July 15, 2024

Truck Dealers Win $2 Billion in Ford Suit

Ford said it would appeal the decision that it had violated agreements with about 3,100 dealerships from 1987 to 1998. The judge said Ford used “hidden discounts” and unpublished prices to increase its profits at the dealerships’ expense.

The ruling, by Judge Peter J. Corrigan, of the Cuyahoga County Common Pleas Court in Cleveland, said that Ford made the dealers pay a total of $800 million more than they should have for nearly 475,000 medium- and heavy-duty trucks, including tractor-trailers and bulldozers.

The damages include $1.2 billion in interest and were calculated based on the formula that was used by a jury in February to award $4.5 million to the lead plaintiff in the lawsuit, Westgate Ford in Youngstown, Ohio.

Judge Corrigan upheld the February ruling and added $6.7 million in interest to the jury’s award. “Ford’s breach of its obligation to sell Westgate trucks only at prices published to any dealer,” Judge Corrigan wrote in his ruling, shifted “any surplus in profit from Westgate to Ford.”

Ford, in a statement, said it was confident that the decision would be reversed on appeal and that the judge “committed significant legal errors.”

The company argued that the pricing program at issue in the lawsuit “caused no harm to our dealers. Rather, it brought significant benefit to the dealers.”

But experts hired by the plaintiffs to examine each transaction calculated that dealers paid an average of $1,650 more than the price that Ford should have charged them. In some cases, the dealers were overcharged by up to $15,000, while in others they paid less than the experts said they should have, said James A. Lowe, the plaintiffs’ lawyer.

The lawsuit, filed in 2002, said Ford set wholesale prices on the trucks that were higher than the prices buyers were willing to pay for them. Through a program known as Competitive Price Assistance, the dealers could request discounts from Ford so that they would be able to earn a profit, but each dealer was unaware of how much Ford was discounting the trucks to other dealers. As a result, the prices that dealers paid for identical trucks varied widely.

“The dealers who called to get these special discounts thought they were getting a deal, but they weren’t,” Mr. Lowe said. “No dealer knew what any other dealer was paying.”

Mr. Lowe said Ford’s dealer agreements required it to charge uniform wholesale prices and that the discretionary discounts prevented dealers from knowing what the actual prices were.

“It’s a very straightforward, simple case,” Mr. Lowe said. “Ford had written agreements to sell the trucks at certain prices. It clearly violated that promise.”

Ford sold its medium- and heavy-truck business in 1998.

According to the Web site of his firm, Mr. Lowe and two other lawyers previously won a $10.4 million verdict against Ford on behalf of a woman who became a quadriplegic after her Ford Explorer was struck from behind.

Ford, which earned a $6.6 billion profit in 2010, warned investors in its annual report earlier this year that it could face “substantial” damages if it lost the lawsuit and if the judge applied the formula from the February ruling.

Article source: http://feeds.nytimes.com/click.phdo?i=b316022028420039ab8fa1868a1ee441

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