Item 1. Legal Proceedings
ITEM 1. Legal Proceedings.
PRODUCT LIABILITY MATTERS
Brogdon v. Ford. Plaintiffs, the adult children of Debra and Herman Hills, filed this product liability action against Ford in the U.S. District Court for the Middle District of Georgia on May 23, 2023, alleging that the roof of a 2015 Ford F-250 involved in a rollover accident was defectively designed. After a trial in February 2025, a jury found that Ford was responsible for 85% of the damages, resulting in $25.9 million in damages being apportioned to Ford. The jury subsequently awarded punitive damages against Ford in the amount of $2.5 billion. We have filed post-trial motions, which are pending before the trial court.
ENVIRONMENTAL MATTERS
Any legal proceeding arising under any federal, state, or local provisions that have been enacted or adopted regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment, in which (i) a governmental authority is a party, and (ii) we believe there is the possibility of monetary sanctions (exclusive of interest and costs) in excess of $1,000,000 is described on page 36 of our 2024 Form 10-K Report.
OTHER MATTERS
Brazilian Tax Matters (as previously reported on page 37 of our 2024 Form 10-K Report). One Brazilian state (São Paulo) and the Brazilian federal tax authority currently have outstanding substantial tax assessments against Ford Motor Company Brasil Ltda. (“Ford Brazil”) related to state and federal tax incentives Ford Brazil received for its operations in the Brazilian state of Bahia. The São Paulo assessment is part of a broader conflict among various states in Brazil. The federal legislature enacted laws designed to encourage the states to end that conflict, and in 2017 the states reached an agreement on a framework for resolution. Ford Brazil continues to pursue a resolution under the framework and expects the amount of any remaining assessments by the states to be resolved under that framework. The federal assessments are outside the scope of the legislation.
All of the outstanding assessments have been appealed to the relevant administrative court of each jurisdiction and some appeals are now pending in the judicial court system. To proceed with an appeal within the judicial court system, an appellant may be required to post collateral. If we are required to post collateral, which could be in excess of $1 billion for all the cases in the aggregate, we expect it to be in the form of fixed assets, surety bonds, and/or letters of credit, but we may be required to post cash collateral. To date, we have received collateral waivers for most of the cases that have been appealed to the judicial court system, although we have been required to post less than $100 million of collateral. Although the ultimate resolution of these matters may take many years, we consider our overall risk of loss to be remote.
European Commission and U.K. Competition and Markets Authority Matter (as previously reported on page 37 of our 2024 Form 10-K Report) . On March 15, 2022, the European Commission (the “Commission”) and the U.K. Competition and Markets Authority (the “CMA”) conducted unannounced inspections at the premises of, and sent formal requests for information to, several companies and associations active in the automotive sector, including Ford. The inspections and requests for information concern possible collusion in relation to the collection, treatment, and recovery of end-of-life cars and vans (“ELVs”). We understand that the scope of the investigations includes determining whether manufacturers and importers of passenger cars and vans agreed to an approach to (i) the compensation of ELV collection, treatment, and recovery companies, and (ii) the use of data relating to the recyclability or recoverability of ELVs in marketing materials, and whether such conduct violates relevant competition laws. On April 1, 2025, the Commission announced that Ford, as well as other companies under investigation, agreed to settle the case. Ford agreed to pay a maximum fine of €41,462,000 and to be jointly and severally liable with its former group companies Volvo and Mazda for a maximum amount of €4,935,000. The CMA simultaneously announced a settlement with Ford, pursuant to which we agreed to pay a maximum fine of £18,541,929.
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