A big verdict on a big truck, with litigation in a costly matter likely to drag on for years.
Ford Motor Company says that it will appeal a $2 billion ruling against it by an Ohio judge in a class action lawsuit by Ford dealers. The judge found that Ford overcharged its truck dealers for 11 years on sales of almost 500,000 trucks. Ford apparently did not inform all dealers equally of discounts available. The judge called them hidden discounts.
The lawsuit class includes all Ford dealers who bought from Ford any F600 or higher series truck during a period of 11 years, starting in 1987. The court granted the dealers’ motion for summary judgment on liability.
The settlement potentially delays Ford’s return to investment grade ratings because it adds a couple of billion dollars to the $16.6 billion Ford owes. As a result of the huge debt rating agencies currently have Ford bonds graded as junk. In an analyst presentation last week before the decision Ford said “it expects to achieve investment grade in the near-term, and to resume paying dividends at an appropriate level of after-tax earnings.”
