Truck dealers win $2 billion in Ford overcharging suit

Published 5:00 am Saturday, June 11, 2011

DETROIT — The Ford Motor Co. must pay $2 billion in a class-action lawsuit accusing it of overcharging commercial truck dealerships over an 11-year period, an Ohio judge ruled Friday.

Ford said it would appeal the decision that it had violated agreements with about 3,100 dealerships from 1987 to 1998. The judge said Ford used “hidden discounts” and unpublished prices to increase its profits at the dealerships’ expense.

The ruling, by Judge Peter J. Corrigan, of the Cuyahoga County Common Pleas Court in Cleveland, said that Ford made the dealers pay a total of $800 million more than they should have for nearly 475,000 medium- and heavy-duty trucks, including tractor-trailers and bulldozers.

The damages include $1.2 billion in interest and were calculated based on the formula that was used by a jury in February to award $4.5 million to the lead plaintiff in the lawsuit, Westgate Ford in Youngstown, Ohio. Corrigan upheld the February ruling and added $6.7 million in interest to the jury’s award.

“Ford’s breach of its obligation to sell Westgate trucks only at prices published to any dealer,” Corrigan wrote in his ruling, shifted “any surplus in profit from Westgate to Ford.”

Ford, in a statement, said it was confident that the decision would be reversed on appeal and that the judge “committed significant legal errors.”

The company argued that the pricing program at issue in the lawsuit “caused no harm to our dealers. Rather, it brought significant benefit to the dealers.”

But experts hired by the plaintiffs to examine each transaction calculated that dealers paid an average of $1,650 more than the price that Ford should have charged them. In some cases, the dealers were overcharged by up to $15,000, while in others they paid less than the experts said they should have, said James A. Lowe, the plaintiffs’ lawyer.

The lawsuit, filed in 2002, said Ford set wholesale prices on the trucks that were higher than the prices buyers were willing to pay for them. Through a program known as Competitive Price Assistance, the dealers could request discounts from Ford so that they would be able to earn a profit, but each dealer was unaware of how much Ford was discounting the trucks to other dealers. As a result, the prices that dealers paid for identical trucks varied widely.

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