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DATE News (chronologically)
06/11/11
automotive
Ohio judge says Ford must pay dealers $2B
A judge in Cleveland ordered Ford Motor Co. Friday to pay nearly $2 billion in damages to thousands of dealers who filed a class-action lawsuit accusing the automaker of violating dealer agreements over 11 years.

In a 10-page ruling, Cuyahoga County Judge Peter J. Corrigan upheld a $4.5 million verdict awarded to Westgate Ford Truck Sales, Inc. of Youngstown, and said Ford must pay similar damages and interest to a class of about 3,000 other dealers. "We are pleased that the court and a unanimous jury agreed that Ford's pricing program violated our contractual rights by systematically overcharging the dealers who purchased medium and heavy trucks," said attorney James Lowe, who represented the plaintiffs.

Ford was obligated under the agreements with dealers to publish prices, he said, but instead required them to apply for a price. "The whole idea was that no dealer would know what any other dealer was paying and they could manipulate the prices that way," Lowe said. Ford said in a statement that it 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 Dearborn automaker said.

Westgate sued Ford in 2002, claiming the Dearborn-based automaker broke an agreement to sell trucks — Ford 600 Series or bigger — at published prices from 1987 through 1997. That, the dealer said, forced them to pay more.

Lowe said the judge agreed in 2005 to let the dealers join in a class-action suit.

Because every potential price was not published, "each sale is affected by hidden discounts in each negotiation of the artificially inflated published price," Corrigan ruled, according to a story posted on the Bloomberg BusinessWeek website.

"As to all class members, it is undisputed that the franchise agreements were identical in all material aspects."

The payment order to Westgate, Bloomberg reported, includes interest of $11.1 million; interest to be paid to the class includes interest of about $1.2 billion. "This was exactly what the experts said was proper," Lowe said in a telephone interview Friday.

In Ford's annual report, filed on Feb. 28, the automaker says the jury awarded $4.5 million to Westgate and that "total damages could be substantial" if similar amounts were awarded to other dealers represented by the class-action lawsuit. The Detroit News
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