Ford hit with $2 billion judgment in class action suit by truck dealers
Published: Friday, June 10, 2011, 4:33 PM Updated: Friday, June 10, 2011, 5:31 PM
Robert Schoenberger, The Plain Dealer By Robert Schoenberger, The Plain Dealer
http://www.cleveland.com/business/index.ssf/2011/06/ford_hit_with_2_billion_judgem.htmlCLEVELAND, Ohio -- A Cuyahoga County Common Pleas Court has issued a $2 billion ruling against the Ford Motor Co., saying the automaker violated the terms of franchise agreements with more than 3,000 truck dealers.
The 10-year-old case centers around large commercial vehicles sold between 1987 and 1997. Dealers accused Ford of hiding some discounts from dealers, forcing some stores to pay more for commercial trucks.
"That is the relief the class was entitled to," said James Lowe, a Cleveland attorney for the dealers. "This has been the result of a long-contested feud between the Ford truck dealers and the Ford Motor Co."
Ford officials declined to comment Friday afternoon as the court's ruling emerged. The judge's ruling came out at about 4 p.m. Friday.
The automaker had warned investors of the possibility of a big ruling. In its annual report, the company listed the suit as one of its ongoing legal challenges.
Ford noted that in February, a jury issued a $4.5 million judgment to Youngstown's Westgate Ford, the lead plaintiff in the case.
"If similarly calculated amounts are awarded to other class members, total damages could be substantial," Ford said in its filing.
In his ruling, Judge Peter J. Corrigan awarded dealers nearly $800 million in damages and about $1.2 billion in interest.
"Ford breached the unambigous terms of the contract, read as a whole, when it failed to publish prices to all dealers," Corrigan said in his ruling.
Corrigan increased the jury's award to Westgate to $11.1 million, $4.5 million for damages and $6.6 million in interest.
In their suit, dealers said Ford's contract agreement called for all truck dealers to pay the same wholesale price for commercial trucks. But the automaker started using a discounting system that required dealers to submit large amounts of customer information to the company before getting the discount rate.
The dealers said that system allowed Ford to set different discounts for different stores and customers, effectively overcharging some stores for trucks while offering breaks to others.
The large judgement amount stems from both the large number of plaintiffs and the fact that damages were based on the number of commercial vehicles sold. Ford sold 474,289 commercial vehicles during the decade covered by the suit.
Corrigan's damages ruling comes out to about $1,650 per truck sold. The back interest on that lost revenue made up the bulk of the judgement.
Ford officials declined to comment on whether or not they would appeal, but the plaintiffs expect more legal action.
"It's not over. There's no question," Lowe said. "I'm anticipating that they will appeal and make all of the same arguments that they have been making."
