US court orders Ford Motors to pay $2 billion in damages to truck dealers
13 June 2011
Upholding a February 2011 ruling in a new class-action suit, an Ohio Court ordered Ford Motors to pay nearly $2 billion in damages to a certain section of US commercial truck dealers for having overcharged them for over 11 years.
In February, a jury awarded $4.5 million to Ford's Ohio dealer Westgate Ford Truck Sales, Inc. An Ohio Judge used the same formula and ordered the Dearborn-based carmaker to pay its 3,000 commercial truck dealers $800 million in damages and about $1.2 billion in interest.
Westgate had sued Ford in 2002 for reneging on an agreement to sell trucks at published prices from 1987 through 1997.
Under agreements signed with dealers, Ford was required to publish prices, but instead asked individual dealers to apply for a price. ''The idea was that no dealer would know what any other dealer was paying and they could manipulate the prices that way,'' said the plaintiffs attorney, James Lowe.
Carmakers often offer discounts and other incentives known as CPA programme to their dealers in order to push vehicle purchases, but Ford violated the law by selling heavy-duty trucks, dump trucks and other heavy vehicles to dealers at unpublished prices.
''Because every potential price was not published, each sale is affected by hidden discounts in each negotiation of the artificially inflated published price. As to all class members, it is undisputed that the franchise agreements were identical in all material aspects,'' said Cuyahoga County Judge Peter Corrigan in his a 10-page ruling.
Ford, the second-biggest automaker in the US, said it would appeal the decision and is confident that the ruling will be reversed.
Ford had acknowledged in its February annual report that the jury has awarded $4.5 million to Westgate and admitted that the total damages could be substantial if similar damages were awarded to the 3,000 other dealers represented in the class-action lawsuit.