Skip to comments.Ohio judge says Ford must pay dealers $2B
Posted on 06/11/2011 7:27:44 AM PDT by EBH
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.
(Excerpt) Read more at finance.yahoo.com ...
Welcome to the Ford Heavy and Medium Truck Dealer CPA Class Action website
This site provides information concerning a class action brought on behalf of current and former Ford Dealers who purchased medium duty and heavy duty trucks from Ford between October 5, 1987 and the present.
What is this lawsuit about? This is an action for breach of contract brought by Westgate Ford Truck Sales, Inc. (Westgate), against Ford Motor Company (Ford). Westgate has been a Ford truck dealer in Youngstown, Ohio since 1973. Westgate instituted this lawsuit on its own behalf and as the representative of all Ford Dealers who purchased medium duty and heavy duty trucks (medium/heavy trucks) from Ford between October 5, 1987 and the present. Class Members are sometimes referred to in this Notice as the Dealers. Medium/heavy trucks are defined as trucks with a Ford series designation of 600 and above.
Westgate claims that Ford has breached the Sales and Service Agreement (referred to here as the SSA) of every Class Member. Specifically, Westgate alleges that Ford failed to comply with the product pricing provisions set forth in Paragraph 10 of every Dealers SSA. Under Paragraph 10, Ford is required to sell products to every Dealer using prices, charges and discounts that are published in advance of sale in accordance with dealer-wide Terms of Sale Bulletins. Westgate alleges that Ford violated this duty through the operation of pricing programs known as the Competitive Price Assistance Program and the Government Price Concession Program (referred to jointly as the CPA Program).
Westgate contends that around 1983, Ford began publishing to Dealers wholesale prices on medium/heavy trucks that were far in excess of the resale prices those trucks could command in the retail marketplace. This made it necessary for Dealers to ask Ford for discounts from the wholesale price in order to be able to profitably sell the trucks to retail consumers. The CPA Program was the mechanism through which Dealers asked for those discounts. There were two levels of discounts available under the CPA Program. The initial or minimum level of discount was published to all Dealers and was available on all medium/heavy trucks. This first level of CPA discount was originally known as the Rainbow Schedule and was later called Sales Advantage. When those initial discounts did not bring the Dealers wholesale price to a level below the expected retail price, the CPA Program provided for an appeal process. A Dealer could appeal to Ford to grant further price reductions known as Appeal-Level CPA.
Westgate alleges that, contrary to the duties imposed by Paragraph 10, Ford did not publish the amount of Appeal-Level CPA discount available on any truck, nor did it publish the prices of trucks receiving Appeal-Level CPA. Instead, Appeal-Level CPA was given at Fords discretion so that the maximum amount of discount available - and true net wholesale price - for a given truck was never known by the Dealers. Westgate claims Fords operation of the CPA Program made it possible for Ford to sell comparable trucks to Dealers at prices that varied widely. As a result, Ford sold like trucks to different Dealers at price differences as great as $15,000 per truck. Through this suit, the Dealers seek to recapture those differences and other losses caused by Fords breach of contract.
Ford denies all of Westgates material allegations and denies that it breached its duties under Paragraph 10. Ford claims that Appeal-Level CPA discounts were based entirely on a Dealers competitive need. Ford also contends that it satisfied its duty to publish prices and discounts by faxing CPA approvals to the Dealers, and by sending Dealers invoices for trucks after the sales were made. Alternatively, Ford claims it complied with its Paragraph 10 duties by publishing a CPA Manual.
Who represents the class? The Court has designated, that Westgate Ford Truck Sales, Inc. shall serve as the Class representative in this lawsuit. The attorneys that serve as lead counsel for the Class are: John A. Corr from Law Offices of John A. Corr, LLC, 301 Richard Way, Collegeville, PA 19426; Stephen A. Corr and Thomas E. Mellon of the law firm of Mellon, Webster & Shelly, 87 North Broad Street, Doylestown, Pennsylvania 18901; James A. Lowe and Dennis P. Mulvihill from the law firm of Lowe, Eklund, Wakefield & Mulvihill, 610 Skylight Office Tower, 1660 West Second Street, Cleveland, Ohio 44113; and James A. Pikl from the law firm of Scheef & Stone, LLP, 2601 Network Blvd., Suite 102, Frisco, Texas 75034.
Your knee jerk reaction to the current jerk that is running GM, if successful will likely leave you, the taxpayer holding an even bigger bag when GM does not do reasonably well financially. The fact that this guy wants gas to go up so he can sell cars none of us want in nonsense. I have several GM vehicles. They have been serviceable for me. I hate the UAW, but they didn’t build the Avalanche I have currently, as it was built in Monterrey, Mexico. GM, and for that matter, the other two remaining US automakers are victims of both the UAW and the aholes that have acended to the leadership roles within their respective companies. My prediction, and it’s based on recent press articles, is that the US automakers are going to leave the country. They have to, to escape the UAW and our government. And the Japanese are probably going to do the same ( just look at Mazda). They got tied up with Ford and have to build cars here in a UAW plant. But no more, they’re ceasing US manufacturing all together.
It's not the current jerk, it's the jerk several jerks back and the jerks in the White House and Congress back in late 2008. The bailout and nationalization of GM were reprehensible and unforgivable, which is why I will never forgive that company or anyone else involved. The rightful claimants on GM assets were ripped off, stiffed, robbed, however you want to put it - contract law, bankruptcy law, and common law were ignored and grossly violated. It's for that reason and not because the current CEO is a jerk that I am boycotting GM for life.
Also, I believe the more costly this GM bailout turns out to be, both in federal dollars and in jobs killed by fascism, the better for America. I want even the UAW and SEIU to join decent fiscally responsible Americans in opposing this sort of governmental abuse the next time a bailout is proposed.
I agree with most of what you say, but I also believe never to say never. Neither of us know what the future holds for GM or who it’s future leaders may be. Just like the government. I would not move out of the US because we have a Marxist no account for president, and I won’t move out ( unlike some of our “nation’s brightest” in Holllywierd) if for some inexplicable reason he stays on for four more years. You are sort of saying like the folks did after WWII, “I won’t by a Japanese car” and you know how that’s turned out. I will continue to shop for cars like I do everything else, look for the best value for my money.
There are times to say “never”.
I have been ripped off only twice when it was enough to be worth criminal charges, and both times I prosecuted and obtained a conviction. I’ve been ripped off where there was either not enough money or not enough evidence, and the prosecutor wouldn’t press charges, and in those cases I’ve refused ever again to deal with the company and encouraged others to do the same. Skip the most convenient gas station for two decades because they ripped me off once? You betcha. Boycott GM forever because they ripped off their old bondholders and are too politically connected to be prosecuted? Again, you betcha!
The differences between GM and an honest company are not now nor will they ever be enough that a sensible person would consider a GM vehicle a dramatically better deal than a competitor. If integrity mattered, why would anyone accept about the same product from a corrupt organization when they could buy from a company that does not engage in grand theft? Besides, wouldn’t contributing to GM’s survival encourage the fascists in our government to approve another bailout and another massive theft from the rightful owners of assets? Better to make this as expensive as possible, one time, that to have our government routinely behave as the corrupt organization that perpetrated this bailout and robbed the GM bondholders.
Those who boycotted Japanese products did so out of what was to some extent a justifiable anger, but they responded in a racist manner. With GM, my righteous anger is directed only at the criminal organization responsible for grand theft. Since the government will not do the right thing, it is our individual responsibility to respond to GM. Forever.
Either because it’s a point of law that they missed or it’s either a line-item or an assumption in the contract they have with one another. If it’s just made up by the judge, then the judge has problems. If it’s a reasonable interpretation or assumption by a dealer that they were entitled to the same rates, then Ford has a problem.
I don’t understand the ruling.
They paid the negotiated price and want the same T&C’s as other dealers who may have sold more vehicles and would naturally be given a price concession that other dealers didn’t get.
That’s the way it works in my industry. There is standard pricing along with Terms and Conditions.
You get what you negotiate for and if you negotiate nothing more than what is offered there is no obligation for the supplier to give you the same deal someone else got.
No way! That is not who business is done and how contract negotiations work.
You negotiate the deal you want.
Some are better than others.
Corrigan says Ford's use of the program breached its franchise agreements.Now, you can argue (as Ford likely will on appeal) that the judge is wrong, but you should refrain from exclaiming that it is not how "business is done."
"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." [emphasis added]
I understand distribution, dealership and franchise law.
Not all dealerships or franchisee’s are equal.
BTW, I am in a position to practice it as a dealer for two VoIP suppliers and the equipment. They handed us a standard contract and I balked until I got what I wanted.
Everyone else probably pays more than us.
Same thing with the agent contracts we have. I negotiated very different %’s of pay and changed the T&C’s to something closer to what I wanted.
On the ISP side of our business, same thing.
Our construction business doesn’t really have the ability to negotiated better terms for parts and supplies. You can get slightly better pricing but ultimately the advantage comes from negotiated terms with the customer and our ability to beat the estimated time for completion.
On our maintenance company we have different deals with different companies. Not so favorable for us at this time but as we grow that business and understand the market better we will be able to negotiate more favorable terms.
BTW, we run and agent business from our VoIP business and only one person ever bothered to negotiate terms that made sense from his side and it’s worked out well.
Well done, it only took 24 years.
Sort of like some companies get healthcare waivers and some don’t.
I may very well be unaware but that is my experience in telecom services and equipment.
You get the deal you negotiate for and agree upon.
When we started with one wholesale provider they refused to bugde. So I told them will perform “x” and what would be the T&C’s based on our achievement.
They told us (I was shocked) and I asked for a tiered performance but that the last two tiers will have to be higher.
We will provide many of the services they normally would (I charge for it as part of the package or by event).
There were some other elements but ultimately they agreed and they agreed to some other things.
I have a friend, who is a competitor but he absolutely didn’t get a deal anywhere like ours.
We even charge our clients more than most of our competitors but we are a trusted advisor relationship and there’s a cost associated with that.
Our work on the telecom, ISP and Construction businesses are custom. Each client has unique requirements and their environments are unique.
When buy the equipment, cabling, parts and supplies are about the same from supplier to supplier.
Even when we were in the cabling business there were no real price advantages from suppliers. I had a couple of competitors who had better pricing on supplies but that never made the difference in the deal or the ultimate profit.
Ooops, gotta take of something....
>> “If I negotiate a price cut/concession...why would the terms of that deal need to be revealed to my competition?” <<
Because every Franchised Dealer has the right of expectation of an equal footing. Why else would they sign the contract?
If Ford wished to play favorites, they should have included that provision in all of their dealer contracts.
This has nothing to do with Obama.
>> “What if one dealer purchases more units than another?” <<
That’s in the contract, its called “Dealer Incentives,” and it is not done in secret.