Ford Forced to Pay $2 Billion to Dealerships in Chicago Distribution Ruling

A judge in Cleveland recently ruled that the Ford Motor Company must pay $2 billion as part of a class-action lawsuit accusing the company of overcharging truck dealerships over an 11-year period, The New York Times reports.

Chicago Distribution Attorneys believe this case demonstrates the importance of thinking through the implications of commercial contracts to maximize supplier flexibility. Chicago distribution and sales can be crucial to a company looking to gain increased exposure in the marketplace.

In the Ford case, the company plans to appeal the ruling, which stated that it violated agreements with about 3,100 dealerships from 1987 to 1998, using "hidden discounts" and unpublished prices to increase its profits at the expense of dealerships. Ford made 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.

Damages include $1.2 billion in interest and were calculated based on the formula used by a jury that in February awarded $4.5 million to an Ohio dealership. The company, in a statement, said the pricing program benefited dealers and didn't harm them.

The lawsuit was filed in 2002 and alleged that the company set wholesale prices on the trucks that were higher than the prices buyers were willing to pay for them. 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.

Our firm handles many areas of business law in Chicago and is well-equipped to bring a lawsuit either on behalf of a company or its distributors. We work with clients to structure these agreements and negotiate distribution, franchise and sales representative agreements. Many times, our firm has seen that licensing and trade secret agreements become an important part of these contracts.

We deal with day-to-day operational issues, including commissions and royalties and, if necessary, are available to help terminate these relationships if they don't work out for the client. Sometimes, this can include the need for dispute resolution through litigation.

But at the heart of these areas of business are successfully written contracts. These documents are what truly protect businesses that are working together. They establish the agreed upon terms and guarantee that if there is damage in the future, a court will be able to clearly see violations.

Our firm is prepared to not only write the contracts for your company's distribution and sales strategy, but also be available to defend the client if the contract is violated. That is the advantage to using our firm. We have experience in both writing contracts and enforcing them.

If your company is considering a change to your sales strategy that includes distribution to retailers or if you have a dispute with a retailer, contact our firm. We are ready to assist you in any area of Chicago business law that your company may require our skills. Call today to set up an appointment.

Jeremy A. Gibson & Associates represents clients in trademark infringement and business litigation in Chicago and elsewhere in Illinois. Call 877-452-4529 for a free consultation.

Additional resources:

Truck Dealers Win $2 Billion Ford Suit, by Nick Bunkley, The New York Times