43
Judge: Ford must pay West Gate, others $2B
Document
Associated Press
YOUNGSTOWN
Ford Motor Co. must pay nearly $2 billion in damages to thousands of dealerships, including West Gate Ford Truck Sales Inc. here, in a 2002 class-action lawsuit that said the automaker violated dealer agreements, an Ohio judge ruled Friday.
Damages are to be paid to more than 3,000 dealerships, said James Lowe, a Cleveland attorney for West Gate, 3680 Le Harps Road, which represents the class and is to receive $11.1 million.
Cuyahoga County Common Pleas Judge Peter Corrigan issued the ruling based on a Feb. 11 jury determination that the company overcharged dealers for commercial trucks over an 11-year period.
“In awarding the dealers the amount of money they overpaid for trucks, the jury verdict places West Gate and the rest of the dealers in the financial position contemplated by the terms of the contract,” Lowe said.
Ford said in a 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.
In the suit, the 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.
That system allowed Ford to set different discounts for different stores and customers, effectively overcharging some stores for trucks while offering breaks to others.
Ford disputes the allegation.
“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.
In Ford’s annual report, filed Feb. 28, the automaker says the jury awarded $4.5 million to West Gate and that “total damages could be substantial” if similar amounts were awarded to other dealers represented by the class-action lawsuit.
Judge Corrigan’s ruling added $6.6 million in interest for West Gate, bringing its share to $11.1 million. In all, the judge awarded dealers nearly $800 million in damages and about $1.2 billion in interest. Lowe told the (Cleveland) Plain Dealer the interest levels were so high because some of the sales involved took place 24 years ago.
The large judgment 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 ruling comes out to about $1,650 per truck sold. The back interest on that lost revenue made up the bulk of the judgment. The commercial trucks in the suit were Ford’s biggest products — vehicles used as dump trucks, utility company vehicles and construction vehicles.
Linda Mullenix, a law professor at the University of Texas, said most appeals of large class-action-lawsuit verdicts in recent years have focused on punitive damages, not actual damages and interest awards.
“Over the past decade, there have been four or five cases that have gone to the Supreme Court” that have challenged multibillion-dollar verdicts because of excessive punitive awards, Mullenix said.
The lack of punitive damages in the Ford case will make the company’s appeal more interesting because it’s not arguing many of the hot-button issues facing the court, she added.
Lowe said the plaintiffs had expected Ford to appeal.
“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.”
The Cleveland Plain Dealer contributed to this report.