Ohio judge says Ford must pay dealers $2BWritten by Associated Press | | email@example.com
Ford Motor Co. must pay nearly $2 billion in damages to thousands of dealerships in a 2002 class-action lawsuit that said the automaker violated dealer agreements, an Ohio judge ruled Friday.
Cuyahoga County Common Pleas Judge Peter Corrigan in Cleveland issued the ruling based on a Feb. 11 jury determination that the company overcharged dealers for commercial trucks over an 11-year period.
The $2 billion award covers more than 3,000 dealerships and about 474,000 trucks. It includes a judgment of about $781 million and about $1.2 billion in interest.
“In awarding the dealers the amount of money they overpaid for trucks, the jury verdict places … the dealers in the financial position contemplated by the terms of the contract,” said James Lowe, a Cleveland attorney for Westgate Ford Truck Sales Inc., a dealership in Youngstown that represents the class.
Ford’s annual report, filed on Feb. 28, says the class action included all dealers who purchased a 600?series or higher truck from Ford from 1987 to 1997. It says the lawsuit accused the automaker of failing to reveal that price concessions were given to some dealers.
Ford said in a Friday statement that the company will appeal.
“We believe that the trial court committed significant legal errors. Ford will appeal the judgment and we are confident that it will be reversed,” the statement said.
The jury had awarded $4.5 million in damages to Westgate, to which about $6.7 million in interest was added.
In the annual report, the automaker said “total damages could be substantial” in the case if similar amounts were awarded to other dealers represented by the lawsuit.
Lowe said the lawsuit stemmed from a wholesale price-discount system called the CPA program and that internal documents and testimony showed the automaker used the program to shift retail revenue from the dealerships to Ford.
Corrigan says Ford’s use of the program breached its franchise agreements.
“Westgate showed that the CPA program, through its scheme of unrealistically high published wholesale prices and secretive unpublished discounts, systematically violated the … requirement that Ford sell medium and heavy trucks to dealers at prices and discounts that were published in accordance with all dealer Terms of Sale Bulletins.”
Ford disputes the finding.
“We continue to believe that the CPA program caused no harm to our dealers; rather, it brought significant benefit to the dealers,” its statement said.
AP Auto Writer Tom Krisher in Detroit contributed to this report.