By ED WHITE
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DETROIT
A judge has ordered Ford Motor Co. to start discussing settlement of a
lawsuit filed on behalf of employees who had company stock as a
retirement investment.
In a key ruling this week, U.S. District Judge Stephen Murphy allowed
the 2006 lawsuit to go forward over Ford's objections.
Current and former nonunion workers say it was a mistake for Ford to
offer company stock as an investment for retirement. From April 2000
to April 2006, the stock fell approximately 70 percent and now trades
under $2.20.
"A stock can be imprudently risky for an employee savings plan even in
the absence of fraud or imminent collapse," Murphy said.
The lawsuit was filed under ERISA, a broad federal law that sets rules
for pension and 401(k) plans and allows participants to sue over
mismanagement.
The lawsuit says Ford's stock was an investment option, and a company
match, during a volatile period for the automaker: the messy spinoff
of parts-maker Visteon, rising pension and health care costs and a
drop in market share.
"They had an obligation to protect the plan and its participants from
unreasonable and entirely predictable losses," the lawsuit says.
Ford "failed to apprise participants of the myriad of systemic,
internal and marketplace problems ... which threatened the viability
of the company," according to the lawsuit.
In a court filing, Ford said employees had opportunities to diversify
their investments in major mutual funds.
Murphy wants Ford and lawyers for employees to start holding
settlement talks under the eye of U.S. Magistrate Judge Steven Pepe.
An attorney for workers, Stephen Wasinger, declined to comment. A
message seeking comment was left Wednesday at Ford.
A similar lawsuit involving GM employees and company stock was settled
this year for $37.5 million. Lawyers got 30 percent.
