump issue, Ford knew that it was widespread and would be costly\n\n if not addressed, as replacing engines from failed oil pumps on years\u2019 worth of\n\n defective automobiles would be exponentially more expensive than replacing the oil\n\n pumps.\n\n 69. Third, by October 2020, Ford had identified a defect in rear-view-\n\n cameras (\u201cRVCs\u201d) installed in at least seven different models, spanning production\n\n in 2019 and 2020, and potentially affecting hundreds of thousands of vehicles. 20\n\n Specifically, a lack of \u201celectrical conductivity\u201d in the RVCs was causing them to\n\n \u201cintermittently display[] a blank or distorted image.\u201d This defect required that the\n\n RVCs be \u201creplace[d],\u201d rather than fixed through less-costly OTA updates.\n\n\n 20\n See Safety Recall Report No. 20V-575. Federal standards recognize that\n rearview visibility is an important safety issue that can reduce deaths and injuries,\n making Ford\u2019s defective RVCs a significant safety concern. See Federal Motor\n Vehicle Safety Standard No. 111, \u201cRear Visibility,\u201d 49 C.F.R. \u00a7571.111.\n\n - 33 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1169 Filed 11/21/25 Page 37 of 103\n\n\n\n\n Thereafter, Ford continued to acknowledge that the scope of the RVCs problems\n\n was not limited to just the models identified, but that large aspects of Ford\u2019s product\n\n lines equipped with similar RVC components suffered defects, requiring various\n\n fixes.21\n\n 70. Fourth, starting in 2020, Ford provided advanced OTA updates on\n\n certain vehicles through the Company\u2019s in-vehicle infotainment system: SYNC 4.\n\n Specifically, Ford\u2019s website claims that OTA updates provide consumers \u201cwireless\n\n upgrades with little-to-no action on your [the consumer\u2019s] part\u201d and \u201care designed\n\n to help make your [the consumer\u2019s] vehicle better over time.\u201d Through OTA\n\n updates, Ford remotely \u201cdeliver[s] new features and functionality\u201d such as software\n\n and firmware enhancements, quality improvements, and safety and security updates.\n\n 71. In July 2021, defendant Farley emphasized the importance that \u201cdealers\n\n are very knowledgeable about these new OTA features that are really meaningful in\n\n the use of the customer\u2019s life.\u201d However, during the Class Period, rather than utilize\n\n OTA updates to fix issues on a cost efficient basis, dealerships were replacing entire\n\n\n\n\n 21\n For example, in Safety Recall Report No 21V-223, issued in March 2021, Ford\n acknowledged an RVC defect in Lincoln Aviators built in 2018 through 2020,\n causing \u201cintermittent loss of image on the rearview camera display\u201d with \u201ca blank\n or distorted image.\u201d Similarly, in Safety Recall Report No 22V-252, issued April\n 2022, Ford acknowledged an RVC defect on certain Ford trucks, including F-150s,\n causing an \u201cintermittent[] display[] [of] blank or distorted image.\u201d\n\n - 34 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1170 Filed 11/21/25 Page 38 of 103\n\n\n\n\n modules, which would be known to Ford through its close monitoring of such\n\n updates and warranty repair costs. See also \u00b6\u00b647-55.\n\n Expert Insight Corroborates the Allegations\n 72. Plaintiffs consulted with an expert in automobile operations,\n\n manufacturing, and engineering, Kai Spande, to analyze the significance of the\n\n alleged defects.\n\n 73. Mr. Spande holds a Bachelor\u2019s of Science degree in Industrial\n\n Technology from the University of Northern Iowa. Mr. Spande has decades of\n\n industry experience and has served in multiple automotive leadership roles\n\n throughout his 30+ year career with GM, a multi-billion dollar global vehicle\n\n manufacturer. For example, Mr. Spande served as Plant Manager at: (i) GM\u2019s\n\n Bowling Green, Kentucky manufacturing plant, where he led the production of two\n\n generations of GM\u2019s Chevrolet Corvette vehicles, including design and production\n\n of castings, engine components, and engines; and (ii) GM\u2019s Romulus, Michigan\n\n manufacturing plant, where he led the production of GM\u2019s V6 and V8 engines; and\n\n GM\u2019s Bay City, Michigan manufacturing plant, where he led waste reduction efforts\n\n for vehicle castings.22\n\n\n 22\n Other relevant experience includes serving as an Engineering Director,\n Powertrain Operations and as a Global Director, Casting Processes-Powertrain. Mr.\n Spande also previously completed a fellowship sponsored by the United States\n Department of Commerce.\n\n - 35 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1171 Filed 11/21/25 Page 39 of 103\n\n\n\n\n 74. Mr. Spande reviewed, among other things, NHTSA recall\n\n acknowledgement letters, dealership notifications and supplements thereto\n\n (including technical service bulletins (\u201cTSBs\u201d)), Part 573 Safety Recall Reports,\n\n recall chronologies as reported by Ford to NHTSA, Ford notices to owners and\n\n supplements thereto, and Ford\u2019s annual and quarterly recall reports to NHTSA for\n\n the following recalls:\n\n \uf0b7 NHTSA Recall No. 23V-896 and Ford Recall No. 23S65 (affecting\n \u201ccertain 2021-2023 F-150 vehicles equipped with the Trailer Tow Max\n Duty package and a 9.75-inch heavy duty axle with a 3/4 float axle\n design\u201d);\n\n \uf0b7 NHTSA Recall No. 25V-512 and Ford Recall No. 25S82 (affecting\n \u201ccertain 2023-2025 F-150 vehicles equipped with the Trailer Tow Max\n Duty package and a 9.75-inch heavy duty axle with a 3/4 float axle\n design\u201d);\n\n \uf0b7 NHTSA Recall No. 23V-905 and Ford Recall No. 23S64 (affecting\n certain \u201c2016-2018 Ford Focus\u201d and \u201c2018-2022 Ford EcoSport\u201d\n vehicles. \u201cThe engine oil pump drive belt tensioner arm may fracture,\n separate from the tensioner backing plate, and/or the oil pump drive belt\n material may degrade and lose teeth, resulting in a loss of engine oil\n pressure.\u201d);\n\n \uf0b7 NHTSA Recall No. 20V-575 and Ford Recall No. 20C19 (affecting\n various model year 2020 vehicles with \u201cintermittent or inoperative\n rearview cameras\u201d); and\n\n \uf0b7 Thirty-six additional NHTSA-reported recalls (as distinguished by\n independent NHTSA and Ford recall numbers) relating to Ford\u2019s\n RVCs, ranging based on date of report to the NHTSA from March 30,\n 2021 through September 4, 2025.\n\n\n\n\n - 36 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1172 Filed 11/21/25 Page 40 of 103\n\n\n\n\n 75. Based on his extensive experience in the automotive industry and\n\n review of such materials, Mr. Spande reached the following conclusions, which\n\n corroborate Plaintiffs\u2019 allegations above.\n\n Expert Conclusions Regarding the Axle Bolt Issue\n\n (a) Ford\u2019s axle bolt issue, potentially affecting up to nearly 217,000\n\n MY 2021-2025 F-150 vehicles, involved a \u201c3/4 floating\u201d rear axle design offered as\n\n part of a \u201cMax Tow\u201d package for certain F-150 vehicles. This rear axle design was\n\n introduced starting with model year 2021 vehicles and was intended to improve the\n\n F-150\u2019s towing capacity. However, the rear axle design experienced failures in the\n\n bolt that held the axle hub (on which the tire is mounted) to the axle. Due to the\n\n nature of the axle hub design, the axle bolt would materially fatigue as a result of\n\n physical overloading, thus failing and causing the bolt to break, which in turn led to\n\n parts related to the axle and wheel to wear out. This impeded both the ability of the\n\n affected wheel(s) to propel the vehicle when customers pressed the gas, potentially\n\n rendering the vehicle \u201cundriveable,\u201d and the ability of the vehicle to be parked\n\n safely, as the vehicles could then roll away.\n\n (b) Because the bolt that held the axle hub was overloaded and\n\n experiencing fatigue, it would be highly unlikely that this issue could be adequately\n\n fixed by simple or low-cost repairs, such as replacing the bolt or adding fasteners,\n\n which would be likely to result in the same overloading, fatigue, and failure. Instead,\n\n\n - 37 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1173 Filed 11/21/25 Page 41 of 103\n\n\n\n\n to address the physical overloading being placed on the bolt, a redesign of the axle\n\n assembly would likely be required. Such redesigns are generally costly not only to\n\n implement (driving significant parts and labor costs), but also to develop, as\n\n engineering teams need to expend substantial time and resources to reach a workable\n\n solution that will last. Ford did ultimately develop and issue a redesigned axle to\n\n replace the defective ones. In addition, because the rear axle bolt could impact the\n\n truck\u2019s ability to be safely driven, Ford could be required to incur substantial\n\n additional expenses to pay for towing to a dealership and/or loaner vehicles to certain\n\n customers, and other consequential costs.\n\n (c) In Mr. Spande\u2019s experience, vehicle manufacturers closely\n\n monitor and respond to potential defects reported on their vehicles, even without any\n\n contact from the NHTSA. According to the chronology Ford reported to the NHTSA\n\n for the first of two recalls for the axle bolt issue, Ford was contacted by the NHTSA\n\n regarding customer reports of the issue by June 6, 2022, culminating with Ford\u2019s\n\n Field Review Committee approving a field action (recall) for MY 2021\u20132023 Ford\n\n F-150 vehicles on December 15, 2023 \u2013 during which time Ford would have been\n\n manufacturing and shipping MY 2024 F-150 vehicles containing the same, defective\n\n design. Ford later issued the second of its two recalls for the axle bolt design on\n\n August 1, 2025 for up to over 103,000 MY 2024-2025 F-150s. Thus, Ford continued\n\n\n\n\n - 38 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1174 Filed 11/21/25 Page 42 of 103\n\n\n\n\n to sell F-150s containing the defective axle design even after June of 2022 and\n\n December of 2023.\n\n Expert Conclusions Regarding the Oil Pump Issue\n\n (d) Ford\u2019s oil pump issue, potentially affecting up to nearly 140,000\n\n MY 2016-2018 Ford Focus and MY 2016-2022 Ford EcoSport vehicles, was\n\n significant in magnitude given the nature of the issue and related repairs. All of the\n\n vehicles potentially affected by this issue shared in common a new design that Ford\n\n introduced in model year 2016 vehicles consisting of an engine oil pump drive\n\n system for automatic transmission vehicles using a \u201cwet belt\u201d where the oil pump\n\n drive belt is submerged into engine oil. This design was faulty and caused the oil\n\n pump belt tensioner to fail, because the engine would run out of lubrication (i.e., oil),\n\n which in turn reduced customers\u2019 ability to control the vehicle until coming to a rest,\n\n and/or which would cause the engine to seize and the vehicle to shudder or jerk, each\n\n of which constituted a safety concern.\n\n (e) Because the faulty design caused the belt tensioner to fail, it\n\n would be highly unlikely that this issue could be adequately fixed by simple or low-\n\n cost repairs, such as replacing the belt, which would be likely to result in the same\n\n failure; and even investigating the issue would involve opening the engine which\n\n already triggers significant expense. In this situation, however, modifications to the\n\n oil pump tensioner system would likely be required, resulting in significant costs\n\n\n - 39 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1175 Filed 11/21/25 Page 43 of 103\n\n\n\n\n from developing the solution, and also labor and parts costs to implement the fix.\n\n Moreover, given the nature of the issue that was inherent in a common design, and\n\n consistent with vehicle manufacturing industry practices, it likely would have been\n\n straightforward for a manufacturer to \u201cread across\u201d vehicles with this common\n\n engine oil pump drive system to assess the scope and magnitude of the problem.\n\n (f) Adding to the magnitude, the oil pump issue could lead to the\n\n vehicle not being able to be operated safely, making it what is known in the industry\n\n as a \u201cwalk home\u201d issue, thus exposing Ford to expenses related to pay for towing to\n\n a dealership and/or loaner vehicles for customers, and other consequential costs.\n\n Moreover, running such vehicles\u2019 engines for too long without adequate lubrication\n\n would likely cause complete engine failure, requiring high-cost replacement of the\n\n engine.\n\n Expert Conclusions Regarding the Rearview Camera Issues\n\n (g) Ford automobiles have suffered significant RVC issues, dating\n\n back to at least 2020. On September 23, 2020, Ford issued a recall potentially\n\n affecting up to 620,246 vehicles including certain MY 2020 F-150, F-250, F-350, F-\n\n 450, F-550, Edge, Escape, Expedition, Explorer, Mustang, Ranger, and Transit\n\n vehicles. Such RVC issues impact the ability of drivers to use their RVCs, which is\n\n a well-understood safety concern in the automotive industry.\n\n\n\n\n - 40 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1176 Filed 11/21/25 Page 44 of 103\n\n\n\n\n (h) Notably, many of Ford\u2019s vehicles share common platforms,\n\n which are shared structural and engineering foundations that are used across multiple\n\n vehicle models. In the automotive industry, it is common practice to \u201cread across\u201d\n\n vehicle platforms to identify where common or identical parts, designs, and suppliers\n\n in already-recalled vehicles would be present in further vehicles, requiring additional\n\n recalls. Through September 2025, Ford has issued recalls relating to RVCs that have\n\n affected up to more than 5 million vehicles across nearly all of Ford\u2019s models under\n\n its Ford and Lincoln brands,23 including vehicles produced from 2015 through 2025.\n\n Given the scope of recalls covering nearly all of Ford\u2019s models, and the repeated\n\n attempted fixes outlined in the documents Mr. Spande reviewed, Mr. Spande\n\n concludes that the RVC issues at Ford have been widespread for years.\n\n DEFENDANTS\u2019 FALSE AND MISLEADING CLASS PERIOD\n STATEMENTS\n 76. Throughout the Class Period, Defendants made false and misleading\n\n statements that overstated their purported success in improving quality and reducing\n\n warranty costs. More specifically, Defendants made false and misleading statements\n\n that portrayed positive trends in warranty costs and quality improvements,\n\n\n\n\n 23\n Models impacted by RVC recalls through September 2025 include Aviator,\n Bronco, Continental, Corsair, Econoline, Edge, Escape, Expedition, Explorer, F-\n 150, F-250, F-350, F-450, Fiesta, Flex, Maverick, MKC, Mustang, Navigator,\n Nautilus, Ranger, Transit, and Transit Connect vehicles.\n\n - 41 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1177 Filed 11/21/25 Page 45 of 103\n\n\n\n\n concealing that Ford continued to be plagued by significant and expensive vehicle\n\n defects that threatened Ford\u2019s ability to increase profits to fund the Ford+ strategy.\n\n In addition, Defendants further concealed such then-existing defects and the\n\n resulting increasing warranty and FSA costs by falsely and misleadingly: (i) assuring\n\n that they were monitoring defects and updating warranty reserves accordingly; and\n\n (ii) issuing boilerplate warnings that stated only that warranty costs theoretically\n\n \u201ccould\u201d increase and impact Ford\u2019s reputation and market acceptance of its vehicles.\n\n Defendants\u2019 False and Misleading Statements\n Claiming Positive Trends in Ford\u2019s Warranty\n Costs and Quality Improvements\n 77. On October 27, 2021, Ford filed its quarterly report on Form 10-Q for\n\n the period ending September 30, 2021 (\u201c3Q 2021 Form 10-Q\u201d). The 3Q 2021 Form\n\n 10-Q contained signed certifications by defendants Farley and Lawler and reported\n\n positive trends in Ford\u2019s warranty reserves by recording a tiny increase.\n\n Specifically, Ford reported \u201c[c]hanges in accrual related to pre-existing\n\n warranties\u201d of only $44 million, which was 3% of the increase reported in the prior\n\n year of $1.4 billion.24\n\n\n\n\n 24\n A warranty reserve is the total amount that a company sets aside to cover the\n costs of claims. An accrual is the process of determining the necessary amounts to\n include in the warranty reserves. Thus, when Ford reports a change in accrual, it is\n reporting the amount it is adding to (or subtracting from) the warranty reserves.\n\n - 42 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1178 Filed 11/21/25 Page 46 of 103\n\n\n\n\n 78. On the same day, defendants Farley and Lawler participated in a\n\n conference call to discuss Ford\u2019s third quarter 2021 (\u201c3Q 2021\u201d) earnings results.\n\n In response to an analyst question regarding sales in the second half of 2021,\n\n defendant Lawler acknowledged that, \u201cfrom a headwind standpoint . . . we are going\n\n to see some higher warranty costs on a sequential basis in the fourth quarter for\n\n things that we have to take care of around extended warranties and a little bit higher\n\n coverages\u201d but assured investors it was a short term issue by adding that, \u201cour\n\n warranty will improve in the fourth quarter and full year on a year-over-year basis.\n\n Our warranty, we expect to be good by about $1.4 billion.\u201d\n\n 79. Analysts reacted positively to Defendants\u2019 false and misleading\n\n statements reflecting the $1.4 billion improvement. For example, on October 27,\n\n 2021, RBC Capital Markets increased its price target for Ford stock based, in part,\n\n on improvements in warranty, stating: \u201cF[ord] hopes to continue to make headway\n\n reducing warranty ($1.4bn in 2021).\u201d On the same day, Wells Fargo likewise\n\n increased its price target for Ford stock from $17 per share to $19 per share and\n\n commented that, even \u201c[m]ore positively, there is still opportunity for more warranty\n\n improvements as Ford is targeting a $2bn reduction and will be down $1.4bn in\n\n 2021, leaving a $600mn 2022 cost opportunity.\u201d\n\n 80. On February 3, 2022, Ford filed its annual report on Form 10-K for the\n\n year ending December 31, 2021 (\u201c2021 Form 10-K\u201d), signed by defendants Farley\n\n\n - 43 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1179 Filed 11/21/25 Page 47 of 103\n\n\n\n\n and Lawler, in which Defendants reported positive trends in Ford\u2019s warranty\n\n reserves by recording a small increase. Specifically, Defendants reported\n\n \u201c[c]hanges in accrual related to pre-existing warranties\u201d of only $221 million\n\n which was a $2.2 billion improvement from the prior year.\n\n 81. The same day, Ford issued a release announcing earnings results for the\n\n period ended December 31, 2021 (the \u201cFY 2021 Release\u201d). In discussing the\n\n Company\u2019s FY 2021 EBIT, the FY 2021 Release claimed that Ford\u2019s \u201clower\n\n warranty costs\u201d had \u201cmore than offset the effects of production losses and higher\n\n commodity costs.\u201d\n\n 82. Also on that day, defendants Farley and Lawler participated in a\n\n conference call to discuss Ford\u2019s FY 2021 earnings results. During this conference\n\n call, defendant Lawler made the following false and misleading statements:\n\n (a) During prepared remarks, defendant Lawler claimed that\n\n \u201cimprovement in warranty costs\u201d had contributed to \u201coffset[ting] commodity\n\n headwinds and supply chain-related production losses.\u201d\n\n (b) In response to an analyst question requesting \u201cmore color\u201d on\n\n Ford\u2019s \u201cmargin\u201d targets and how Defendants would \u201cimprov[e] margins from here,\u201d\n\n defendant Lawler stated that \u201c[w]e\u2019re improving our quality, which is important.\n\n We saw that come through this year, from a year-over-year warranty standpoint\n\n\n\n\n - 44 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1180 Filed 11/21/25 Page 48 of 103\n\n\n\n\n was down roughly $1.4 billion\u201d and claimed Ford was \u201cleveraging what we have\n\n from the connected vehicle [e.g., OTAs] to improve warranty even further.\u201d\n\n 83. Analysts continued to react positively to Defendants\u2019 false and\n\n misleading statements. For example, on February 3, 2022, RBC Capital Markets\n\n expressed optimism in Ford\u2019s ability to generate more profit to fund EVs, stating\n\n \u201c[i]t was also good to hear they [Defendants] could ring more profit out of ICE\u201d and\n\n added that \u201cwe believe higher profits from ICE (from cycle or more efficiencies) get\n\n redeployed to increase and accelerate\u201d EV investment and growth. Similarly, on\n\n February 4, 2022, Credit Suisse commented that \u201cnear-term financial strength is\n\n supporting better funding of Ford\u2019s long-term [EV] transition,\u201d adding that in 2022,\n\n investing in EVs should be \u201coffset by tailwinds from material cost and warranty.\u201d\n\n 84. On April 27, 2022, Ford filed its quarterly report on Form 10-Q for the\n\n period ending March 31, 2022 (\u201c1Q 2022 Form 10-Q\u201d). The 1Q 2022 Form 10-Q\n\n contained signed certifications by defendants Farley and Lawler and reported\n\n positive trends in Ford\u2019s warranty reserves by recording a tiny increase.\n\n Specifically, Ford reported \u201c[c]hanges in accrual related to pre-existing\n\n warranties\u201d of only $21 million, further portraying Ford as having reversed the 2019\n\n and 2020 trends resulting in $2 billion of increased reserves related to pre-existing\n\n warranties ($1.9 billion in 2019 and $2.4 billion in 2020).\n\n\n\n\n - 45 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1181 Filed 11/21/25 Page 49 of 103\n\n\n\n\n 85. On April 28, 2022, Credit Suisse wrote, \u201cwe appreciate ongoing\n\n progress in Ford\u2019s EV transition\u201d and noted that Ford\u2019s \u201cEV spend\u201d would be \u201coffset\n\n by tailwinds from material cost and warranty.\u201d\n\n 86. On July 27, 2022, Ford filed its quarterly report on Form 10-Q for the\n\n period ending June 30, 2022 (\u201c2Q 2022 Form 10-Q\u201d). The 2Q 2022 Form 10-Q\n\n contained signed certifications by defendants Farley and Lawler and reported\n\n positive trends in Ford\u2019s warranty reserves by recording a small increase.\n\n Specifically, Ford reported \u201c[c]hanges in accrual related to pre-existing\n\n warranties\u201d in the first half of 2022 of only $395 million, further portraying Ford as\n\n having reversed the 2019 and 2020 trends resulting in $2 billion of increased reserves\n\n related to pre-existing warranties ($1.9 billion in 2019 and $2.4 billion in 2020).\n\n 87. The same day, defendants Farley and Lawler participated in a\n\n conference call to discuss Ford\u2019s second quarter 2022 (\u201c2Q 2022\u201d) earnings results.\n\n During prepared remarks, defendant Farley assured investors that Ford continues to\n\n \u201cidentif[y] issues\u201d and \u201ctake[s] actions quickly to resolve them . . . including by\n\n making much more frequent use of [OTAs]\u201d which \u201cha[ve] . . . worked for us.\u201d\n\n 88. On October 22, 2022, Ford filed its quarterly report on Form 10-Q for\n\n the period ending September 30, 2022 (\u201c3Q 2022 Form 10-Q\u201d). The 3Q 2022 Form\n\n 10-Q contained signed certifications by defendants Farley and Lawler and reported\n\n positive trends in Ford\u2019s warranty reserves by recording a small increase.\n\n\n - 46 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1182 Filed 11/21/25 Page 50 of 103\n\n\n\n\n Specifically, Ford reported \u201c[c]hanges in accrual related to pre-existing\n\n warranties\u201d in the first nine months of 2022 of only $449 million, further portraying\n\n Ford as having reversed the 2019 and 2020 trends resulting in $2 billion of increased\n\n reserves related to pre-existing warranties ($1.9 billion in 2019 and $2.4 billion in\n\n 2020).\n\n 89. On February 2, 2023, Ford filed its annual report on Form 10-K for the\n\n year ending December 31, 2022 (\u201c2022 Form 10-K\u201d), signed by defendants Farley\n\n and Lawler, in which Defendants reported positive trends in Ford\u2019s warranty\n\n reserves. Specifically, Defendants reported \u201c[c]hanges in accrual related to pre-\n\n existing warranties\u201d of $1.1 billion which, as set forth above (\u00b656), represented a\n\n positive reversal of massively increased accruals in 2018 through 2020 of $1.8\n\n billion to $2.4 billion and a continuation of the positive trend from the prior year.\n\n 90. The same day, defendants Farley and Lawler participated in a\n\n conference call to discuss Ford\u2019s earnings results for the period ended December 31,\n\n 2022 (\u201cFY 2022\u201d). During prepared remarks, defendant Lawler emphasized that\n\n Ford Blue\u2019s \u201centire enterprise quality operating system\u201d was \u201coverhauled\u201d and \u201cwe\n\n are already seeing improvements in initial quality,\u201d while concealing the major\n\n issues in pre-existing automobiles.\n\n\n\n\n - 47 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1183 Filed 11/21/25 Page 51 of 103\n\n\n\n\n 91. The statements set forth in \u00b6\u00b677-78, 80-82, 84, 86-90 were false and\n\n misleading when made. The true facts, which Defendants knew or recklessly\n\n disregarded, were:\n\n (a) Rather than experiencing positive trends in warranty costs and\n\n reserves, such as reported reserves that reversed the negative trend of massive\n\n increases in prior years, and rather than seeing lower warranty costs that were \u201cgood\n\n by about $1.4 billion\u201d that \u201coffset the effects of production losses\u201d or \u201ccommodity\n\n headwinds,\u201d Ford continued to be plagued by significant and expensive vehicle\n\n defects (mainly to older models), consistent with prior years, and the reported\n\n reserves understated the true state of Ford\u2019s warranty problems and costs, which was\n\n revealed by the massive increases in warranty costs and reserves at the end of the\n\n Class Period;\n\n (b) Defendants\u2019 statements that Ford was \u201cimproving quality,\u201d had\n\n \u201coverhauled\u201d Ford\u2019s quality operating systems to improve \u201cinitial quality,\u201d and was\n\n using the \u201cconnected vehicle to improve warranty\u201d and \u201ctaki[ing] action to quickly\n\n resolve\u201d quality issues including through \u201cfrequent use of [OTAs]\u201d that were\n\n working well, were misleading because they omitted to disclose: (i) the significant\n\n and expensive quality problems in older vehicles that were not addressed or\n\n improved by OTAs and were negatively impacting warranty costs, such as the Ford\n\n F-150 rear axle defect, RVC problems, and the 2016 oil pump defect; and (ii) OTAs\n\n\n - 48 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1184 Filed 11/21/25 Page 52 of 103\n\n\n\n\n were not working well as dealerships failed to repair issues using OTAs, and instead\n\n brought vehicles in for service to do costly replacement of in-car computer modules.\n\n 92. On February 15, 2023, defendants Farley and Lawler participated in a\n\n conference call as part of the Wolfe Research Global Auto, Auto Tech, and Mobility\n\n Conference. During the conference call, an analyst asked the Individual Defendants\n\n about the Company\u2019s \u201cvariable costs\u201d and whether investors could \u201cactually see[]\n\n evidence of improvement.\u201d In response, the Individual Defendants made the\n\n following false and misleading statements:\n\n (a) Defendant Lawler stated that \u201cwarranty is an issue for us of about\n\n $1 billion\u201d but assured investors that, \u201c[i]n 2021, we improved by about $1 billion\u201d\n\n and added that \u201cwe were about flat\u201d in 2022.\n\n (b) Defendant Farley immediately followed up, stating \u201c[a]nd on\n\n warranty, we\u2019ll see it [the improvement] in initial quality\u201d with \u201cthe warranty cost\n\n to be lagging, but you\u2019ll see very quick progress on initial quality,\u201d adding \u201cour\n\n fitness there [in initial quality] will show up there first.\u201d\n\n 93. On May 2, 2023, Ford filed its quarterly report on Form 10-Q for the\n\n period ending March 31, 2023 (\u201c1Q 2023 Form 10-Q\u201d). The 1Q 2023 Form 10-Q\n\n contained signed certifications by defendants Farley and Lawler and reported\n\n positive trends in Ford\u2019s warranty reserves by recording a small increase.\n\n Specifically, Ford reported \u201c[c]hanges in accrual related to pre-existing\n\n\n - 49 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1185 Filed 11/21/25 Page 53 of 103\n\n\n\n\n warranties\u201d of only $226 million, further portraying Ford as having reversed the\n\n 2019 and 2020 trends resulting in $2 billion of increased reserves related to pre-\n\n existing warranties ($1.9 billion in 2019 and $2.4 billion in 2020).\n\n 94. On May 22, 2023, defendants Farley and Lawler participated in a\n\n conference call as part of Ford\u2019s Capital Markets Day. During prepared remarks,\n\n defendant Lawler emphasized \u201cFord Blue\u2019s focus on reducing costs\u201d in order to\n\n reach \u201can EBIT margin in the low double digits\u201d and stated that, \u201c[s]pecifically,\n\n contribution costs improved by about 4 points driven by several key factors\n\n including material, logistics and warranty along with lower commodity costs.\u201d\n\n 95. On July 27, 2023, defendants Farley and Lawler participated in a\n\n conference call to discuss Ford\u2019s second quarter 2023 (\u201c2Q 2023\u201d) earnings results.\n\n During prepared remarks, defendant Lawler commented that Ford\u2019s updated\n\n financial guidance for 2023 reflected expected \u201cincreased warranty costs.\u201d\n\n However, rather than disclose and attribute the increased costs to the significant and\n\n continued underlying defects and quality issues in older vehicles, he claimed that\n\n Ford was experiencing and would continue to experience increased warranty costs\n\n due to \u201cinflationary pressures,\u201d stating:\n\n [W]e\u2019re also seeing some inflationary pressures. And we saw that in\n the quarter as well, we see that going through the second half,\n primarily around warranty, and that\u2019s with the costs that we\u2019re seeing\n come through the dealers. So they\u2019re increasing their costs and\n warranty for the repair. Their labor rates, et cetera have gone up with\n inflation.\n\n - 50 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1186 Filed 11/21/25 Page 54 of 103\n\n\n\n\n 96. Following the 2Q 2023 earnings call, Jefferies commented that, \u201c[l]ike\n\n GM, Ford mentioned headwinds on warranty as a result of inflation in repair costs,\u201d\n\n adding that this was \u201can industry-wide issue.\u201d\n\n 97. The statements set forth in \u00b6\u00b692-95 were false and misleading when\n\n made. The true facts, which Defendants knew or recklessly disregarded, were:\n\n (a) Rather than experiencing positive trends in warranty costs and\n\n reserves that reversed the negative trend of massive increases in prior years, and\n\n rather than seeing a \u201c$1 billion\u201d improvement followed by \u201cflat\u201d warranty costs and\n\n benefits from \u201cimproved\u201d warranty, Ford continued to be plagued by significant and\n\n expensive vehicle defects (mainly to older models), consistent with prior years, and\n\n the reported accruals understated the true state of Ford\u2019s warranty problems and\n\n costs, which was revealed by the massive increases in warranty costs and reserves at\n\n the end of the Class Period;\n\n (b) Defendants\u2019 statements touting Ford\u2019s improvement \u201cin initial\n\n quality\u201d and \u201cvery quick progress on initial quality\u201d were misleading because they\n\n omitted to disclose the continued significant and expensive quality problems in older\n\n vehicles that were not improving, and were negatively impacting warranty costs,\n\n including the Ford F-150 rear axle defect (which remained in 2023), RVC problems,\n\n and the 2016 oil pump defects; and\n\n\n\n\n - 51 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1187 Filed 11/21/25 Page 55 of 103\n\n\n\n\n (c) Contrary to defendant Lawler\u2019s claim that increased warranty\n\n costs were the result of \u201cinflationary pressures\u201d and dealers \u201cincreasing their costs\n\n and warranty for the repair,\u201d a significant part of Ford\u2019s increased warranty costs\n\n was the result of quality issues that continued to negatively impact Ford.\n\n 98. On October 26, 2023, defendants Farley and Lawler participated in a\n\n conference call to discuss Ford\u2019s third quarter 2023 (\u201c3Q 2023\u201d) earnings results.\n\n As discussed below in \u00b6\u00b6133-134, certain disclosures partially revealed Ford\u2019s\n\n underlying quality issues and warranty costs, but the full scope and magnitude of the\n\n issues continued to be concealed. To offset and allay any investor concern,\n\n Defendants continued to falsely and misleadingly understate reserves and claim they\n\n were adequately fixing the problems reported on October 26, 2023.\n\n 99. On February 6, 2024, defendants Farley and Lawler participated in a\n\n conference call to discuss Ford\u2019s earnings results for the period ended December 31,\n\n 2023 (\u201cFY 2023\u201d) earnings results. In response to an analyst question regarding\n\n Ford\u2019s \u201cline of sight on warranty coming down,\u201d defendant Lawler stated that, \u201cfrom\n\n a warranty standpoint, costs are probably going to be about flat this year\u201d because\n\n \u201cwe\u2019re starting to see green shoots in the quality improvements.\u201d25\n\n\n 25\n \u201c\u2018Green shoots\u2019 is a term used to describe signs of economic recovery or positive\n data during an economic downturn.\u201d Clay Halton, Green Shoots: Meaning and\n Popularization by Ben Bernanke, Investopedia (Mar. 9, 2024),\n https://www.investopedia.com/terms/g/green-shoots.asp.\n\n - 52 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1188 Filed 11/21/25 Page 56 of 103\n\n\n\n\n 100. Following the February 6, 2024 statements, BofA Securities\n\n commented that \u201c[t]otal costs are expected to be flat YoY.\u201d The next day, on\n\n February 7, 2024, Barclays stated that warranty costs \u201cshould be stable y/y\u201d and\n\n were \u201cstill net neutral \u2013 even after several years of sharp headwinds.\u201d\n\n 101. On April 24, 2024, Ford filed its quarterly report on Form 10-Q for the\n\n period ending March 31, 2023 (\u201c1Q 2024 Form 10-Q\u201d). The 1Q 2024 Form 10-Q\n\n contained signed certifications by defendants Farley and Lawler and reported\n\n positive trends in Ford\u2019s warranty reserves by recording a small increase.\n\n Specifically, Ford reported \u201c[c]hanges in accrual related to pre-existing\n\n warranties\u201d of $397 million, signaling a reversal of the $2.6 billion reported in full\n\n year 2023.\n\n 102. The same day, defendants Farley and Lawler participated in a\n\n conference call to discuss Ford\u2019s first quarter 2024 (\u201c1Q 2024\u201d) earnings results,\n\n during which defendant Farley stated that \u201c[o]ur quality is making real progress\u201d\n\n and emphasized that \u201cinitial quality is 10% better than the previous model year,\u201d\n\n purportedly because of Ford\u2019s new vehicle launch process, and claimed that Ford\n\n has \u201cso far . . . avoided about 12 recalls on F-150\u201d thanks to Ford\u2019s apparent focus\n\n on vehicle launches.\n\n 103. Analysts reacted positively to Defendants\u2019 false and misleading\n\n statements. For example, on April 24, 2024, UBS raised its price target and stated\n\n\n - 53 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1189 Filed 11/21/25 Page 57 of 103\n\n\n\n\n it was \u201cincrementally more encouraged by . . . [i]mproving launch quality (even if\n\n launches go slower) as this should eventually yield warranty benefits.\u201d Furthermore,\n\n on April 26, 2024, BNP Paribas noted that one of their \u201ckey takes from the quarter\u201d\n\n was that \u201cFord has seen 10% improvements in initial build quality in both model\n\n years 2023 and 2024.\u201d\n\n 104. On June 11, 2024, defendant Lawler participated in a conference call\n\n as part of the Deutsche Bank Global Auto Industry Conference. In response to an\n\n analyst question requesting insight on vehicle sales \u201cspecifically so far in the second\n\n quarter,\u201d defendant Lawler stated that he would \u201cnot . . . give any guidance or\n\n information around Q2\u201d and emphasized that \u201c[w]e\u2019re seeing some puts and takes\n\n on costs\u201d and, specifically, \u201c[w]e\u2019re seeing some inflation in the warranty space,\n\n the cost per repairs going up.\u201d\n\n 105. The statements set forth in \u00b6\u00b699, 101-102, 104 were false and\n\n misleading when made. The true facts, which Defendants knew or recklessly\n\n disregarded were:\n\n (a) Rather than experiencing positive changes in warranty reserves\n\n that reversed the 2023 increase, and rather than seeing \u201creal progress\u201d in warranty\n\n costs, such as \u201cflat\u201d costs and \u201cgreen shoots in quality\u201d following the spike in\n\n warranty costs 3Q 2023, Ford continued to be plagued by significant and expensive\n\n vehicle defects, consistent with prior years, and the reported accruals understated the\n\n\n - 54 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1190 Filed 11/21/25 Page 58 of 103\n\n\n\n\n true state of Ford\u2019s warranty problems and costs, which was fully revealed by the\n\n massive increases in warranty costs and reserves at the end of the Class Period;\n\n (b) Defendants\u2019 statements that Ford\u2019s \u201cinitial quality\u201d had\n\n improved and Ford had \u201cavoided about 12 recalls on F-150\u201d were misleading\n\n because they omitted to disclose: (i) the significant and expensive quality problems\n\n in older vehicles (including the F-150) that were not improving, and were negatively\n\n impacting warranty costs, including the Ford F-150 rear axle defect (which remained\n\n in 2024), RVC problems, and the 2016 oil pump defect; and (ii) Ford was\n\n experiencing increased costs from dealerships failing to use OTAs, and instead\n\n replacing in-car computer modules; and\n\n (c) Contrary to any claim that increased warranty costs would be the\n\n result of merely \u201cinflation in the warranty space, the cost per repairs going up,\u201d Ford\n\n was experiencing increased warranty costs driven by Company-specific problems,\n\n such as: (i) significant and expensive quality problems in older vehicles; and (ii)\n\n dealerships failing to use OTAs, and instead replacing in-car computer modules.\n\n Defendants\u2019 False and Misleading Risk\n Warnings and Reserves Disclosures\n 106. In addition to the foregoing statements, during the Class Period,\n\n Defendants issued false and misleading boilerplate risk warnings that warned of\n\n mere potential or hypothetical risks or costs, when those risks had already\n\n\n\n - 55 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1191 Filed 11/21/25 Page 59 of 103\n\n\n\n\n materialized, and assured investors that they were sufficiently increasing warranty\n\n reserves as necessary to reflect underlying quality issues, when in fact they were not.\n\n 107. During the Class Period, Defendants filed with the SEC eight quarterly\n\n reports on Form 10-Q, all of which contained signed certifications by defendants\n\n Farley and Lawler. These quarterly reports on Form 10-Q were for the quarters\n\n ended March 31, 2022-2024 (the \u201c1Q Form 10-Qs\u201d), June 30, 2022-2023 (the \u201c2Q\n\n Form 10-Qs\u201d), and September 30, 2021-2023 (the \u201c3Q Form 10-Qs\u201d and,\n\n collectively, the \u201cClass Period Form 10-Qs\u201d).\n\n 108. The 1Q Form 10-Qs were filed on April 27, 2022, May 2, 2023, and\n\n April 24, 2024. The 2Q Form 10-Qs were filed on July 27, 2022 and July 27, 2023.\n\n The 3Q Form 10-Qs were filed on October 27, 2021, October 26, 2022, and October\n\n 26, 2023.\n\n 109. The Class Period Form 10-Qs falsely and misleadingly stated that\n\n \u201cFord\u2019s vehicles\u201d merely \u201ccould be affected by defects that result in delays in new\n\n model launches, recall campaigns, or increased warranty costs\u201d (the \u201cCould be\n\n Affected by Defects Statement\u201d).\n\n 110. During the Class Period, Defendants filed with the SEC three annual\n\n reports on Form 10-K, all of which were signed and certified by defendants Farley\n\n and Lawler. These annual reports on Form 10-K were for the year ending December\n\n 31, 2021, filed on February 3, 2022 (the 2021 Form 10-K), year ending December\n\n\n - 56 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1192 Filed 11/21/25 Page 60 of 103\n\n\n\n\n 31, 2022, filed on February 2, 2023 (the 2022 Form 10-K), and year ending\n\n December 31, 2023, filed on February 6, 2024 (the \u201c2023 Form 10-K\u201d and,\n\n collectively, the \u201cClass Period Form 10-Ks\u201d).\n\n 111. Ford\u2019s Class Period Form 10-Ks included the same Could be Affected\n\n by Defects Statement (\u00b6109) as well as the following additional false and misleading\n\n statements:\n\n (a) In purporting to describe Ford\u2019s risks, the Class Period 10-Ks\n\n included a boilerplate warning that \u201c[t]he cost of recall and customer satisfaction\n\n actions to remedy defects in vehicles that have been sold\u201d merely \u201ccould be\n\n substantial, particularly if the actions relate to global platforms or involve defects\n\n that are identified years after production.\u201d\n\n (b) In purporting to describe Ford\u2019s risks, the 2021 Form 10-K and\n\n the 2022 Form 10-K stated that \u201c[i]f warranty costs are greater than anticipated as\n\n a result of increased vehicle and component complexity, the adoption of new\n\n technologies, or otherwise, such costs\u201d merely \u201ccould have an adverse effect on\n\n our financial condition or results of operations. Furthermore, launch delays, recall\n\n actions, and increased warranty costs could adversely affect our reputation or\n\n market acceptance of our products.\u201d\n\n (c) In purporting to describe Ford\u2019s risks, the 2023 Form 10-K\n\n similarly stated that \u201c[i]f warranty costs are greater than anticipated as a result of\n\n\n - 57 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1193 Filed 11/21/25 Page 61 of 103\n\n\n\n\n increased vehicle and component complexity, the adoption of new technologies, the\n\n time it takes to improve the quality of our products and services (or if such efforts\n\n are unsuccessful), or otherwise (including as a result of higher repair costs driven\n\n by inflation or other economic factors), such costs\u201d merely \u201ccould continue to have\n\n an adverse effect on our financial condition or results of operations.\u201d\n\n 112. These largely unchanged, theoretical and boilerplate statements of risks\n\n that could or may occur, set forth in \u00b6\u00b6109, 111, were false and misleading when\n\n made because they did not inform investors of the actual substantial costs and\n\n financial impact of underlying defects and warranty-related issues, including defects\n\n from \u201cyears after production,\u201d that were continuing to result in increased warranty\n\n costs that were having an adverse effect on Ford\u2019s financial condition, including the\n\n long-standing rear-axle defect impacting Ford\u2019s flagship F-150 pickup, the long-\n\n standing RVC problems that impacted a broad scope of Ford products, and the even\n\n longer-standing oil pump defect that could result in an entire engine replacement, as\n\n well as the fact that Ford dealerships were replacing costly computer modules, rather\n\n than utilizing cheaper OTA updates.\n\n 113. Additionally, the Class Period Form 10-Ks included the following\n\n assurances that Ford was updating warranty reserves based on actual defects and\n\n existing information:\n\n\n\n\n - 58 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1194 Filed 11/21/25 Page 62 of 103\n\n\n\n\n (a) With respect to Ford\u2019s \u201cestimate of base warranty obligations,\u201d\n\n Ford uses \u201ca patterned estimation model\u201d and \u201chistorical information regarding the\n\n nature, frequency, and average cost of claims for each vehicle line by model year,\u201d\n\n and \u201c[b]ased on this data, we update our estimates as necessary.\u201d\n\n (b) With respect to Ford\u2019s \u201cestimates of field service action\n\n obligations,\u201d Ford \u201cassess[es] our obligation for field service actions on a regular\n\n basis using actual claims experience and update[s] our estimates as necessary.\u201d\n\n 114. These statements, set forth in \u00b6113, were false and misleading when\n\n made because Ford was not \u201cupdat[ing] our estimates as necessary\u201d to account for\n\n the continued actual substantial costs and financial impact of then-existing\n\n underlying defects and warranty-related issues, which were revealed by the massive\n\n increases in warranty costs and reserves at the end of the Class Period, including\n\n costs and issues related to the long-standing rear-axle defect impacting Ford\u2019s\n\n flagship F-150 pickup, the long-standing RVC problems that impacted a broad scope\n\n of Ford products, the even longer-standing oil pump defect that could result in an\n\n entire engine replacement, and Ford dealerships replacing costly computer modules,\n\n rather than utilizing cheaper OTA updates.\n\n 115. In addition, Ford\u2019s 2023 Form 10-K falsely and misleadingly stated that\n\n \u201cour warranty costs have increased, in part, due to inflationary cost pressures at\n\n our dealers,\u201d which was false and misleading when made because warranty costs\n\n\n - 59 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1195 Filed 11/21/25 Page 63 of 103\n\n\n\n\n were continuing to increase overwhelmingly because of underlying defects and\n\n warranty-related issues, not inflationary cost pressures.\n\n FORD\u2019S CLASS PERIOD FINANCIAL STATEMENTS WERE\n MATERIALLY FALSE AND MISLEADING\n 116. As set forth in SEC Rule 4-01(a) of SEC Regulation S-X, \u201c[f]inancial\n\n statements filed with the [SEC] which are not prepared in accordance with [GAAP]\n\n will be presumed to be misleading or inaccurate.\u201d 17 C.F.R. \u00a7210.4-01(a)(1).\n\n Regulation S-X also requires that interim financial statements filed with the SEC\n\n comply with GAAP. 17 C.F.R. \u00a7210.10-01(a).\n\n 117. GAAP are those principles recognized by the accounting profession as\n\n the conventions, rules, and procedures necessary to define accepted accounting\n\n practice at a particular time. The SEC has adopted the accounting standards set forth\n\n in the Financial Accounting Standards Board\u2019s Accounting Standards Codification\n\n (\u201cASC\u201d) as \u201cthe single source of authoritative nongovernmental U.S. generally\n\n accepted accounting principles.\u201d\n\n 118. Throughout the Class Period, Ford issued financial statements to\n\n investors that were filed with the SEC in its Forms 10-K and 10-Q signed or certified\n\n by defendants Farley and Lawler. These financial statements represented that they\n\n were prepared in conformity with GAAP stating, in pertinent part, \u201c[o]ur\n\n consolidated financial statements are presented in accordance with U.S. generally\n\n accepted accounting principles (\u2018GAAP\u2019).\u201d\n\n - 60 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1196 Filed 11/21/25 Page 64 of 103\n\n\n\n\n 119. This representation was materially false and misleading because\n\n Defendants, in violation of GAAP, knowingly or recklessly suppressed and delayed\n\n the recognition of warranty costs, thereby falsely inflating the Company\u2019s\n\n profitability during the Class Period. By materially understating warranty cost\n\n related reserves used to account for defective automobile parts and components, the\n\n financial statements failed to timely recognize warranty costs during the Class\n\n Period. In addition, the financial statements failed to make required disclosures\n\n associated with such costs and defects.\n\n 120. GAAP, in ASC Topic 460 Guarantees, sets forth the financial\n\n statement accounting and disclosure requirements for certain guarantees, including\n\n product warranties incurred in connection with the sale of goods or services. ASC\n\n Topic 460 provides that because of the uncertainty surrounding such claims,\n\n warranty obligations fall within the definition of a \u201closs contingency\u201d and losses\n\n from warranty obligations are to be accrued and/or disclosed in financial statements\n\n in accordance with the requirements ASC Topic 450 Contingencies.26\n\n\n\n\n 26\n ASC 450 defines a loss contingency as \u201c[a]n existing condition, situation, or set\n of circumstances involving uncertainty as to [a] possible loss to an enterprise that\n will ultimately be resolved when one or more future events occur or fail to occur.\u201d\n\n - 61 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1197 Filed 11/21/25 Page 65 of 103\n\n\n\n\n 121. ASC Topic 450 mandates when a contingency must be accrued as a\n\n liability and/or when financial statements must provide disclosure about contingent\n\n liabilities, as well as what the financial statements must disclose.\n\n 122. Specifically, ASC Topic 450 provides that a loss from a loss\n\n contingency is to be accrued as a liability, which results in a charge against income,\n\n if: (i) the contingent loss is probable, i.e., likely; and (ii) the contingent loss is\n\n reasonably estimable.\n\n 123. Condition (i) above is met when, based on available information, it is\n\n probable that customers will make claims under warranties relating to goods or\n\n services that have been sold. ASC Topic 460-10-25-6. The satisfaction of Condition\n\n (ii) above normally depends on the experience of an entity or other information.\n\n 124. When no accrual is made, either because the contingent loss is not\n\n \u201cprobable\u201d or because the amount of the contingent loss cannot be \u201creasonably\n\n estimated,\u201d the loss contingency nonetheless must be disclosed if there is at least a\n\n \u201creasonably possible\u201d chance that a loss, or an additional loss, may have been\n\n incurred. GAAP defines reasonably possible as a more than a slight, but less than\n\n likely, chance a future event will occur. See ASC Topic 450-20.\n\n 125. When disclosure of a loss contingency is required, the disclosure must\n\n describe the \u201cnature of the contingency\u201d and provide \u201can estimate of the possible\n\n\n\n\n - 62 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1198 Filed 11/21/25 Page 66 of 103\n\n\n\n\n loss or range of loss or a statement that such an estimate cannot be made.\u201d ASC\n\n Topic 450-20-50-4.\n\n 126. Accordingly, GAAP required that the Ford\u2019s Class Period Form 10-Ks\n\n and Class Period Form 10-Qs recognize warranty costs and include disclosures\n\n regarding the quality problems and increased warranty costs related to older-model\n\n vehicles that were plaguing Ford during the Class Period, as revealed by the massive\n\n increases in warranty costs and reserves at the end of the Class Period. Indeed, in\n\n Ford\u2019s Class Period Form 10-Ks, the Company confirmed that, pursuant to its\n\n warranties, \u201c[Ford] will repair, replace, or adjust all parts on a vehicle that are\n\n defective in factory-supplied materials or workmanship during the specified\n\n warranty period,\u201d and that Ford \u201calso incur[s] costs as a result of field service actions\n\n (i.e., safety recalls, emission recalls, and other product campaigns), and for customer\n\n satisfaction actions.\u201d\n\n 127. As noted, GAAP required these loss contingencies to be timely accrued\n\n and disclosed in Ford\u2019s financial statements during the Class Period. Throughout\n\n the Class Period, Defendants knew that Ford\u2019s underlying warranty exposure had\n\n not changed from the massive increases in prior years and it continued to be plagued\n\n by longstanding warranty and FSA issues. See \u00b656. Further, Ford defects on older-\n\n model vehicles included the long-standing rear-axle defect impacting Ford\u2019s\n\n flagship F-150 pickup, the long-standing RVC problems that impacted a broad scope\n\n\n - 63 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1199 Filed 11/21/25 Page 67 of 103\n\n\n\n\n of Ford products, and the even longer-standing oil pump defect that could result in\n\n an entire engine replacement. See \u00b6\u00b656-75.\n\n 128. Thus, no later than the start of the Class Period, the requirements for\n\n accrual under ASC 450 had been met, and Ford was required under GAAP to\n\n increase its warranty reserves to account for the known warranty costs arising from\n\n Ford\u2019s longstanding quality problems, which had not changed.\n\n 129. In addition, even if the losses could not be reasonably estimated, it was\n\n clearly \u201cmore than remote\u201d that losses had been incurred, and Ford\u2019s financial\n\n statements during the Class Period were required to disclose the specific nature of\n\n the warranty loss contingency and either estimate \u201cthe possible loss or range of loss\u201d\n\n or \u201cstate that such an estimate cannot be made.\u201d\n\n 130. However, Ford did not accrue the warranty obligations or disclose that\n\n it was more than remote that the losses had been incurred. Therefore, Ford\u2019s\n\n financial statements during the Class Period were materially false and misleading\n\n and presented in violation of GAAP because they failed to disclose that:\n\n (a) The financial statements included in those SEC filings materially\n\n understated the reported warranty balance;\n\n (b) The quality problems and increased warranty costs related to\n\n Ford\u2019s underlying warranty exposure that had not changed from the massive\n\n increases in prior years, and its longstanding warranty and FSA issues on older\n\n\n - 64 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1200 Filed 11/21/25 Page 68 of 103\n\n\n\n\n vehicles, constituted a loss contingency, and the financial statements further failed\n\n to disclose: (i) an estimate of the possible loss or range of loss for the loss\n\n contingency; or (ii) state that such an estimate cannot be made; and\n\n (c) the financial statements were not prepared in \u201cin conformity with\n\n U.S. generally accepted accounting principles\u201d and did not comply with Ford\u2019s\n\n stated warranty reserves policies.\n\n 131. Ultimately, evidencing that the Class Period 10-Qs and Class Period\n\n 10-Ks violated GAAP, on July 24, 2024, Ford belatedly increased its pre-existing\n\n warranty balance by over $1.4 billion (60%) and issued nearly $1.5 billion in\n\n warranty payments during the period.\n\n THE TRUTH EMERGES\n 132. The truth about the Company\u2019s failure to reduce warranty costs and\n\n improve the Company\u2019s profitability in order to fund future EV investments and\n\n technologies emerged over the course of two disclosures, causing declines in the\n\n price of Ford common stock.\n\n October 2023 Disclosures\n 133. After market close on October 26, 2023, Ford announced, and convened\n\n an earnings call to discuss, Ford\u2019s 3Q 2023 earnings results. During prepared\n\n remarks, defendant Lawler disclosed that the Company had experienced \u201chigher\n\n warranty [costs] driven by recalls and higher per unit repair costs due to inflation.\u201d\n\n\n - 65 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1201 Filed 11/21/25 Page 69 of 103\n\n\n\n\n While this statement initially blamed inflation, defendant Lawler eventually\n\n conceded the majority related simply to higher costs from warranties. More\n\n specifically, when asked by an analyst about a slide deck that showed $1.7 billion in\n\n warranty costs year-to-date, defendant Lawler asserted that the massive $1.2 billion\n\n spike in 3Q 2023 consisted of \u201cabout $300 million of that was inflationary costs and\n\n roughly $900 million was the issue with warranties.\u201d Defendant Farley quickly\n\n added in response to the same question, to \u201cexplain our operational headwinds,\u201d that\n\n \u201cwe have a lot of revenue power in the company, but we also have a lot of\n\n technology, and that technology that we rolled out like cameras before our\n\n competitors, it puts a huge burden on that electric architecture with a lot of extra\n\n modules and software.\u201d After these disclosures, Ford\u2019s stock price declined by\n\n $1.39 per share (approximately 12%), from $11.35 per share on October 26, 2023,\n\n to $9.96 per share on October 27, 2023.\n\n 134. Analysts attributed Ford\u2019s stock price decline to the increased warranty\n\n costs, with Wells Fargo reporting that Ford shares had declined \u201con [the] Q3 miss\n\n driven by more warranty issues.\u201d The next day, on October 27, 2023, Barclays\n\n commented that $900 million of the $1.2 billion in Ford\u2019s quarterly warranty\n\n expenses were unrelated to inflationary pressures, which \u201cis frustrating as it reminds\n\n us of a key weak point for Ford around quality,\u201d but added that \u201c[r]esolving these\n\n\n\n\n - 66 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1202 Filed 11/21/25 Page 70 of 103\n\n\n\n\n issues has been a key focus of CEO Jim Farley\u201d and stated that \u201cas bad as it [may]\n\n appear \u2013 roughly 3/4 of the warranty cost should be non-recurring\u201d in nature.\n\n July 2024 Disclosures\n 135. The true scope and magnitude of the facts regarding Ford\u2019s warranty\n\n costs fully emerged on July 24, 2024, when Ford was forced to belatedly admit it\n\n had not been successful, as investors were led to believe, in reducing warranty costs\n\n and improving quality. Instead, Ford reported rising warranty costs revealing that\n\n Defendants had not been turning around Ford, rather, Ford continued to suffer from\n\n massive quality and warranty issues, causing a massive decline in Ford\u2019s stock price.\n\n 136. On July 24, 2024, after the market closed, Ford published a release\n\n disclosing that: (i) the Company reported disappointing EBIT of $2.8 billion (far\n\n below analyst expectations of $3.7 billion), as \u201c[p]rofitability was affected by an\n\n increase in warranty reserves\u201d; (ii) Ford Blue reported a massive year-over-year\n\n EBIT decline from $2.3 billion to $1.2 billion (also far below analyst expectations\n\n of $2.5 billion), \u201cmostly because of the higher warranty costs;\u201d and (iii) Ford Blue\u2019s\n\n full-year 2024 EBIT guidance was lowered by $1 billion, from $7.0 to $7.5 billion\n\n to $6.0 to $6.5 billion, due to \u201chigher warranty costs.\u201d The release quoted defendant\n\n Lawler admitting, \u201c\u2018[w]e still have lots of work ahead of us to raise quality and\n\n reduce costs and complexity.\u2019\u201d\n\n\n\n\n - 67 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1203 Filed 11/21/25 Page 71 of 103\n\n\n\n\n 137. In Ford\u2019s 2Q 2024 quarterly report on form 10-Q, filed after market\n\n close on July 24, 2024 (\u201c2Q 2024 Form 10-Q\u201d), Ford reported that in-period\n\n warranty and FSA payments for the first half of 2024 had increased by more than\n\n 40%, from $2 billion in 2023 to $2.8 billion in 2024. The 2Q 2024 Form 10-Q also\n\n disclosed that Ford had increased its accruals relating to pre-existing warranties in\n\n the first half of 2024 by more than 60%, from $880 million in 2023 to $1.4 billion\n\n in 2024.\n\n 138. Defendants Farley and Lawler hosted a conference call the same\n\n evening. During opening remarks, defendant Farley initially stated that the higher\n\n warranty costs recorded in 2Q 2024 were \u201ctied to new technologies, FSAs, and\n\n inflationary pressures for the cost of repair.\u201d In response to an analyst question about\n\n \u201cthe warranty performance that led to the higher cost,\u201d defendant Lawler stated:\n\n [T]hese are issues that are popping up in the field on these older models.\n The largest one coming through is on a rear axle bolt for vehicles that\n were engineered for the 2021 model year was when they were\n introduced. And if these things come through, at a higher time in\n service, we\u2019re made aware of them, we need to take care of our\n customers, we go out to fix them. And we have several of those types\n of things popping up on older models. We got a failed oil pump issue\n that\u2019s popping up on, 2016-launched vehicles.\n\n 139. Contrary to defendant Lawler\u2019s claim that \u201cit is hard to predict on some\n\n of these units that have been out in the field for quite a while that one of these issues\n\n is going to show up with these longer-term durability and quality issues,\u201d Defendants\n\n had known about Ford\u2019s quality problems for years leading up to and during the\n\n - 68 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1204 Filed 11/21/25 Page 72 of 103\n\n\n\n\n Class Period (and, for example, the rear axle bolt, RVC, and oil pump issues had\n\n been known for years), but concealed the scope and impact they continued to have\n\n on warranty costs during the Class Period. During the July 24, 2024 call, defendant\n\n Farley also attributed increased warranty costs to the dealers replacing components,\n\n rather than using OTA updates. He stated it was \u201cdifficult for the dealers to diagnose\n\n when customers come in and say something is wrong with my SYNC system. They\n\n replace modules unnecessarily, et cetera, and that hits our warranty reserves.\u201d\n\n 140. On this news, Ford\u2019s stock price declined by $2.51 per share\n\n (approximately 18%), from $13.67 per share on July 24, 2024, to $11.16 per share\n\n on July 25, 2024, reportedly marking the stock\u2019s largest one-day percentage decline\n\n since the 2008 financial crisis, and removing artificial inflation caused by\n\n Defendants\u2019 fraud and causing Plaintiffs to suffer losses.\n\n 141. Analysts reacted negatively to Ford\u2019s shocking disclosures. For\n\n instance:\n\n \uf0b7 On July 24, 2024, Piper Sandler stated it was \u201ccutting\u201d its 2024 earnings\n estimates for Ford following the July 24, 2024 earnings call. Piper\n Sandler noted that \u201c[t]he stock is indicated lower by ~11% in after-\n hours trading, due (in our view) to unwelcome warranty headwinds.\n Ford referenced quality problems on vehicles from the 2016 and 2021\n model years.\u201d\n\n \uf0b7 On July 25, 2024, Barclays cut its price target for Ford stock, citing\n Ford\u2019s \u201cwarranty headwind[s]\u201d and \u201cwarranty pressures\u201d that included\n \u201ca ~$700mn drag on cost in [Ford] Blue\u201d and commenting that these\n \u201cwarranty challenges are frustrating for investors.\u201d Barclays noted that\n Ford\u2019s reported EBIT of $2.8 billion was well short of consensus\n\n - 69 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1205 Filed 11/21/25 Page 73 of 103\n\n\n\n\n analyst expectations of $3.7 billion, and the same was true of Ford\n Blue\u2019s reported EBIT of $1.8 billion, compared to consensus\n expectations of $2.5 billion.\n\n \uf0b7 On July 25, 2024, UBS also reduced its price target for Ford stock,\n noting that \u201c[w]arranty was a ~$700mm y/y headwind in Ford Blue\n during [the] quarter as Ford had a number of field service actions\n (FSAs) on older product.\u201d\n\n \uf0b7 On July 26, 2024, BNP Paribas likewise lowered its price target for\n Ford stock, stating \u201c[t]his qtr. has entirely rekindled our concerns over\n Ford\u2019s historical track record of inconsistent execution\u201d and \u201csudden\n periods of excess costs . . . as was the case w/ 2Q\u2019s [Ford] Blue warranty\n outlay.\u201d\n\n 142. Media also reported on the disclosures and resulting stock price decline.\n\n Bloomberg published an article on July 24, 2024, which was subsequently updated\n\n on July 25, 2024, reporting that the stock \u201csank 18%\u201d and had its \u201cworst day in more\n\n than 15 years\u201d \u2013 or \u201csince November 2008\u201d \u2013 following news that Ford saw \u201ca surge\n\n in warranty repair costs for older vehicles.\u201d The article further noted that the \u201c18%\u201d\n\n stock decline \u201cwiped out the 2024 gain for the stock, which is now down more than\n\n 8% for the year.\u201d Similarly, The Detroit News reported on July 25, 2024 that Ford\n\n shares had \u201cplunged\u201d and the spike in warranty costs \u201ccaught investors by surprise,\u201d\n\n citing Wedbush Securities Inc. as stating that Ford\u2019s disclosures amounted to \u201c\u2018a\n\n code red situation at Ford after a disaster quarter.\u2019\u201d\n\n 143. A week later, on August 1, 2024, BofA Securities issued a report\n\n regarding a conversation with defendants Farley and Lawler. On the topic of\n\n warranty costs, BofA Securities stated that \u201c[c]ommentary suggests the primary\n\n - 70 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1206 Filed 11/21/25 Page 74 of 103\n\n\n\n\n issues have been associated with the powertrain,\u201d which includes rear axles, \u201cand\n\n Ford has also had challenges with technology from the supply base, including\n\n cameras/screens.\u201d\n\n ADDITIONAL SCIENTER ALLEGATIONS\n\n The Individual Defendants\u2019 Public Statements\n Support a Strong Inference of Scienter\n 144. Through defendant Farley\u2019s role as CEO and President and defendant\n\n Lawler\u2019s role as CFO, the Individual Defendants were able to, and did, determine\n\n the content of the various SEC filings and other public statements pertaining to Ford\n\n during the Class Period. Defendants Farley and Lawler signed or certified Ford\u2019s\n\n annual and quarterly reports filed with the SEC. See \u00b6\u00b680, 84, 86, 88-89, 101, 107-\n\n 108, 110. Defendants Farley and Lawler were repeatedly quoted in Ford releases\n\n during the Class Period. And, defendants Farley and Lawler attended conference\n\n calls and spoke on behalf of the Company during the Class Period. See, e.g., \u00b6\u00b678,\n\n 82, 87, 90, 92, 94, 99, 102, 104.\n\n 145. Further, the Individual Defendants participated in the drafting,\n\n preparation and/or approval of such public statements and were provided with copies\n\n of the documents alleged herein to be false and misleading prior to or shortly after\n\n their issuance and had the ability and/or opportunity to prevent their issuance or\n\n cause them to be corrected. Accordingly, the Individual Defendants were\n\n responsible for ensuring the accuracy of the public reports and releases detailed\n\n - 71 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1207 Filed 11/21/25 Page 75 of 103\n\n\n\n\n herein and for verifying that the facts supported the statements and there were no\n\n material omissions, and they are therefore liable for the misrepresentations and\n\n omissions therein.\n\n 146. During their time as directors and/or senior executive officers of Ford,\n\n the Individual Defendants were privy to confidential and proprietary information\n\n concerning Ford\u2019s warranty reserves and the factors the Company considers when\n\n setting its reserves. Each of them also: (i) had access to, inter alia, internal corporate\n\n documents, and conversations with corporate officers and employees; (ii) attended\n\n management and Board meetings and committees thereof; and (iii) reviewed reports\n\n and other information provided to them in connection therewith. Because of their\n\n possession of such information, each of the Individual Defendants knew or\n\n recklessly disregarded that the adverse facts specified herein had not been disclosed\n\n to, and were being concealed from, the investing public.\n\n 147. By executing certifications in accordance with the Sarbanes-Oxley Act\n\n of 2002 (\u201cSOX Certifications\u201d), which were attached to each Class Period 10-Q and\n\n each Class Period 10-K, defendants Farley and Lawler undertook the affirmative\n\n obligation to ensure the Company\u2019s disclosures to the market were true and to obtain\n\n the requisite knowledge of material information, like the existence of understated\n\n warranty reserves. In fact, through signing the SOX Certifications, defendants\n\n Farley and Lawler certified that they had designed \u201cdisclosure controls and\n\n\n - 72 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1208 Filed 11/21/25 Page 76 of 103\n\n\n\n\n procedures . . . to ensure that material information relating to [Ford] . . . is made\n\n known to us by others . . . particularly during the period in which [each] report [was]\n\n being prepared.\u201d And at no point since the revelation of the negative facts discussed\n\n herein, have any of the Defendants claimed that those SOX Certifications were\n\n untrue and that defendants Farley and Lawler had not been informed about material\n\n information relating to Ford\u2019s ballooning warranty costs and the impact these costs\n\n had on Ford\u2019s financial statements.\n\n 148. Additionally, defendants Farley and Lawler held themselves out to\n\n investors and the market as the persons directly involved in, and most\n\n knowledgeable about, Ford Blue, the Company\u2019s purported focus on quality and\n\n quality improvements, and the Company\u2019s warranty issues. Their repeated\n\n statements to the investing public during the Class Period demonstrate knowledge\n\n of the topics on which they directly spoke. See, e.g., \u00b6\u00b653, 78, 82, 87, 90, 92, 94,\n\n 99, 102.\n\n 149. For example, defendant Lawler hosted conference calls during which\n\n he specifically addressed warranty-related issues and questions during the Class\n\n Period, and also provided detail about the Company\u2019s quality, warranty costs, and\n\n process of establishing warranty reserves. \u00b6\u00b678, 82, 90, 92(a), 94, 95, 99, 104; see\n\n also \u00b635.\n\n\n\n\n - 73 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1209 Filed 11/21/25 Page 77 of 103\n\n\n\n\n 150. Likewise, defendant Farley repeatedly discussed quality and warranty\n\n related issues, and held himself outs as executing \u201ca very concrete plan\u201d to address\n\n warranty costs. \u00b643; see also \u00b6\u00b687, 92(b), 102. Defendant Farley has expressed a\n\n detailed understanding of the topics at issue here, explaining, for example, that when\n\n the \u201ctransmission and rear axle\u201d in ICE vehicles \u201cgo[] bad\u201d it\u2019s \u201csuper expensive\u201d\n\n and \u201ccomplicated.\u201d \u00b653.\n\n 151. The Individual Defendants\u2019 repeated statements regarding, and their\n\n direct involvement in the decisions impacting, these topics support an inference that\n\n at the time they spoke they were actively monitoring and had access to, and knew or\n\n recklessly disregarded, the facts that rendered their statements false and misleading.\n\n Defendants Closely Monitored Ford Warranty\n Costs and Financial Performance, Which Were\n Critical to Ford\n 152. Because reserves are such a significant cost item, they are closely\n\n monitored by senior management and accountants. For example, as stated by\n\n defendant Lawler, \u201con a quarterly basis, we conduct reserve reviews to assess the\n\n adequacy of th[e] reserves\u201d and \u201c[a]s the actual claims are incurred, we compare this\n\n experience with the historic spend and the trends we see to identify whether an\n\n adjustment to the reserve is required.\u201d\n\n 153. Defendants had to monitor warranty reserves because they sign off on\n\n the financial statements, which include the updated warranty reserves at each\n\n\n - 74 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1210 Filed 11/21/25 Page 78 of 103\n\n\n\n\n quarter. In its financial statements, Ford reports both the warranty and FSA costs it\n\n incurred and its estimated \u201cfuture warranty and field service action costs\u201d on a\n\n quarterly and annual basis. In doing so, the Company provides a beginning and\n\n ending balance for the period reported, as well as how the differences in those\n\n balances were impacted by changes from: (i) payments made during the period; (ii)\n\n warranties issued during the period; (iii) changes in accrual related to pre-existing\n\n warranties; and (iv) foreign currency translation or other impacts.\n\n 154. In their roles as CEO (Farley) and CFO (Lawler), the Individual\n\n Defendants were required to not only keep themselves informed of the Company\u2019s\n\n day-to-day business and operations, but to keep Ford\u2019s non-management directors\n\n apprised of the state of the Company\u2019s business, operations, and trends.\n\n 155. As discussed above (see \u00b6\u00b627-55), Ford and the Individual Defendants\n\n publicly acknowledged that the profits and success of Ford\u2019s ICE business (Ford\n\n Blue), and controlling warranty costs, were critical to Ford\u2019s profitability,\n\n operations, and growth, and the execution of the Individual Defendants\u2019 highly-\n\n touted Ford+ strategy. In short, the Ford Blue business was the core of Ford\u2019s\n\n historical success, and allowed Ford to heavily invest in the development of present\n\n and future EVs in Ford Model e, so long as warranty costs did not impede\n\n profitability. As the leaders of Ford, defendants Farley and Lawler determined\n\n\n\n\n - 75 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1211 Filed 11/21/25 Page 79 of 103\n\n\n\n\n business strategy and made and approved the decision to move forward with Ford+,\n\n restructure the business, and change the Company\u2019s financial reporting structure.\n\n 156. More specifically, with respect to Ford\u2019s ICE business (Ford Blue), the\n\n success of that business and Ford\u2019s ability to rein in warranty costs and quality\n\n control issues were critical to Ford\u2019s stock price and closely followed by analysts\n\n and investors. The Individual Defendants reported on, and responded to, analyst\n\n questions regarding Ford\u2019s warranty costs and the Company\u2019s plan to lower them\n\n before, during, and after the Class Period. For example, during a February 26, 2020\n\n conference call, defendant Farley emphasized that \u201cwe need to lower our warranty\n\n spending\u201d and stated that Ford apparently had \u201ca very concrete plan\u201d to lower\n\n warranty costs. In response to an analyst question later in the call, defendant Farley\n\n added that Ford\u2019s warranty problems had \u201ctaken a little work. But I don\u2019t think it\n\n was a total mystery,\u201d adding \u201c[t]here are issues that people knew about that just\n\n weren\u2019t being resolved.\u201d\n\n 157. Furthermore, Ford held an October 28, 2020 conference call discussing\n\n Ford\u2019s 3Q 2020 earnings results. Notably, this was defendants Farley and Lawler\u2019s\n\n first quarterly earnings call as CEO and CFO, respectively. During this conference\n\n call, analysts asked multiple questions about Ford\u2019s warranty costs and the\n\n Company\u2019s plan to address them. One analyst \u201cnoticed that . . . warranty costs\n\n moderated a bit\u201d in the quarter and wondered whether this was \u201ca sign that things\n\n\n - 76 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1212 Filed 11/21/25 Page 80 of 103\n\n\n\n\n are finally peaking,\u201d and even asked a follow-up question: \u201cThe warranty cost, is\n\n this a sign that you\u2019re starting to get your arms around that and that . . . there\u2019s\n\n visibility on when that\u2019s going to start coming back down?\u201d In response, Farley\n\n confirmed his and Lawler\u2019s focus on Ford\u2019s warranty costs:\n\n A warranty in the last few years, coverage is up $1 billion to $2 billion\n depending on the year, and that is not okay.\n\n So although it moderated in the quarter and we have taken a lot\n of actions on craftsmanship, long-term durability, we have a much\n bigger ambition to improve the quality of our vehicles.\n 158. Another analyst also focused on Ford\u2019s warranty expenses and sought\n\n additional information on the Company\u2019s plan, asking \u201cwhat need[ed] to be done on\n\n the warranty side and the quality side\u201d and what was \u201cbeing done or can be done?\u201d\n\n 159. Moreover, during a June 15, 2023 conference call, an analyst asked\n\n defendant Lawler about \u201c[profit] margin improvement in contribution cost,\u201d which\n\n includes warranty costs. In response, defendant Lawler identified warranty costs\n\n specifically, stating that \u201c[t]here\u2019s 4 points which will be in that contribution cost\n\n area\u201d and \u201c[w]arranty is about 1 point.\u201d\n\n 160. Additionally, Ford and the Individual Defendants, before, during, and\n\n after the Class Period, repeatedly emphasized the critical importance of Ford Blue\n\n and, specifically, the F-Series trucks, which includes the F-150 (with the axle bolt\n\n defect). For example, before the Class Period, on June 26, 2020, then-COO\n\n defendant Farley was asked during an interview on CNBC about the F-150\u2019s\n\n - 77 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1213 Filed 11/21/25 Page 81 of 103\n\n\n\n\n \u201ccomplete redesign\u201d and how \u201ccritical\u201d it was that the F-150 \u201cconnect with buyers.\u201d\n\n In response, defendant Farley stated it was \u201cvery critical\u201d that it connect with buyers,\n\n and added F-150 was Ford\u2019s \u201cmost important vehicle at Ford globally.\u201d The same\n\n day, in an interview with Yahoo! Finance, defendant Farley once again emphasized\n\n the F-150, stating that F-Series is \u201cfundamental,\u201d the \u201cF-Series lineup is the second\n\n most valuable consumer product, only second to the iPhone\u201d and \u201cfrom a revenue\n\n and profit standpoint, it is fundamental to the Company.\u201d\n\n 161. Moreover, during the Class Period, in an April 26, 2022 release\n\n announcing production of Ford\u2019s all-electric F-150 Lightning, the Company stated\n\n that its F-Series trucks had been the \u201cbest-selling truck for 45 years in a row\u201d in the\n\n United States \u201cand is second only to the iPhone in revenue among all American\n\n consumer products.\u201d In October 2025, defendant Farley stated in an online post that\n\n the \u201cF-Series lineup\u201d has been the best-selling truck in the United States for nearly\n\n 50 years, and the best-selling vehicle of any kind in the United Stated since 1981.\n\n The Scope and Severity of the Massive\n Spike in Ford\u2019s Warranty Costs Support\n a Strong Inference of Scienter\n 162. Contrary to Defendants\u2019 Class Period representations, Ford\u2019s October\n\n 26, 2023 and July 24, 2024 announcements revealed an enormous decline in\n\n profitability that was primarily attributable the severe and undisclosed warranty\n\n issues. The magnitude of this undisclosed warranty issue and the financial impact it\n\n\n - 78 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1214 Filed 11/21/25 Page 82 of 103\n\n\n\n\n had on Ford\u2019s profitability supports a strong inference that Defendants\u2019\n\n misstatements were made with scienter.\n\n 163. For example, on July 24, 2024, Ford announced that while the Ford\n\n Blue segment had a 7% increase in revenue year-over-year, increasing to $26.7\n\n billion, Ford Blue\u2019s EBIT declined by $1.1 billion year-over-year ($1.2 billion EBIT\n\n in 2Q 2024 compared to $2.3 billion in 2Q 2023), a nearly 50% decline, which Ford\n\n explained was \u201cmostly because of the higher warranty costs.\u201d\n\n 164. The higher warranty costs in the Ford Blue segment impacted Ford\u2019s\n\n overall profitability as well. While the Company\u2019s total quarterly revenue grew by\n\n $2.8 billion, or 6%, year-over-year ($47.8 billion in 2Q 2024 compared to $45.0\n\n billion in 2Q 2023), the Company\u2019s net income declined during that same year-over-\n\n year period. As Ford bluntly admitted in its Q2 2024 release: \u201cProfitability was\n\n affected by an increase in warranty reserves . . . .\u201d\n\n 165. Indeed, Ford\u2019s reported warranty accruals as of the six months ended\n\n June 30, 2024 (\u201c2H2024\u201d) were $2.7 billion higher than the same period a year\n\n earlier (approximately $12.6 billion as of June 30, 2024 compared to approximately\n\n $9.9 billion as of June 30, 2023), an increase of 27%, and, on a quarterly basis,\n\n Ford\u2019s accruals for warranty in 2Q 2024 were approximately $1.0 billion higher than\n\n just a quarter earlier (approximately $12.6 billion as of June 30, 2024 compared to\n\n $11.5 billion as of March 31, 2024). As to increases to warranty reserves related to\n\n\n - 79 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1215 Filed 11/21/25 Page 83 of 103\n\n\n\n\n pre-existing warranties (older vehicles) which Defendants have confirmed continued\n\n to be at the center of Ford\u2019s quality and warranty problems, Ford\u2019s accruals as of 2Q\n\n 2024 increased by 60% from the prior year (from $880 million as of 2Q 2023 to\n\n $1.44 billion as of 2Q 2024). In fact, the $1.44 billion increased accrual for pre-\n\n existing warranties in the first half of 2024, was more than three times the average\n\n first half increased accruals in 2021, 2022, and 2023:\n\n\n\n\n 166. The sheer scale of the increases to warranty reserves, combined with\n\n the erasure of nearly half of Ford Blue\u2019s profitability due to the increased warranty\n\n costs, demonstrate that the warranty and quality issues were not isolated or\n\n unforeseen, but rather systemic problems that had remained since prior to the Class\n\n Period. Indeed, the failure to disclose a mounting liability of this magnitude \u2013 a\n\n\n - 80 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1216 Filed 11/21/25 Page 84 of 103\n\n\n\n\n problem so severe it erased nearly half of the Ford Blue segment\u2019s profitability \u2013 is\n\n precisely the type of core omission that demonstrates a conscious, or at minimum\n\n severely reckless, disregard for the truth.\n\n 167. Such substantial financial provisions do not materialize overnight; they\n\n reflect ongoing quality defects and recalls that had been present for years and would\n\n have continued to have been tracked through internal reporting mechanisms,\n\n including warranty claims data, quality control metrics, and risk assessments\n\n routinely reviewed by senior executives. Indeed, Ford\u2019s EBIT was listed in the\n\n \u201cCOMPANY KEY METRICS\u201d section of every one of Ford\u2019s quarterly and annual\n\n reports to the SEC during the Class Period (i.e., the Class Period 10-Qs and Class\n\n Period 10-Ks), as well as listed in a \u201cCompany Key Metrics\u201d summary in each\n\n quarterly earnings release issued by Ford during that time.\n\n 168. The Individual Defendants, as key officers responsible for Ford\u2019s\n\n operations and financial disclosures, had access to this information throughout the\n\n Class Period, making their failure to disclose the escalating warranty liabilities a\n\n reckless disregard for the truth, or intentional concealment.\n\n 169. The Individual Defendants\u2019 detailed commentary on the warranty\n\n issues on the corrective dates adds to the strong inference of scienter. For example,\n\n during Ford\u2019s 2Q 2024 earnings call, held on July 24, 2024, defendant Farley\n\n confirmed that Ford \u201cdid see warranty costs increase in 2Q\u201d and defendant Lawler\n\n\n - 81 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1217 Filed 11/21/25 Page 85 of 103\n\n\n\n\n acknowledged \u201cheadwinds in warranty\u201d but asserted that Ford was \u201cworking to\n\n mitigate these costs.\u201d When an analyst asked about Ford management\u2019s \u201cvisibility\u201d\n\n into the purportedly \u201csurprise warranty issues,\u201d defendant Farley admitted Ford has\n\n \u201cinternal data\u201d on warranty and reliability issues that they had been tracking \u201cfor\n\n quite some time.\u201d\n\n 170. Defendant Farley asserted that he could speak to the \u201chundreds\u201d of\n\n \u201croot causes for these [warranty] issues\u201d and even spoke about a few in particular,\n\n explaining that when dealers fail to properly diagnose an issue and replace modules\n\n unnecessarily, \u201cthat hits our warranty reserves.\u201d\n\n 171. Demonstrating the magnitude and importance of these continued\n\n warranty issues, defendant Farley concluded: \u201c[W]e\u2019re working all of those\n\n [warranty] cost curves every day for each of our models.\u201d Defendant Lawler added\n\n that warranty and FSAs are \u201can issue that the team is focused on.\u201d\n\n 172. When another analyst asked for additional details about \u201cthe warranty\n\n performance that led to the higher cost,\u201d defendant Lawler was able to provide\n\n details about particular defects that contributed to the higher costs, pinpointing that\n\n the \u201clargest one coming through is on the rear axle bolt for vehicles that were\n\n engineered for the 2021 model year\u201d and commenting on \u201ca failed oil pump issue\n\n that\u2019s popping up on 2016 launched vehicles.\u201d He also admitted that \u201cif these things\n\n come through at a higher time in service, we\u2019re made aware of them.\u201d See also \u00b6133.\n\n\n - 82 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1218 Filed 11/21/25 Page 86 of 103\n\n\n\n\n 173. The Individual Defendants\u2019 comments, in response to analyst questions\n\n on the corrective dates, demonstrate that Ford tracked data internally about these\n\n warranty issues, that the Individual Defendants were aware of the continued\n\n significant quality problems and warranty costs, and that managing warranty costs\n\n was a constant focus of the executive team.\n\n 174. Taken together, the sheer magnitude of continued significant quality\n\n problems and the Individual Defendants\u2019 detailed admissions confirming their long-\n\n standing, specific knowledge of the Ford\u2019s quality problems and warranty costs \u2013\n\n create a cogent and compelling inference that Defendants\u2019 misstatements were made\n\n with knowledge of the ongoing warranty issues and costs that were concealed from\n\n investors throughout the Class Period.\n\n Ford\u2019s Consent Order with the NHTSA\n Supports a Strong Inference of Scienter\n 175. On November 14, 2024, NHTSA, an operating administration of the\n\n DOT, announced a Consent Order with the Company (the \u201cConsent Order\u201d). In a\n\n press release discussing the Consent Order, NHTSA stated that the Consent Order\n\n concerned Ford\u2019s \u201cfail[ure] to comply with federal recall regulations\u201d and included\n\n a civil penalty of $165 million against Ford. The $165 million civil penalty against\n\n Ford was historically significant, then-representing the second-highest penalty\n\n NHTSA had ever obtained in the agency\u2019s more than 50-year history.\n\n\n\n - 83 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1219 Filed 11/21/25 Page 87 of 103\n\n\n\n\n 176. The Consent Order centered on Ford\u2019s recall of RVCs in Ford vehicles,\n\n originally announced on September 23, 2020, which concerned intermittent or\n\n inoperative RVCs and potentially affected up to 620,000 vehicles. On August 3,\n\n 2021, during the Class Period, NHTSA opened a \u201cRecall Query\u201d to investigate\n\n Ford\u2019s compliance with the National Traffic and Motor Vehicle Safety Act of 1996\n\n (the \u201cSafety Act\u201d) in connection with Ford\u2019s first RVC recall, including the\n\n timeliness and scope of the recall. On April 14, 2022, after NHTSA opened its\n\n Recall Query, Ford filed an expanded RVC recall. By March 8, 2024, following\n\n discussions with NHTSA, Ford expanded the recall again.\n\n 177. According to NHTSA\u2019s investigation into Ford, which included\n\n information provided by the Company, NHTSA stated that Ford violated multiple\n\n provisions of the Safety Act and regulations thereunder. These violations included\n\n that Ford: (i) provided inaccurate and/or incomplete information concerning RVCs\n\n in its reports to the NHTSA; (ii) failed to timely recall vehicles with RVCs; and (iii)\n\n failed to fully comply with the requirement for public availability of recall\n\n information with respect to several recalls concerning RVCs.\n\n 178. In addition to the monetary provision contained in the Consent Order\n\n (i.e., the $165 million civil penalty), the Consent Order also required Ford to meet\n\n with NHTSA on a quarterly basis, to submit complete and accurate safety\n\n\n\n\n - 84 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1220 Filed 11/21/25 Page 88 of 103\n\n\n\n\n evaluations lists, and to undergo a \u201cthorough review\u201d of all its recalls from the three\n\n years prior to \u201censure that it . . . accurately scoped each recall.\u201d\n\n 179. The NHTSA\u2019s findings, as set forth in the Consent Order, that Ford\n\n repeatedly failed to address a defect, understated the initial scope of the recall, and\n\n failed to disclose required safety information during the investigation in the Class\n\n Period further supports that Defendants likewise knew of the underlying warranty\n\n issues plaguing Ford during the Class Period, but failed to adequately address them,\n\n understated their significance, and underreported related reserves.\n\n Insider Stock Sales Support a Strong\n Inference of Scienter\n 180. The Individual Defendants financially benefited by selling Ford stock\n\n at artificially inflated prices during the Class Period. As Defendants made false and\n\n misleading statements, Ford\u2019s stock price increased from around $17 per share at the\n\n start of the Class Period to around $25 per share in 2022, and remained artificially\n\n inflated until the truth was fully revealed in July 2024. While knowingly or\n\n recklessly disregarding the undisclosed scheme alleged herein, the Individual\n\n Defendants disposed of hundreds of thousands shares of Ford common stock.\n\n 181. Defendant Farley did not report any sales of Ford stock in 2020 (the\n\n year before the Class Period) or in 2021 through the start of the Class Period\n\n (October 28, 2021). During the Class Period, when Ford stock was trading at\n\n artificially inflated prices, defendant Farley engaged in multiple rounds of stock\n\n - 85 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1221 Filed 11/21/25 Page 89 of 103\n\n\n\n\n selloffs, selling approximately 265,000 shares for a total of roughly $4.3 million in\n\n proceeds. For example, on March 3, 2022, when Ford stock was trading at nearly\n\n $18 per share and just after defendant Farley had reported a $2.2 billion\n\n improvement on warranty reserve increases related to pre-existing warranties (\u00b680),\n\n defendant Farley sold over 185,000 shares and grossed over $3.3 million in\n\n proceeds. Similarly, defendant Lawler did not report any sales of Ford stock in the\n\n 3 years leading up to the Class Period, and then sold nearly 30,000 shares of Ford\n\n stock on a single trading day during the Class Period, collecting almost $390,000 in\n\n proceeds.\n\n 182. Other Ford senior executives financially benefited from insider stock\n\n sales as well. On December 3, 2021, then Controller and Principal Accounting\n\n Officer Cathy O\u2019Callaghan (who signed many of the Class Period SEC filings) sold\n\n nearly 73,000 shares of Ford stock at over $20 per share, generating nearly $1.5\n\n million.\n\n 183. In addition, Mark Kosman, who replaced O\u2019Callaghan as the\n\n Company\u2019s Principal Accounting Officer, sold nearly 27,000 shares of Ford stock\n\n on March 6, 2024, at over $12 per share for a total of approximately $337,000.27\n\n\n\n\n 27\n Kosman departed Ford in 2025, and joined joined The Hertz Corporation\n (\u201cHertz\u201d) in a similar role. According to Hertz, Kosman would receive an annual\n salary of $450,000, along with other incentives. Thus, Kosman\u2019s insider sale\n - 86 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1222 Filed 11/21/25 Page 90 of 103\n\n\n\n\n LOSS CAUSATION AND ECONOMIC LOSS\n 184. During the Class Period, as detailed herein, Defendants made false and\n\n misleading statements and engaged in a scheme to deceive the market and a course\n\n of conduct that artificially inflated the price of Ford common stock and operated as\n\n a fraud or deceit on Class Period purchasers of Ford common stock by\n\n misrepresenting and concealing: (i) the fraudulent scheme to understate its warranty\n\n reserves; (ii) the quality and defects of Ford vehicles and their impact on warranty\n\n costs and reserves; and (iii) the materialization of the undisclosed risk that Ford\n\n would incur hundreds of millions of dollars in warranty expenses to cover defective\n\n products covered under either warranties or FSAs.\n\n 185. Defendants\u2019 false and misleading statements and omissions,\n\n individually and collectively, had their intended effect and directly and proximately\n\n caused Ford\u2019s common stock to trade at artificially inflated levels, reaching a Class\n\n Period high of $25 per share.\n\n 186. As a result of Defendants\u2019 fraudulent conduct as alleged herein, the\n\n price at which Ford common stock traded was artificially inflated throughout the\n\n Class Period. When Plaintiffs and other members of the Class (defined infra \u00b6200)\n\n purchased their Ford common stock, the true value of such common stock was\n\n\n\n executed on a single day at the end of the Class Period for a total of roughly\n $337,000, represented nearly 75% of his subsequent annual salary.\n\n - 87 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1223 Filed 11/21/25 Page 91 of 103\n\n\n\n\n substantially lower than the prices actually paid. As a result of purchasing Ford\n\n common stock during the Class Period at artificially inflated prices, Plaintiffs and\n\n other members of the Class suffered economic loss, i.e., damages, under federal\n\n securities laws, when such artificial inflation dissipated.\n\n 187. As a result of Defendants\u2019 materially false and misleading statements,\n\n Plaintiffs and other members of the Class relied to their detriment on such\n\n statements, documents, and omissions, and/or the integrity of the market, in\n\n purchasing their Ford common stock at artificially inflated prices during the Class\n\n Period. Had Plaintiffs and other members of the Class known the truth, they would\n\n not have taken such actions.\n\n 188. When the misrepresentations and omissions that Defendants had\n\n concealed from the market began to be partially revealed on October 26, 2023,\n\n Ford\u2019s stock price declined by $1.39 per share (approximately 12%), from $11.35\n\n per share on October 26, 2023, to $9.96 per share on October 27, 2023, wiping out\n\n more than $5 billion of Ford\u2019s market value.\n\n 189. As reflected in the chart below, while Ford common stock fell\n\n approximately 12%, the S&P 500 decreased by 0.5% and the Dow Jones\n\n\n\n\n - 88 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1224 Filed 11/21/25 Page 92 of 103\n\n\n\n\n Automobiles & Parts Titans 30 Index, of which Ford is a component, decreased by\n\n 0.6%:28\n\n\n\n\n 190. And, when misrepresentations and omissions that Defendants had\n\n concealed from the market were fully revealed on July 24, 2024, the price of Ford\n\n common stock declined by $2.51 per share, or approximately 18%, from $13.67 per\n\n share on July 24, 2024, to close at $11.16 per share on July 25, 2024, wiping out\n\n approximately $9.8 billion of Ford\u2019s market value.\n\n 191. As reflected in the chart below, while Ford common stock fell\n\n approximately 18%, the S&P 500 decreased by 0.5% and the Dow Jones\n\n\n\n\n 28\n In its Annual Reports on Form 10-K, Ford compared its common stock returns\n with the returns of the S&P 500 and the Dow Jones Automobiles & Parts Titans 30\n Index.\n\n - 89 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1225 Filed 11/21/25 Page 93 of 103\n\n\n\n\n Automobiles & Parts Titans 30 Index, of which Ford is a component, decreased by\n\n 2.7%:\n\n\n\n\n 192. The new, Company-specific, material information released on October\n\n 26, 2023 and July 24, 2024 was directly related to the false and/or misleading\n\n statements previously made by the Defendants.\n\n 193. The timing and magnitude of the price decline of Ford common stock\n\n negate any inference that the losses suffered by Plaintiffs and other Class members\n\n were caused by changed market conditions, macroeconomic factors or industry\n\n factors, or Company-specific factors unrelated to Defendants\u2019 wrongful conduct.\n\n 194. Analyst and media reports reflected that the revelation of the previously\n\n undisclosed information was responsible for the stock decline. See \u00b6\u00b6134, 141-142.\n\n\n\n\n - 90 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1226 Filed 11/21/25 Page 94 of 103\n\n\n\n\n PRESUMPTION OF RELIANCE\n 195. At all relevant times, the market for Ford common stock was an\n\n efficient market for the following reasons among others:\n\n (a) Ford common stock met the requirements for listing and was\n\n listed and actively traded on the NYSE, a highly efficiency and automated market;\n\n (b) According to Ford\u2019s 3Q 2023 Form 10-Q, the Company had\n\n more than 3.9 billion shares of common stock outstanding as of October 23, 2023;\n\n (c) Ford regularly communicated with public investors via\n\n established market communication mechanisms, including the regular dissemination\n\n of releases on national circuits of major newswire services, the Internet, and other\n\n wide-ranging public disclosures; and\n\n (d) Ford was followed by numerous securities analysts employed by\n\n major brokerage firms, such as BofA Securities, Barclays, JP Morgan, Morgan\n\n Stanley, Nomura, Piper Sandler, UBS Securities, and Wells Fargo.\n\n 196. As a result of the foregoing, the market for Ford common stock\n\n promptly digested current information regarding Ford from publicly available\n\n sources and reflected such information in Ford\u2019s common stock price. Under these\n\n circumstances, a presumption of reliance applies to Plaintiffs\u2019 purchases of Ford\n\n common stock.\n\n\n\n\n - 91 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1227 Filed 11/21/25 Page 95 of 103\n\n\n\n\n 197. A presumption of reliance is also appropriate in this action under the\n\n Supreme Court\u2019s holding in Affiliated Ute Citizens of Utah v. United States, 406 U.S.\n\n 128 (1972), because Plaintiffs\u2019 claims are based, in significant part, on Defendants\u2019\n\n material omissions. Because this action involves Defendants\u2019 failure to disclose\n\n material adverse information regarding Ford\u2019s business and operations, positive\n\n proof of reliance is not a prerequisite for recovery. All that is necessary is that the\n\n facts withheld be material in the sense that a reasonable investor might have\n\n considered them important in making investment decisions. Given the importance\n\n of the material omissions set forth above, that requirement is satisfied here.\n\n NO SAFE HARBOR\n 198. The false and misleading statements alleged herein were not forward-\n\n looking. To the extent any of the alleged false and misleading statements were\n\n forward-looking, the federal statutory safe harbor for forward-looking statements\n\n under certain circumstances does not apply. Many of the specific statements alleged\n\n were not identified as \u201cforward-looking statements\u201d when made. To the extent there\n\n were any forward-looking statements, they were not accompanied by meaningful\n\n cautionary statements. To be meaningful, cautionary statements must identify\n\n important factors that could cause actual results to differ materially from those in the\n\n purportedly forward-looking statements. Such meaningful cautions were absent\n\n\n\n\n - 92 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1228 Filed 11/21/25 Page 96 of 103\n\n\n\n\n from Ford\u2019s Class Period filings and oral disclaimers, and instead Ford\u2019s purported\n\n risk warnings were false and misleading. See \u00b6\u00b6109-112.\n\n 199. Alternatively, to the extent that the statutory safe harbor could apply to\n\n any forward-looking statements pleaded herein, Ford and the Individual Defendants\n\n are liable for those false and misleading forward-looking statements because, at the\n\n time each of those forward-looking statements were made, the speaker knew that the\n\n particular forward-looking statement was false or misleading and the forward-\n\n looking statement was authorized and approved by an executive officer of Ford who\n\n knew that those statements were false or misleading when made.\n\n CLASS ACTION ALLEGATIONS\n 200. Plaintiffs bring this action as a class action pursuant to Federal Rule of\n\n Civil Procedure 23(a) and (b)(3) on behalf of a class consisting of all purchasers of\n\n Ford common stock during the Class Period (the \u201cClass\u201d). Excluded from the Class\n\n are Defendants, the current and Class Period officers and directors of the Company,\n\n the members of the immediate families and the legal representatives, affiliates, heirs,\n\n successors-in-interest, or assigns of any such excluded person, and any entity in\n\n which such excluded persons have or had a controlling interest.\n\n 201. The members of the Class are so numerous that joinder of all members\n\n is impracticable. Throughout the Class Period, Ford common stock was actively\n\n traded on the NYSE. According to the Company\u2019s 3Q 2023 Form 10-Q, the\n\n\n - 93 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1229 Filed 11/21/25 Page 97 of 103\n\n\n\n\n Company had more than 3.9 billion shares of common stock outstanding as of\n\n October 23, 2023. While the exact number of Class members can only be\n\n determined by appropriate discovery, Plaintiffs believe that Class members number\n\n at least in the hundreds, if not thousands, and that they are geographically dispersed.\n\n 202. Plaintiffs\u2019 claims are typical of the claims of the members of the Class\n\n because Plaintiffs\u2019 and all the Class members\u2019 damages arise from and were caused\n\n by the same representations and omissions made by or chargeable to Defendants.\n\n Plaintiffs do not have any interests antagonistic to, or in conflict with, the Class.\n\n 203. Plaintiffs will fairly and adequately protect the interests of the members\n\n of the Class and have retained counsel competent and experienced in class action\n\n and securities litigation.\n\n 204. Common questions of law and fact exist as to all members of the Class\n\n and predominate over any questions solely affecting individual members of the\n\n Class. Among the questions of law and fact common to the Class are:\n\n (a) whether the federal securities laws were violated by Defendants\u2019\n\n acts as alleged herein;\n\n (b) whether statements made by or chargeable to Defendants during\n\n the Class Period misrepresented or omitted material facts;\n\n (c) whether the price of Ford common stock was artificially inflated\n\n during the Class Period; and\n\n\n - 94 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1230 Filed 11/21/25 Page 98 of 103\n\n\n\n\n (d) to what extent the members of the Class have sustained damages\n\n and the proper measure of damages.\n\n 205. A class action is superior to all other available methods for the fair and\n\n efficient adjudication of this controversy since joinder of all members is\n\n impracticable. Furthermore, as the damages suffered by individual Class members\n\n may be relatively small, the expense and burden of individual litigation makes it\n\n impracticable for members of the Class to individually redress the wrongs done to\n\n them. Plaintiffs are not aware of any difficulty in the management of this action as\n\n a class action.\n\n COUNT I\n\n For Violation of \u00a710(b) of the Exchange Act and SEC Rule 10b-5\n Against Defendants Ford, Farley, and Lawler\n 206. Plaintiffs incorporate the foregoing paragraphs by reference.\n\n 207. During the Class Period, defendants Ford, Farley, and Lawler\n\n disseminated or approved the false or misleading statements specified above, which\n\n they knew or recklessly disregarded were misleading in that they contained\n\n misrepresentations and failed to disclose material facts necessary in order to make\n\n the statements made, in light of the circumstances under which they were made, not\n\n misleading.\n\n 208. Defendants violated \u00a710(b) of the Exchange Act and SEC Rule 10b-5\n\n promulgated thereunder in that they:\n\n - 95 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1231 Filed 11/21/25 Page 99 of 103\n\n\n\n\n (a) employed devices, schemes, and artifices to defraud;\n\n (b) made untrue statements of material fact or omitted to state\n\n material facts necessary in order to make the statements made, in light of the\n\n circumstances under which they were made, not misleading; or\n\n (c) engaged in acts, practices, and a course of business that operated\n\n as a fraud or deceit upon Plaintiffs and other members of the Class in connection\n\n with their purchases of Ford common stock.\n\n 209. As a direct and proximate result of Defendants\u2019 wrongful conduct,\n\n Plaintiffs and other members of the Class suffered damages in connection with their\n\n respective purchases of Ford common stock during the Class Period, because, in\n\n reliance on the integrity of the market, Plaintiffs and other members of the Class\n\n paid artificially inflated prices for Ford common stock and experienced losses when\n\n the artificial inflation was released from Ford common stock as a result of the\n\n leakage and disclosure of information and price declines detailed herein. Plaintiffs\n\n and other members of the Class would not have purchased Ford common stock at\n\n the prices paid, or at all, if they had been aware that the market price had been\n\n artificially and falsely inflated by the false and misleading statements.\n\n 210. By virtue of the foregoing, defendants Ford, Farley, and Lawler have\n\n each violated \u00a710(b) of the Exchange Act and SEC Rule 10b-5 promulgated\n\n thereunder.\n\n\n - 96 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1232 Filed 11/21/25 Page 100 of 103\n\n\n\n\n COUNT II\n\n For Violation of \u00a720(a) of the Exchange Act\n Against Defendants Farley and Lawler\n 211. Plaintiffs incorporate the foregoing paragraphs by reference.\n\n 212. Defendants Farley and Lawler acted as controlling persons of Ford\n\n within the meaning of \u00a720(a) of the Exchange Act.\n\n 213. By virtue of their high-level positions, participation in and/or awareness\n\n of the Company\u2019s operations and/or intimate knowledge of the Company\u2019s\n\n disclosures, practices, and business model, Farley and Lawler had the power to\n\n influence and control, and did influence and control, directly or indirectly, the\n\n decision-making of the Company, including the content and dissemination of the\n\n various statements that Plaintiffs contend are false and misleading. Farley and\n\n Lawler were provided with, or had unlimited access to copies of, the Company\u2019s\n\n public filings and other statements alleged by Plaintiffs to be misleading before\n\n and/or shortly after these statements were issued and had the ability to prevent the\n\n issuance of the statements or cause the statements to be corrected.\n\n 214. As set forth above, Ford violated \u00a710(b) and SEC Rule 10b-5\n\n promulgated thereunder by its acts and omissions as alleged in this complaint. By\n\n virtue of their positions as controlling persons, and as a result of their\n\n aforementioned conduct, Farley and Lawler are liable pursuant to \u00a720(a) of the\n\n Exchange Act for the \u00a710(b) violations. As a direct and proximate result of these\n\n - 97 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1233 Filed 11/21/25 Page 101 of 103\n\n\n\n\n Defendants\u2019 wrongful conduct, Plaintiffs and other members of the Class suffered\n\n damages in connection with their purchases of the Company\u2019s stock during the Class\n\n Period, as evidenced by, among others, the stock price declines discussed above,\n\n when the artificial inflation was released from the Company\u2019s stock.\n\n PRAYER FOR RELIEF\n WHEREFORE, Plaintiffs pray for judgment as follows:\n\n A. Declaring this action to be a class action properly maintained pursuant\n\n to Rule 23(a) and (b)(3) of the Federal Rules of Civil Procedure and certifying\n\n Plaintiffs as Class Representatives and Robbins Geller Rudman & Dowd LLP as\n\n Class Counsel;\n\n B. Awarding compensatory damages in favor of Plaintiffs and other\n\n members of the Class against all Defendants, jointly and severally, for all damages\n\n sustained as a result of Defendants\u2019 wrongdoing, in an amount to be proven at trial,\n\n including interest thereon;\n\n C. Awarding Plaintiffs reasonable costs and expenses incurred in this\n\n action, including attorneys\u2019 fees, experts\u2019 fees, and other costs and disbursements;\n\n and\n\n D. Awarding such further relief, including any equitable/injunctive relief,\n\n as the Court may deem just and proper.\n\n\n\n\n - 98 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1234 Filed 11/21/25 Page 102 of 103\n\n\n\n\n JURY DEMAND\n Plaintiffs hereby demand a trial by jury.\n\n DATED: November 21, 2025 VANOVERBEKE, MICHAUD\n & TIMMONY, P.C.\n THOMAS C. MICHAUD (P46787)\n\n\n s/ Thomas C. Michaud\n THOMAS C. MICHAUD\n 79 Alfred Street\n Detroit, MI 48201\n Telephone: 313/578-1200\n tmichaud@vmtlaw.com\n Local Counsel\n\n ROBBINS GELLER RUDMAN\n & DOWD LLP\n JAMES E. BARZ*\n FRANK A. RICHTER*\n MICHAEL J. STRAMAGLIA*\n 200 South Wacker Drive, 31st Floor\n Chicago, IL 60606\n Telephone: 630/696-4107\n jbarz@rgrdlaw.com\n frichter@rgrdlaw.com\n mstramaglia@rgrdlaw.com\n\n Lead Counsel for Lead Plaintiff\n\n\n\n\n - 99 -\n 4933-9010-5723.v1\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 48, PageID.1235 Filed 11/21/25 Page 103 of 103\n\n\n\n\n LEVI & KORSINSKY, LLP\n SHANNON L HOPKINS*\n GREGORY M. POTREPKA*\n 1111 Summer Street, Suite 403\n Stamford, CT 06905\n Telephone: 203/992-4523\n 212/363-7171 (fax)\n shopkins@zlk.com\n gpotrepka@zlk.com\n\n Counsel for Additional Named Plaintiff\n Ronald A. Ferrante\n\n *Admissions forthcoming\n\n\n\n\n - 100 -\n 4933-9010-5723.v1\n\f","ocr_status":2,"date_upload":"2026-05-08T07:53:19.464973-07:00","document_number":"48","attachment_number":null,"pacer_doc_id":"097014585688","is_available":true,"is_free_on_pacer":null,"is_sealed":null,"document_type":1,"description":"Civil Case - Complaint, Amended","acms_document_guid":""}],"date_created":"2025-11-21T15:26:47.645425-08:00","date_modified":"2026-05-11T09:56:27.981226-07:00","date_filed":"2025-11-21","time_filed":"17:51:34","entry_number":48,"recap_sequence_number":"2025-11-21.001","pacer_sequence_number":203,"description":"AMENDED COMPLAINT with Jury Demand CONSOLIDATED COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS filed by Ronald Ferrante, Clark D. Crippen against James D. Farley, Jr., Ford Motor Company, John T. Lawler. NO NEW PARTIES ADDED. (Michaud, Thomas) (Entered: 11/21/2025)","tags":[]},{"resource_uri":"https://www.courtlistener.com/api/rest/v4/docket-entries/438563018/","id":438563018,"docket":"https://www.courtlistener.com/api/rest/v4/dockets/69027187/","recap_documents":[{"resource_uri":"https://www.courtlistener.com/api/rest/v4/recap-documents/453067703/","id":453067703,"tags":[],"absolute_url":"/docket/69027187/47/guzman-v-ford-motor-company/","date_created":"2025-09-22T11:17:43.659444-07:00","date_modified":"2026-05-11T09:56:27.948229-07:00","sha1":"3550c1063dd12347703de50206e996bfdaca841f","page_count":29,"file_size":521919,"filepath_local":"recap/gov.uscourts.mied.378964/gov.uscourts.mied.378964.47.0.pdf","filepath_ia":"https://archive.org/download/gov.uscourts.mied.378964/gov.uscourts.mied.378964.47.0.pdf","ia_upload_failure_count":null,"thumbnail":null,"thumbnail_status":0,"plain_text":"Case 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1104 Filed 09/22/25 Page 1 of 29\n\n\n\n\n UNITED STATES DISTRICT COURT\n EASTERN DISTRICT OF MICHIGAN\n SOUTHERN DIVISION\n\nALBERT GUZMAN and\nROBERT SKLODOWSKI, Individually\nand on Behalf of All Others Similarly\nSituated,\n\n Plaintiffs, Case No. 24-cv-12080\n (Consolidated with\nv. Case No. 24-cv-12492)\n Honorable Linda V. Parker\n\nFORD MOTOR COMPANY,\nJAMES D. FARLEY, JR., and\nJOHN T. LAWLER,\n\n Defendants.\n_______________________________/\n\n OPINION AND ORDER ON PENDING MOTIONS FOR APPOINTMENT\n OF LEAD PLAINTIFF AND LEAD COUNSEL\n\n This is a consolidated putative class action lawsuit filed under the Securities\n\nExchange Act of 1934, as amended by the Private Securities Litigation Reform Act\n\nof 1995 (\u201cPSLRA\u201d). Plaintiffs Albert Guzman and Robert Sklodowski\n\n(collectively \u201cPlaintiffs\u201d) allege that Defendants made materially false\n\nmisrepresentations and/or omissions about Ford Motor Company\u2019s business,\n\noperations, and prospects, and that the value of the company\u2019s securities dropped\n\nwhen the truth was disclosed. Guzman filed a Complaint seeking to represent a\n\nclass of investors who purchased Ford Motor Company (\u201cFord\u201d) securities\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1105 Filed 09/22/25 Page 2 of 29\n\n\n\n\nbetween April 27, 2022 through July 24, 2024, inclusive. In his Complaint,\n\nSklodowski proposes a class of investors who purchased Ford securities between\n\nOctober 28, 2021 and July 24, 2024, inclusive.\n\n The matter is presently before the Court on competing motions for\n\nappointment as lead plaintiff and lead counsel, filed initially on October 7, 2024,\n\nby Michael M. Press, Clark D. Crippen, Teamsters Local 710 Pension Fund\n\n(\u201cTeamsters 710\u201d), and Ronald Ferrante. The motions are fully briefed. On\n\nOctober 21, 2024, Press filed a notice in which he concedes that he does not have\n\nthe \u201clargest financial interest\u201d and, therefore, is not presumptively the \u201cmost\n\nadequate plaintiff\u2019 to represent the interests of class members. (ECF No. 18.) The\n\nCourt held a hearing with respect to the remaining motions on September 16, 2025.\n\nI. Factual and Procedural Background\n\n Ford is an automotive manufacturing company which develops, delivers, and\n\nservices a range of trucks, cars, and luxury vehicles worldwide. (ECF No. 3 at\n\nPageID.42 \u00b6 2.) During the period relevant to Plaintiffs\u2019 claims, Defendant James\n\nD. Farley, Jr., was Ford\u2019s Chief Executive Officer, and Defendant John T. Lawler\n\nwas its Chief Financial. (Id. at PageID.45 \u00b6\u00b6 13, 14.)\n\n On July 24, 2024, after the stock market closed, Ford announced its second\n\nquarter 2024 financial results, revealing that its \u201cprofitability was affected by an\n\nincrease in warranty reserves\u201d and \u201chigher warranty costs.\u201d (Id. at PageID.42 \u00b6 3.)\n\n 2\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1106 Filed 09/22/25 Page 3 of 29\n\n\n\n\nAnalysts and journalists reported that, in the second quarter, Ford\u2019s warranty and\n\nrecall costs had increased by $800 million more than the first quarter and by $700\n\nmillion more than the year before. (Id. at PageID.2-3 \u00b6 3.) As a result, Ford\n\nrevised its outlook for full-year earnings for its electric vehicle segment to\n\n\u201creflect[] higher warranty costs than originally planned.\u201d (Id.) On this news,\n\nFord\u2019s share price fell 18.36% the following day. (Id. at PageID.3 \u00b6 4.)\n\n On August 8, 2024, Guzman filed his Complaint against Defendants (ECF\n\nNo. 1), followed by an Amended Complaint a few days later (ECF No. 3).\n\nGuzman claims that Defendants made materially false and misleading statements\n\nand/or omissions in public announcements and filings with the Securities and\n\nExchange Commission (\u201cSEC\u201d) between April 27 and July 24, 2024. (ECF No. 3\n\nat PageID.43 \u00b6 5.) Specifically, Guzman alleges that Defendants failed to disclose:\n\n(1) that Ford had deficiencies in its quality assurance of vehicle models since 2022;\n\n(2) that, as a result, Ford was experiencing higher warranty costs; (3) Ford\u2019s\n\nwarranty reserves did not accurately reflect the quality issues in vehicles sold since\n\n2022; and (4) as a result, Defendants\u2019 positive statements about Ford\u2019s business,\n\noperations, and prospects were materially misleading and/or lacked a reasonable\n\nbasis. (Id.)\n\n On September 23, 2024\u2014two weeks before the October 7 deadline to file\n\nlead plaintiff motions in the Guzman action\u2014Sklodowski filed in this District a\n\n 3\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1107 Filed 09/22/25 Page 4 of 29\n\n\n\n\nsubstantially identical putative class action. Compl., Sklodowski v. Ford Motor\n\nCo., No. 24-cv-12492, ECF No. 1. Sklodowski, however, proposes a class period\n\nbeginning on October 28, 2021. See id. at PageID.1 \u00b6 1. In his Complaint,\n\nSklodowski asserts the same nondisclosures by Defendants set forth in the\n\npreceding paragraph, but he does not identify a period for when the deficiencies in\n\nFord\u2019s quality assurance of vehicle models began. See id. at PageID.3 \u00b6 5.\n\nSklodowski also offers an expanded list of Ford\u2019s announcements and SEC filings\n\nwhere the alleged misrepresentations and/or omissions were purportedly made,\n\nwhich precede Guzman\u2019s proposed class period. See id. at PageID.6-7 \u00b6\u00b6 17-19.\n\n Plaintiffs, who invested in Ford securities, claim that they suffered\n\nsignificant losses and damages due to the precipitous decline in the market value of\n\ntheir holdings when the truth about the companies warranty problems was\n\ndisclosed.\n\n As indicated, on October 7, Press, Crippen, Teamsters 710, and Ferrante\n\nfiled motions seeking their appointment as lead plaintiff and their counsel of choice\n\nas lead counsel. (ECF Nos. 13-17.) Teamsters 710, Crippen, and Press also sought\n\nconsolidation of the Guzman and Sklodowski actions. (See ECF Nos. 13, 15, 17.)\n\nEach movant attached the PSLRA-required certification and a list of the movant\u2019s\n\ntransactions in Ford securities. (See ECF No. 13-2 [Teamster 710]; ECF No. 14-2\n\n[Ferrante]; ECF No. 15-3 [Crippen]; ECF No. 17-4 [Press].) All of the movants,\n\n 4\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1108 Filed 09/22/25 Page 5 of 29\n\n\n\n\nexcept Ferrante, disclosed their transactions during the Sklodowski expanded class\n\nperiod, while Ferrante limited his disclosures to the shorter Guzman period. (Id.)\n\nThereafter, Press effectively withdrew his motion (ECF No. 18), and briefing was\n\ncompleted with respect to the remaining motions (see ECF Nos. 19-24).\n\n It was not until October 21, 2024, when Ferrante responded to the motions\n\nfiled by Crippen and Teamsters 710, that he disclosed his transactions in Ford\n\nsecurities during the expanded Sklodowski proposed class period. (See ECF No.\n\n19-2 at PageID.507; ECF No. 19-3; ECF No. 19-4 at PageID.519.) Ferrante did\n\nnot explain why these transactions had not been disclosed initially. However, he\n\ndid take issue with the expanded class period, suggesting that the Sklodowski\n\naction\u2014with its extension of the beginning of the class period to October 28,\n\n2021\u2014was filed for \u201ca tactical purpose\u201d or \u201cillegitimate reasons[.]\u201d (ECF No. 19\n\nat PageID.490-91.)\n\n On November 27, 2024, after the Court consolidated the two matters (ECF\n\nNo. 31), Crippen, Teamsters 710, and Ferrante refiled their respective briefs in\n\nsupport of and in opposition to the motions for appointment of lead plaintiff and\n\nlead counsel. (ECF Nos. 33, 35-42.)\n\nII. The PSLRA\u2019s Procedures\n\n After a complaint is filed under the PSLRA, the plaintiff must \u201ccause to be\n\npublished, in a widely circulated national business-oriented publication or wire\n\n 5\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1109 Filed 09/22/25 Page 6 of 29\n\n\n\n\nservice, a notice\u201d informing putative class members of the lawsuit, the claims\n\nasserted, and the purported class period. See 15 U.S.C. \u00a7 78u-4(a)(3)(A)(i)(I).\n\nWithin 60 days of the notice\u2019s publication, members of the purported class seeking\n\nappointment as lead plaintiff must file the appropriate motion with the court. See\n\nid. \u00a7 78u-4(a)(3)(A)(i)(II). The motion must be accompanied by a sworn\n\ncertification that includes certain information, including \u201call of the transactions of\n\nthe [movant] in the security that is the subject of the complaint during the class\n\nperiod specified in the complaint[.]\u201d Id. \u00a7 78u-4(a)(2)(A).\n\n If more than one action on behalf of a class asserting substantially the same\n\nclaim(s) is filed and consolidation is sought, the PSLRA instructs the court to\n\nrefrain from appointing a lead plaintiff until it decides whether consolidation is\n\nappropriate and then to render a lead plaintiff decision \u201c[a]s soon as practicable[.]\u201d\n\nId. \u00a7 78u-4(a)(3)(B)(ii).\n\n The PSLRA requires a court to consider any motion timely filed by a\n\nputative class member seeking to be appointed as lead plaintiff and to \u201cappoint as\n\nlead plaintiff the member or members of the purported plaintiff class that the court\n\ndetermines to be most capable of adequately representing the interests of the class\n\nmembers.\u201d 15 U.S.C. \u00a7 78u-4(a)(3)(B)(i). The PSLRA creates a rebuttable\n\npresumption that the most adequate plaintiff is the person who:\n\n (aa) has either filed the complaint or made a motion in\n response to a notice under subparagraph (A)(i);\n 6\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1110 Filed 09/22/25 Page 7 of 29\n\n\n\n\n (bb) in the determination of the court, has the largest\n financial interest in the relief sought by the class; and\n\n (cc) otherwise satisfies the requirements of Rule 23 of the\n Federal Rules of Civil Procedure.\n\nId. \u00a7 78u-4(a)(3)(B)(iii)(I). Once the court identifies a presumptive lead plaintiff,\n\nthe presumption \u201cmay be rebutted only upon proof by a member of the purported\n\nplaintiff class that the presumptively most adequate plaintiff . . . will not fairly and\n\nadequately protect the interests of the class; or . . . is subject to unique defenses\n\nthat render such plaintiff incapable of adequately representing the class.\u201d 15 U.S.C\n\n\u00a7 78u-4(a)(3)(B)(iii)(II).\n\n With respect to the third requirement to trigger the lead plaintiff presumption\n\n(i.e., otherwise satisfying the requirements of Rule 23), the rule provides:\n\n One or more members of a class may sue or be sued as\n representative parties on behalf of all members only if:\n\n (1) the class is so numerous that joinder of all members is\n impracticable;\n\n (2) there are questions of law or fact common to the\n class;\n\n (3) the claims or defenses of the representative parties are\n typical of the claims or defenses of the class; and\n\n (4) the representative parties will fairly and adequately\n protect the interests of the class.\n\n\n\n\n 7\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1111 Filed 09/22/25 Page 8 of 29\n\n\n\n\nFed. R. Civ. P. 23(a). Courts deciding which investor to appoint as lead plaintiff\n\nfocus on the third and fourth factors, delaying a more rigorous analysis of the first\n\ntwo factors for its decision on whether to certify the matter as a class action. See,\n\ne.g., In re The Goodyear Tire & Rubber Co. Sec. Litig., No. 5:03 cv 2166, 2004\n\nWL 3314943, at *6 (N.D. Ohio May 12, 2004) (collecting cases); Lax v. First\n\nMerchants Acceptance Corp., No. 97 C 2715, 1997 WL 461036, at *6 (N.D. Ill.\n\nAug. 11, 1997) (citation omitted).\n\n The typicality requirement of Rule 23 is met if the prospective lead\n\nplaintiff\u2019s claims \u201carise[] from the same event or practice or course of conduct that\n\ngives rise to the claims of other class members, and if his or her claims are based\n\non the same legal theory.\u201d In re Am. Med. Sys., Inc., 75 F.3d 1069, 1082 (6th Cir.\n\n1996). Rule 23\u2019s adequacy requirement is satisfied where the representative \u201cha[s]\n\ncommon interests with those of unnamed class representatives\u201d and is \u201ccapable of\n\nvigorously prosecuting the action with the assistance of qualified counsel.\u201d Id.\n\n \u201cThe initial inquiry (i.e., the determination of whether the movant with the\n\nlargest interest in the case \u2018otherwise satisfies\u2019 Rule 23) should be confined to\n\ndetermining whether the movant has made a prima facie showing of typicality and\n\nadequacy.\u201d In re Cendant Corp. Litig., 264 F.3d 210, 263-64 (3d Cir. 2001)\n\n(collecting cases); see also Shupe v. Rocket Cos., 601 F. Supp. 3d 214, 220 (E.D.\n\nMich. 2022) (providing that, \u201call that is required is a preliminary showing that the\n\n 8\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1112 Filed 09/22/25 Page 9 of 29\n\n\n\n\nlead plaintiff\u2019s claims are typical and adequate of the class\u201d) (cleaned up). This is\n\na determination to be \u201cmade by \u2018the court,\u2019\u201d In re Cendant Corp. Litig., 264 F.3d at\n\n263 (quoting 15 U.S.C. \u00a7 78u-4(a)(3)(B)(iii)(I)), and the inquiry \u201cneed not be\n\nextensive[,]\u201d id. at 264. \u201c[T]he court may and should consider the pleadings that\n\nhave been filed, the movant\u2019s application, and any other information that the court\n\nrequires to be submitted.\u201d Id. \u201cIn keeping with the statutory text, however, the\n\ncourt generally will not consider at this stage any arguments by other members of\n\nthe putative class; rather such allegations should be dealt with in terms of assessing\n\nwhether the lead plaintiff presumption has been rebutted rather than in terms of\n\ndeciding whether it has been triggered.\u201d Id.; see also In re Cavanaugh, 306 F.3d\n\n726, 730-31 (9th Cir. 2002) (indicating that, once the court identifies the movant\n\nwith the greatest financial stake, the court should focus its attention on that movant\n\nand determine, based on the information the movant provides in its filings, whether\n\nit satisfies the adequacy and typicality requirements of Rule 23; \u201cthere is no\n\nadversary process to test the substance of those claims\u201d).\n\nIII. Lead Plaintiff Analysis\n\n A. Timeliness and the Impact of Ferrante\u2019s Delayed Complete\n Transaction Disclosures\n\n The 60-day window for putative class members to seek the appointment of\n\nlead plaintiff in these consolidated actions closed on October 7, 2024. As\n\nindicated, all movants filed their lead plaintiff motions by that deadline. Teamsters\n 9\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1113 Filed 09/22/25 Page 10 of 29\n\n\n\n\n 710 nevertheless contends the Ferrante\u2019s motion should be deemed untimely\n\n because he used \u201cthe wrong Class Period\u201d\u2014that is, the shorter period proposed by\n\n Guzman\u2014and did not disclose all of his relevant Ford securities transactions until\n\n after the October 7 deadline. As previously set forth, Ferrante\u2019s initial certification\n\n covered his securities transactions only between April 27, 2022 to July 24, 2024.\n\n He did not disclose his transactions going back to the start of the Sklodowski\n\n proposed class period (i.e., October 28, 2021) until October 24, 2024.\n\n However, in the cases Teamsters 710 cites in support of its argument, the\n\n courts did not deem the movants\u2019 motions to be untimely due to errors in their\n\n certifications. Instead, the courts found those errors relevant in assessing the\n\n movants\u2019 adequacy to serve as lead plaintiff. See, e.g., Plaut v. Goldman Sachs\n\n Grp., Inc. No. 18-CV-12084, 2019 WL 4512774, at *5 (S.D.N.Y. Sept. 19, 2019)\n\n (citations omitted) (finding that the movant\u2019s certification, which \u201cinadvertently\n\n omitted certain Class Period transactions . . . due to a clerical error\u201d \u201cspeaks to a\n\n level of carelessness,\u201d causing the court \u201cto doubt whether [the movant] possesses\n\n the necessary adequacy and sophistication to be lead plaintiff\u201d); Rodriguez v.\n\n DraftKings Inc., Nos. 21 Civ. 5739, 21 Civ. 6497, 2021 WL 5282006, at *5-6\n\n (S.D.N.Y. Nov. 12, 2021) (acknowledging that \u201c[t]he slovenliness of [a movant\u2019s]\n\n submissions is undoubtedly relevant and concerning, and plays an important role in\n\n the Court\u2019s assessment of his adequacy as a putative class representative[,]\u201d but\n\n 10\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1114 Filed 09/22/25 Page 11 of 29\n\n\n\n\n finding no reason to conclude that the movant\u2019s claimed losses were inaccurate);\n\n see also Tomaszewski v. Trevena, Inc., 383 F. Supp. 3d 409, 414-15 (E.D. Penn.\n\n 2019) (finding doubt as to whether a movant \u201cpossesse[d] the necessary adequacy\n\n and sophistication to be lead plaintiff\u201d where his sworn statements contained\n\n repeated errors, even though they were \u201cminor or inadvertent mistakes in absolute\n\n terms\u201d). Some courts respond to late disclosures by only considering timely-\n\n disclosed transactions and losses when assessing which movant has the largest\n\n financial interest. See, e.g., In re Able Labs. Sec. Litig., 425 F. Supp. 2d 562\n\n (D.N.J. 2006); In re Telxon Corp. Litig., 67 F. Supp. 2d 803, 818 (N.D. Ohio 1999).\n\n \u201c[T]he plain language of [the PSLRA] precludes consideration of a financial\n\n loss asserted for the first time . . . after the sixty (60) day window has closed.\u201d In\n\n re Able Labs. Sec. Litig., 425 F. Supp. 2d at 565-66 (quoting In re Telxon Corp.\n\n Sec. Litig., 67 F. Supp. 2d at 818) (declining to consider late amended certification\n\n asserting a $2.1 million loss and finding instead that the plaintiffs with a combined\n\n $1.7 million loss had the greatest financial interest); In re Regions Morgan Keegan\n\n Open-End Mut. Fund Litig., Nos. 07-2784, 07-2830, 08-2017, 2009 WL 10665043,\n\n at *3-4 (W.D. Tenn. 2009) (citing In re Telxon Corp. Sec. Litig., 67 F. Supp. 2d at\n\n 819; In re Eaton Vance Corp. Sec. Litig., 219 F.R.D. 38, 42 (D. Mass. 2003)); see\n\n also Salem v. Methode Elec., Inc., No. 24 C 7696, 2025 WL 368955, at *3 (N.D.\n\n Ill. Feb. 3, 2025) (collecting cases) (acknowledging that \u201cthe majority of courts\n\n 11\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1115 Filed 09/22/25 Page 12 of 29\n\n\n\n\n refuse to consider modifications to certifications or claimed losses made after the\n\n PSLRA lead plaintiff motion deadline\u201d); but see Lim v. Hightower, No. 23 C 1454,\n\n 2023 WL 7979869, at *2 n.4 (N.D. Ohio Nov. 16, 2023) (considering a revised loss\n\n chart, after the original loss chart contained inadvertent errors, as the revised chart\n\n contained the same transactions initially reported). Courts limit their review to\n\n transactions reported and losses claimed within the 60-day window \u201ceven when a\n\n later-asserted loss would permit a different party to assert that it had the greatest\n\n financial interest in the litigation.\u201d In re Regions Morgan Keegan Open-End Mut.\n\n Litig., 2009 WL 10665043, at *4 (citing In re Telxon Corp. Sec. Litig., 67 F. Supp.\n\n 2d at 818-19; In re Able Labs., 425 F. Supp. 2d at 565-66, 571). Courts reason that\n\n \u201ccompliance with the procedural requirements of the PSLRA is mandatory and\n\n should be strictly enforced.\u201d Okla. Law Enf\u2019t Ret. Sys. v. Adeptus Health Inc., No.\n\n 17-cv-00449, 2017 WL 3780164, at *3 (E.D. Tex. Aug. 31, 2017) (citations\n\n omitted); see also In re Able Labs. Sec. Litig., 425 F. Supp. 2d at 565; In re Regions\n\n Morgan Keegan Open-End Mut. Litig., 2009 WL 10665043, at *4 (citations\n\n omitted). Thus, in evaluating which movant has the largest financial interest, the\n\n Court considers only the transactions and losses claimed by Ferrante with his\n\n initial timely certification.\n\n But even if Ferrante still comes out as the movant with the largest financial\n\n interest, the Court has reservations concerning his adequacy to serve as lead\n\n 12\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1116 Filed 09/22/25 Page 13 of 29\n\n\n\n\n plaintiff due to his failure to disclose all relevant transactions within the 60-day\n\n window. Ferrante has not offered a persuasive explanation for his late disclosure.\n\n He asserts that all the PSLRA required was the disclosure of his securities\n\n transactions that are the subject of the Guzman Complaint, but his cited caselaw is\n\n not directly on point and is distinguishable. See Plumbers & Pipefitters Nat\u2019l\n\n Pension Fund v. Alta Mesa Res., Inc., No. 10 Civ. 920, 2019 U.S. Dist. LEXIS\n\n 234325, at *5-6 (S.D.N.Y. Apr. 29, 2019) (concluding that movant in Southern\n\n District of New York litigation asserting \u00a7\u00a7 14(a) and 20(a) claims was not\n\n required to provide transactions within class period asserted in two actions filed in\n\n the Southern District of Texas asserting a \u00a7 10(b) claim); Ark. Teacher Ret. Sys. v.\n\n Insulet Corp., 177 F. Supp. 3d 618, 624 (D. Mass. 2016) (finding a justification for\n\n movant\u2019s use of a class period shorter than what was proposed in two other\n\n putative class actions previously pending in the district where there was no support\n\n offered for the extension of the class period in those cases).1\n\n The fact that Ferrante did not acknowledge the potential longer class period\n\n until filing his response brief suggests he and his counsel were not even aware of\n\n the Sklodowski action. Ferrante\u2019s counsel seemed to concede as much at the\n\n motion hearing when he suggested that notice of the Sklodowski action was not\n\n\n\n 1\n As will be discussed infra, this Court finds support for the expanded class period\n proposed by Sklodowski.\n 13\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1117 Filed 09/22/25 Page 14 of 29\n\n\n\n\n widely distributed, although it was published in the same widely-circulated wire\n\n service as the Guzman Action. (See ECF Nos. 17-2, 17-3.) As Teamsters 710\n\n argues, this unawareness is suggestive of negligence and inadequacy to serve as\n\n lead plaintiff and lead counsel.2\n\n The Court is further troubled by Ferrante\u2019s steadfast advocacy of the\n\n shortened class period, particularly at this early stage of the proceedings and when,\n\n as discussed later, there are non-frivolous allegations supporting the expanded\n\n period. Such advocacy benefits Ferrante\u2019s position as lead plaintiff while\n\n potentially jeopardizing at the starting gate the interests of many putative class\n\n members.\n\n B. \u201cLargest Financial Interest\u201d\n\n Most courts, when deciding which movant has the \u201clargest financial\n\n interest,\u201d simply consider which potential lead plaintiff has suffered the greatest\n\n total losses. See, e.g., Patel v. Reata Pharms., Inc., 549 F. Supp. 3d 559, 565 & n.2\n\n (E.D. Tex. 2021) (citing Giovagnoli v. GlobalSCAPE, Inc., No. SA-17-753, 2017\n\n WL 11220692, at *3 (W.D. Tex. Nov. 6, 2017) (collecting cases)); Knox v. Yingli\n\n\n\n 2\n The Court acknowledges that Ferrante signed his certification on September 9,\n 2024, before the Sklodowski action was filed. (See ECF No. 14-2 at PageID.199.)\n Nevertheless, it is incumbent on counsel to take note of changes requiring an\n amendment before a document\u2014especially a sworn certification\u2014is filed. Further\n carelessness is reflected in Ferrante\u2019s certification that he authorized only the filing\n of a complaint, not his motion. (See id.)\n 14\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1118 Filed 09/22/25 Page 15 of 29\n\n\n\n\n Green Energy Holding Co., 136 F. Supp. 3d 1159, 1163 (C.D. Cal. Oct. 6, 2015)\n\n (citations omitted); In re Gentiva Sec. Litig., 281 F.R.D. 108, 117 (E.D.N.Y. 2012)\n\n (collecting cases); Takara Tr. v. Molex, Inc., 229 F.R.D. 577, 579 (N.D. Ill. 2005).\n\n Consistent with that approach, the movants here all focused on their losses in their\n\n initial motions to argue that they should be appointed lead plaintiff. (See ECF No.\n\n 17 at PageID.352 [Press]; ECF No. 33 at PageID.657 [Crippen]; ECF No. 35 at\n\n PageID.692 [Teamsters 710]; ECF No. 36 at PageID.776 [Ferrante].)\n\n Courts also apply the four factors outlined by the District Court for the\n\n Northern District of Illinois in Lax. See, e.g., In re the Goodyear Tire & Rubber\n\n Co. Se. Litig., 2004 WL 3314943 at *3 (citing cases recognizing the four-factor\n\n inquiry outlined in Lax); In re Olsten Corp. Sec. Litig., 3 F. Supp. 2d 286, 295\n\n (E.D.N.Y. 1998). Those factors are: (1) the number of shares purchased during the\n\n class period; (2) the number of net shares purchased during the class period (i.e.,\n\n shares purchased during and retained at the end of the class period); (3) the total\n\n net funds expended during the class period; and (4) the approximate losses suffered\n\n during the class period. Lax, 1997 WL 461036, at *5. Ferrante, in his response\n\n and reply briefs, advocates for the application of the Lax factors when determining\n\n the movant with the largest financial interest. (ECF Nos. 39, 42.) In its response\n\n\n\n\n 15\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1119 Filed 09/22/25 Page 16 of 29\n\n\n\n\n and reply briefs, Teamsters 710 urges the Court to consider only the first two Lax\n\n factors. 3 (ECF Nos. 38, 41.)\n\n In support of this modified application of the Lax factors, Teamsters 710\n\n cites two cases: Westchester Putnam Counties Heavy & Highway Laborers Local\n\n 60 Benefits Funds v. Brixmor Prop. Grp., Inc., No. 16-cv-02400, 2016 WL\n\n 11648466 (S.D.N.Y. Nov. 29, 2016); and Pio v. General Motors Co., No. 14-cv-\n\n 11191, 2014 WL 5421230 (E.D. Mich. Oct. 24, 2014).4 However, the district\n\n\n 3\n While the first two Lax factors actually favor Ferrante, Teamsters 710 maintains\n that he is not adequate to serve as lead plaintiff.\n 4\n In its response and reply briefs, Teamsters 710 also advocates for the Court\u2019s\n consideration of only the second Lax factor (net shares). Its counsel focused on net\n shares at the motion hearing, too. Teamsters 710 claims that courts have\n recognized the propriety of determining largest financial interest based primarily\n on this factor because the candidate with the most shares purchased will normally\n have the largest potential damage recovery. Teamsters 710 again cites Pio in\n support of this argument, as well as Shupe, 601 F. Supp. 3d at 219; Jastram v.\n Nextera Energy, No. 23-80833, 2023 WL 11885983, at *4 (S.D. Fla. Oct. 26,\n 2023); In re Network Assocs., Inc. Sec. Litig., 76 F. Supp. 2d 1017, 1027 (N.D. Cal.\n 1999); and Perlmutter v. Intuitive Surgical Inc., No. 10-cv-03451, 2011 WL\n 566814, at *6 (N.D. Cal. Feb. 15, 20111). Teamsters 710 asserts that this factor is\n the most accurate measure of a movant\u2019s financial interest where, as here, there is a\n constant fraud premium through the class period. As discussed, the undersigned\n considered all four Lax factors in Pio. The Jastram court noted that some courts\n have found net shares to most accurately reflect the largest financial interest, 2023\n WL 11885983, at *2 (citing cases), but the district court in that case still considered\n all four Lax factors, id. at *3. The district courts in Shupe and Perlmutter made the\n same observation yet also considered all four Lax factors. Shupe, 601 F. Supp. 3d\n at 219-20; Perlmutter, 2011 WL 566814, at *7-11. In Network Associates, the\n district judge seemed to focus on net shares \u201c[a]t least as a first approximation\u201d\n because \u201cthe candidate with the most net shares purchased will normally have the\n\n 16\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1120 Filed 09/22/25 Page 17 of 29\n\n\n\n\n judges in those cases\u2014one being the undersigned\u2014did not consider only the first\n\n and second Lax factors.\n\n The Brixmor court not only considered all four factors, but noted that \u201c[t]he\n\n trend among New York courts is to view the factors in ascending order of\n\n importance, such that the number of shares purchased is the least important and the\n\n losses incurred are the most important.\u201d 2016 WL 11648466, at *1 (citing\n\n Richman v. Goldman Sachs Grp., Inc., 274 F.R.D. 473, 475-76 (S.D.N.Y. 2011)).\n\n In Brixmor, the court ultimately did not treat the movants\u2019 losses as the most\n\n important factor, but that was because the difference between the movants\u2019\n\n approximate losses was 16%, and it found courts split on whether such a difference\n\n should be construed as \u201croughly equal\u201d or \u201cnot negligible.\u201d Id. As the remaining\n\n three factors \u201coverwhelmingly favor[ed]\u201d one movant, the court relied on those\n\n factors instead. Id. at *2. The difference between Crippen\u2019s and Teamsters 710\u2019s\n\n approximate losses ($904,340 and $350,182, respectively) is far greater than the\n\n 16% difference in Brixmor. The difference could not be construed to be \u201croughly\n\n equal.\u201d\n\n\n\n\n largest potential damage recovery.\u201d 76 F. Supp. 2d at 1027. However, the limited\n reasoning the Network Associates court provided for not relying upon the\n remaining three Lax factors does not persuade this Court that it should follow its\n lead.\n 17\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1121 Filed 09/22/25 Page 18 of 29\n\n\n\n\n In Pio, the undersigned considered all four Lax factors, rejecting one\n\n movant\u2019s urging to consider only the last factor. See 2014 WL 5421230, at *4-8.\n\n The Court had no trouble concluding that the first three factors favored one\n\n movant. See id. at *4. The Court had some difficulty assessing the fourth factor\n\n because the movants employed different methodologies to calculate their losses\u2014\n\n not only from each other but also from brief to brief, offering varying estimations\n\n of their own losses. Id. at *5. Nevertheless, this Court eventually concluded that\n\n this factor favored the same movant, too. Id. at *8.\n\n In this case, however, for the following reasons, the Court elects to focus on\n\n approximate losses suffered to identify the movant with the largest financial\n\n interest. First, most courts agree that it is the most salient factor in assessing the\n\n lead plaintiff. Second, as indicated, it was the approach all of the movants used in\n\n their opening briefs when arguing for their appointment to the position. Teamsters\n\n 710 and Ferrante only advocated for an alternative approach when it became\n\n apparent that they did not have the greatest approximate losses. See La. Sheriffs\u2019\n\n Penson & Relief Fund v. Cardinal Health, Inc., No. 2:19-cv-3347, 2020 WL\n\n 3396660, at *6 (S.D. Ohio June 19, 2020) (citing Garden City Emps. Ret. Sys. v.\n\n Psychiatric Sols., Inc., Nos. 3:09-cv-00882, 3:09-01211, 2010 WL 1790763, at *4\n\n (M.D. Tenn. Apr. 30, 2010)) (declining to follow method for calculating loss not\n\n advocated by one movant until its response brief, noting that courts have\n\n 18\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1122 Filed 09/22/25 Page 19 of 29\n\n\n\n\n \u201cexpressed disproval for vacillating advocacy such as this\u201d); St. Clair Cnty. Emps.\u2019\n\n Ret. Sys. v. Acadia Healthcare Co., No. 3:18-cv-00988, 2019 WL 494129 at *3 n.9\n\n (M.D. Tenn. Jan. 9, 2019) (citing Nicolow v. Hewlett Packard Co., No. 12-05980,\n\n 2013 WL 792642, at *4 (N.D. Cal. 2013)) (finding that the movant\u2019s failure to\n\n argue for focusing on the first three Lax factors in their original motion\n\n \u201cundermines [their] later argument\u201d that those factors must control the analysis).\n\n The court has the discretion to choose the method for calculating the losses\n\n suffered by a class member during the class period, provided the chosen method is\n\n \u201crational and consistently applied[.]\u201d Shupe, 601 F. Supp. 3d at 218 (citing In re\n\n Regions Morgan Keegan Closed-End Fund Litig., 2010 WL 5173851, at *4); see\n\n also Plumbers & Pipefitters Local 562 v. MGIC Inv. Corp., 256 F.R.D. 620, 623-24\n\n (E.D. Wis. 2009); In re Cavanaugh, 306 F. 3d 726, 730 n.4 (9th Cir. 2002). Courts\n\n employ a variety of methods to make this determination and \u201cthere does not appear\n\n to be any consensus . . . as to which method is best.\u201d Id. (citing MGIC Inv. Corp.,\n\n 256 F.R.D. at 623 & n.4). Here, the movants uniformly use the last in first out\n\n (\u201cLIFO\u201d) method. (See ECF No. 17-5 [Press]; ECF No. 21 at PageID.572\n\n [Crippen]; ECF No. 35-3 [Teamsters 710]; ECF No. 36-3 [Ferrante].) As this\n\n method is regularly used by district courts, see, e.g., Porter v. Graftech Int\u2019l Ltd.,\n\n No. 1:24 CV 00154, 2024 WL 2189642, at *7 n.6 (N.D. Ohio May 15, 2024)\n\n\n\n\n 19\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1123 Filed 09/22/25 Page 20 of 29\n\n\n\n\n (citing Plagens v. Deckard, No. 20-cv-2744, 2021 WL 3284265, at *7 (N.D. Ohio\n\n Aug. 2, 2021)), this Court relies on those calculations.\n\n Which movant suffered the greatest approximate losses varies, depending on\n\n whether the Court focuses on the Guzman proposed class period (April 27, 2022\n\n through July 24, 2024, inclusive) or the Sklodowski proposed class period (October\n\n 28, 2021 through July 24, 2024, inclusive). This is because Crippen purchased all\n\n of his Ford securities before April 27, 2022. As the charts below reflect, Ferrante\n\n incurred the greatest approximate losses, followed by Teamsters 710, under the\n\n shorter proposed class period. Crippen has the largest losses under the expanded\n\n proposed class period.\n\n Guzman Proposed Class Period\n\n\n\n\n 20\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1124 Filed 09/22/25 Page 21 of 29\n\n\n\n\n Sklodowski Proposed Class Period\n\n Shares Net Shares Net Funds Approx.\n Movant\n Purchased Purchased Expended Losses\n Ronald A.\n 342,210 302,242 $3,841,470 $621,230\n Ferrante5\n Teamsters\n Local 710 109,100 109,100 $1,512,610 $350,182\n Pension Fund\n Michael M.\n 103,600 81,800 $978,729 $107,174\n Press\n Clark D.\n 67,546 67,546 $1,624,024 $904,340\n Crippen\n\n Ferrante advocates for the Guzman proposed class period. Crippen and\n\n Teamsters 710 advocate for the Sklodowski proposed class period.\n\n Ferrante asserts that the Sklodowski action, with its longer proposed class\n\n period, was filed for a tactical purpose\u2014that is, to make way for Crippen to serve\n\n as the largest financial stakeholder. Ferrante points out that Sklodowski filed his\n\n Complaint on the eve of the 60-day lead plaintiff deadline. But as Ferrante\u2019s\n\n counsel acknowledged at the motion hearing, Sklodowski and Crippen are not\n\n represented by the same attorneys, and there is no evidence of Sklodowski,\n\n Crippen, and/or their counsel colluding. Ferrante offers no basis from which to\n\n conclude that Sklodowski or his counsel filed the second lawsuit to benefit Crippen\n\n or for some other tactical or nefarious purpose.\n\n\n\n 5\n For the reasons discussed in the preceding section, the Court uses only the\n transactions and losses Ferrante disclosed within the 60-day window.\n 21\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1125 Filed 09/22/25 Page 22 of 29\n\n\n\n\n Ferrante nevertheless maintains that there was no justification for filing the\n\n later action, with its extended proposed class period. The complaints in both\n\n actions, he contends, focus on Ford\u2019s \u201cFord Blue\u201d segment, which did not exist\n\n before March 2022. Therefore, Ferrante maintains, any statements made prior to\n\n that date are disconnected from the theory of liability in both complaints.\n\n Teamsters 710 points out, however, that October 28, 2021\u2014the beginning\n\n date for the Sklodowski proposed class period\u2014coincides with misleading\n\n financial metrics issued by Ford. Teamsters 710 further points out that courts \u201cuse\n\n the longest noticed class period unless the factual allegations supporting the period\n\n are \u2018obviously frivolous.\u2019\u201d In re BP, PLC Sec. Litig., 758 F. Supp. 2d 428, 434\n\n (S.D. Tex. 2010) (quoting MGIC Inv. Corp., 256 F.R.D. at 625); see also Munch v.\n\n Sprout Soc., Inc., Nos. 24-cv-3867, 24-cv-5582, 2024 WL 4753734, at *4 (N.D. Ill.\n\n Nov. 12, 224) (citing cases supporting the application of the longer proposed class\n\n period provided the allegations supporting it are not \u201cobviously frivolous\u201d). The\n\n Court does not find the allegations in Sklodowski\u2019s Complaint, which support the\n\n longer class period, to be \u201cobviously frivolous.\u201d\n\n Contrary to Ferrante\u2019s assertion, the allegations are not focused on Ford\u2019s\n\n statements concerning warranty costs for only its \u201cFord Blue\u201d segment. The\n\n allegations include alleged material misrepresentations concerning warranty costs\n\n beginning in late October 2021. In fact, it appears that Ford\u2019s higher warranty\n\n 22\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1126 Filed 09/22/25 Page 23 of 29\n\n\n\n\n costs were associated with older vehicles from the 2016 and 2021 model years.\n\n (See ECF Nos. 40-2, 40-3.) Thus, the Court applies the Sklodowski proposed class\n\n period for purposes of determining the movant with the largest financial interest.\n\n As indicated, that movant is Crippen.\n\n C. Whether Crippen Makes a Prima Facie Showing as to Rule 23\u2019s\n Requirements\n\n Crippen makes a prima facie showing that he satisfies the typicality and\n\n adequacy requirements of Rule 23. Like the investors he seeks to represent,\n\n Crippen purchased Ford securities and suffered losses as a result of Defendants\u2019\n\n alleged misconduct. His claims are based on the same legal theory as other\n\n putative class members. Crippen\u2019s interests are not antagonistic to those of the\n\n class he seeks to represent, and his chosen counsel appears qualified to conduct the\n\n litigation.\n\n Having found that Crippen has timely moved to be appointed lead plaintiff,\n\n has the largest financial interest in the relief sought by the class, and otherwise\n\n satisfies the typicality and adequacy requirements of Rule 23, the Court concludes\n\n that he is the presumptive lead plaintiff.\n\n D. Whether the Presumption is Overcome\n\n Teamsters 710 challenges Crippen\u2019s adequacy to serve as lead plaintiff,\n\n asserting that he is an \u201cunknown individual[] who lack[s] the sophistication to\n\n serve the Class as Lead Plaintiff.\u201d (ECF No. 38 at PageID.914.) Teamsters 710\n 23\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1127 Filed 09/22/25 Page 24 of 29\n\n\n\n\n maintains that Crippen\u2019s status as a Vietnam War veteran and career experience do\n\n not show that he is capable of managing this securities litigation or supervising and\n\n controlling counsel in sophisticated litigation. Yet, Teamster 710\u2019s arguments are\n\n not proof that Crippen lacks the intelligence, resources, or skills to serve as lead\n\n plaintiff.\n\n Moreover, a movant\u2019s adequacy is judged in part by whether the movant has\n\n chosen qualified counsel, presumably with the assumption that such counsel is\n\n capable of managing complex and sophisticated litigation. Further, in its\n\n expression of the requirements to serve as lead plaintiff in the PSLRA, Congress\n\n did not choose to include experience managing securities or other complex\n\n litigation. Nor is such experience expressly encapsulated in Rule 23.\n\n In its briefs, Teamsters 710 continuously challenges the adequacy of the\n\n other movants based on Teamsters 710\u2019s status as an institutional investor.\n\n Teamsters 710 maintains that the PSLRA\u2019s legislative history reflects Congress\u2019s\n\n preference for institutional plaintiffs over individual plaintiffs as lead plaintiffs,\n\n and that many courts recognize this preference when appointing institutional\n\n investors to this role. See, e.g., In re Pfizer Inc. Sec. Litig., 233 F.R.D. 334, 337\n\n (S.D.N.Y. 2005); City of Pontiac Gen. Emps.\u2019 Ret. Sys. v. Stryker, No. 1:10-cv-520,\n\n 2011 WL 13228127, at *1 (W.D. Mich. Jan. 3, 2011) (quoting City of Marysville\n\n Gen. Emps. Ret. Sys. v. Nighthawk Radiology Holdings, Inc., No. CV 09-659, 2010\n\n 24\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1128 Filed 09/22/25 Page 25 of 29\n\n\n\n\n WL 2000040, at *6 (D. Idaho May 19, 2010)) (observing that \u201c[t]he focus on the\n\n plaintiff with the largest financial interests reflects \u2018a clear congressional\n\n preference for institutional investors to serve as lead plaintiffs\u2019\u201d). In fact,\n\n Teamsters 710 offers a list of cases where Crippen\u2019s chosen attorneys made this\n\n exact argument in support of their institutional investor clients, who were seeking\n\n the lead plaintiff position. (See ECF No. 20 at PageID.561 n.3.)\n\n However, in this Court\u2019s view, the arguments by Crippen\u2019s attorneys in other\n\n lawsuits on behalf of their clients is not a concession that institutional investors\n\n should always be selected over individual investors. Instead, it merely reflects\n\n counsel\u2019s advocacy for their client at the time\u2014which counsel was under a\n\n fiduciary obligation to zealously represent. Further, it shows counsel\u2019s skill and\n\n experience handling PSLRA litigation.\n\n In any event, the preference for institutional investors is primarily based on\n\n the presumption that they will have the largest financial interest rather than an\n\n assumption that they are the most adequate putative class member for the role. See\n\n In re Telxon Corp. Sec. Litig., 67 F. Supp. 2d at 821 (\u201cIt is worth noting . . . that the\n\n legislative history and academic material cited in that legislative history . . . are\n\n based on the theoretical assumption (and empirical reality) that, generally\n\n speaking, the institutional investor will have suffered the greatest financial loss;\n\n and, because it suffered the greatest financial loss, the institutional investor will be\n\n 25\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1129 Filed 09/22/25 Page 26 of 29\n\n\n\n\n the presumptively most adequate plaintiff.\u201d); City of Taylor Gen. Emps. Ret. Sys. v.\n\n Astec Indus., Inc., No. 1:19-cv-24, 2019 WL 2611013, at *4 (E.D. Tenn. June 26,\n\n 2019) (citing MGIC Inv. Corp., 256 F.R.D. at 622-23) (\u201c[T]he preference for\n\n institutional investors is built into the PSLRA itself by means of the second\n\n requirement\u2014to wit, the most adequate plaintiff shall have the largest financial\n\n interest in the action.\u201d). As determined earlier, however, Crippen suffered the\n\n largest financial loss.\n\n Further, if Congress preferred institutional investors for the lead plaintiff\n\n role, regardless of whether those investors had the largest financial loss, it could\n\n have expressly included such a preference in the PSLRA. As the district court\n\n reasoned in Telxon:\n\n The institutional investor is not presumptively the most\n adequate plaintiff solely by virtue of its status as an\n institutional investor . . .. If that were the case, Congress\n would have simply provided that institutional investors\n are presumptively the most adequate plaintiffs, regardless\n of the size of financial loss, and saved the Court from the\n need to engage in the [financial loss analysis]. Instead,\n Congress chose to use the size of financial loss as the\n initial proxy for determining whether a particular plaintiff\n would be the \u201cmost adequate plaintiff.\u201d\n\n Id. at 821-22. Finally, a preference for institutional investors is not proof of\n\n Crippen\u2019s inadequacy, which is what Teamsters 710 must demonstrate to rebut the\n\n lead-plaintiff presumption.\n\n\n\n 26\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1130 Filed 09/22/25 Page 27 of 29\n\n\n\n\n A more substantive challenge to Crippen\u2019s adequacy arises from the fact that\n\n he purchased all of his Ford securities between January 13 and April 26, 2022.\n\n (See ECF No. 33-3.) He did not purchase or acquire any shares during the Guzman\n\n proposed class period (i.e., April 27, 2022 through July 24, 2024). Further, of the\n\n 67,546 shares Crippen purchased, all but 2,502\u2014that is, 96% of his shares\u2014were\n\n purchased on a single date, January 13, 2022. Ferrante argues that, as a result,\n\n Crippen, \u201cinstead of focusing on meritorious claims asserted under the Guzman\n\n class period, . . . will prioritize his self-interest in defending the Sklodowski class\n\n period (even if it proves detrimental to the class at large).\u201d (ECF No. 39 at\n\n PageID.948.) Ferrante further argues that this will make Crippen \u201cvulnerable to\n\n \u2018unique defenses\u2019 and otherwise render[] him \u2018incapable of adequately representing\n\n the class.\u2019\u201d (Id.)\n\n Uncertain what \u201cunique defenses\u201d Ferrante was alluding to, the Court\n\n inquired of his counsel at the motion hearing. Counsel responded that it was only\n\n the legitimacy of the Sklodowski class period. Yet, for the reasons discussed\n\n earlier, nonfrivolous allegations support the extended period, including material\n\n misstatements or omissions made as early as October 28, 2021, and Ford\u2019s alleged\n\n concealment of overall higher warranty costs\u2014not just the Ford Blue division.\n\n Notably, Teamsters 710 does not challenge Crippen\u2019s adequacy based on the timing\n\n of his transactions. If it becomes clear later in the litigation that the timing of\n\n 27\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1131 Filed 09/22/25 Page 28 of 29\n\n\n\n\n Crippen\u2019s transactions render him an inadequate lead plaintiff, a substitution can be\n\n made. At this juncture, however, Ferrante\u2019s assertions to challenge Crippen\u2019s\n\n adequacy are speculative.\n\n For these reasons, Teamsters 710 and Ferrante fail to rebut the presumption\n\n that Crippen should be appointed lead plaintiff.\n\n IV. Lead Counsel Analysis\n\n The PSLRA provides that the \u201cmost adequate plaintiff shall, subject to the\n\n approval of the court, select and retain counsel to represent the class.\u201d 15 U.S.C.\n\n \u00a7 78u-4(a)(3)(B)(iv). Crippen has selected Robbins Geller Rudman & Dowd LLP.\n\n Crippen\u2019s submissions demonstrate that his chosen counsel is competent,\n\n experienced, and qualified to represent the interests of the plaintiff class. No\n\n competing movant has challenged their qualifications.\n\n Thus, the Court will not disturb Crippen\u2019s selection.\n\n V. Conclusion\n\n For the reasons stated, the Court DENIES the motions for appointment as\n\n lead plaintiff and lead counsel filed by Press (ECF No. 17), Teamsters 710 (ECF\n\n No. 35), and Ferrante (ECF No. 36) and GRANTS the motion filed by Crippen\n\n\n\n\n 28\n\fCase 2:24-cv-12080-LVP-KGA ECF No. 47, PageID.1132 Filed 09/22/25 Page 29 of 29\n\n\n\n\n (ECF No. 33).\n\n SO ORDERED.\n\n s/ Linda V. Parker\n LINDA V. 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