Ford asks court to reverse $2 billion award to truck dealers

Ford Motor Co. asked an Ohio appeals court to reverse a $2 billion judgment awarded in June to a class of commercial truck dealers who claimed the company overcharged them for 11 years.

The dealers sued Ford in 2002, claiming the company broke an agreement to sell trucks at published prices, which forced them to pay more from 1987 through 1998 and cut into profits. Cuyahoga County Judge Peter J. Corrigan in June upheld a $4.5 million verdict awarded to one Ohio dealer in February by a Cleveland jury. The Cleveland judge also said Ford had to pay similar damages and interest to a class of about 3,000 other dealers.

The judge improperly found Ford liable before trial for breach of franchise agreements and prevented the company from defending itself on damages, the automaker said in a Sept. 2 filing with the Court of Appeals for Cuyahoga County in Cleveland. Ford also said Corrigan shouldn’t have applied his findings on one dispute across hundreds of thousands of transactions involving other dealers.

“The trial court’s grant of summary judgment on liability exemplifies the court’s repeated and erroneous election to take away from the jury key questions on liability and damages,” Ford said in court papers. “The trial court deprived Ford of its rights to due process and a trial by jury.”

Five Times Higher

The total $2 billion award is five times higher than the amount of the largest-ever jury award against Dearborn, Michigan-based Ford in a lawsuit, according to data compiled by Bloomberg News.

The court’s judgment was the largest of any type in Ohio history, Ford said in its appeal. “That staggering judgment was as unwarranted as it was unprecedented,” the company said. “It resulted from a series of serious errors by the trial court, any one of which compels reversal.”

Ford wasn’t denied any rights, James Lowe, the dealers’ lawyer, said in an interview today. Corrigan’s treatment of the suit by awarding damages to the class was “perfectly appropriate,” he said.

“Ford would have been happy to have 3,000 trials,” he said.

Corrigan allowed the dealers to pursue claims against Ford in a class action, or group suit, in 2005. This decision was upheld on appeal and the Ohio Supreme Court didn’t take Ford’s petition for review.

Verdict Affirmed

Corrigan on June 10 affirmed a Cleveland jury’s February verdict for one dealer and applied it to claims of the entire class of dealers.

“Because every potential price was not published, each sale is affected by hidden discounts in each negotiation of the artificially inflated published price,” Corrigan said in upholding the verdict to Westgate Ford Truck Sales Inc. “As to all class members, it is undisputed that the franchise agreements were identical in all material aspects.”

Corrigan added $6.65 million in interest to the $4.5 million verdict the jury awarded to Westgate, a Youngstown, Ohio, dealer. The $2 billion judgment to the class includes about $1.2 billion in interest.

Ford was accused in the lawsuit of breaching an agreement with truck dealers by failing to publish to all of them all price concessions that were approved for any dealer.

Dealer Class

The class includes all Ford dealers who bought from the company any 600 series or higher truck over a period of about 11 years, starting in 1987. The claims covered sales of 474,289 trucks, Lowe said.

There was no breach of contract and no damages were incurred, Ford said.

“Dealers knew from the program’s inception that Ford published the amount of any case-specific discount only to the particular dealer requesting it, and dealers favored that practice for competitive reasons,” the company said. Westgate Ford participated in the program for 15 years before complaining that non-publication of these discounts breached the franchise agreement, the automaker said.

Ford said the dealers should never have been allowed to pursue their claims as a group.

“That class certification decision was made in 2005,” Lowe said in an interview today. “The court of appeals already reviewed it and upheld it. Absolutely nothing has changed.”

The dealers are scheduled to file their reply Oct. 2, he said.

The largest-ever jury verdict against Ford was for $369 million in a products-defect case awarded in California in 2004. That verdict was later reduced by trial and appellate courts.