Ford dealers are awaiting a court decision which could strike a blow to the auto maker's controversial Blue Oval awards program for dealers.
The U.S. Circuit Court of Appeals in Philadelphia is deciding whether to extend to all Ford dealers, not just nine plaintiff dealers, “class certification” that would protect them from potential negative aspects of the long-standing Blue Oval program.
The plaintiffs are members of the Ford Dealers Alliance (FDA), a Hackensack, NJ-based dissident group, which initiated a lawsuit against the Blue Oval program eight years ago in U.S. District Court in New Jersey.
Blue Oval was designed to reward dealers for achieving sales targets, participating in factory training courses, maintaining facilities and achieving high customer satisfaction scores. It also created a multi-tier pricing system which alliance attorneys argue violated federal equal-pricing laws, even though most financial rewards have been curtailed.
In 2007, a federal district court granted the alliance class certification, widening the scope of the suit to cover all Ford dealers. The appellate court then took the case at the urging of Ford attorneys.
“We are hopeful that the court of appeals will uphold class certification,” says alliance general manager A. Michelle Van Viorst.
“This would invalidate, absent any appeal by Ford to the U.S. Supreme Court, all the abuses of the Blue Oval program, such as two-tier pricing, favoritism in distribution for Ford-certified dealers and — in these days when Ford's dealership total is shrinking — an excuse for Ford to dump non-Blue Oval qualified dealers without compensation.”
The alliance, founded by late Ford dealer Ed Mullane in 1969, has suffered a membership drop of about 200 dealers during the recent downturn in total Ford franchisees in the U.S.
“Despite the hard times, our nine original plaintiffs have stuck to their convictions all through the years,” says Van Viorst.
“We lost one of them May 9,” when Lawrence T. Fette, of Clifton, NJ, died, she says. “Larry was a charter member of FDA and, at the same time, a Time Magazine Quality Award winner who championed the battle against Blue Oval's denial of benefits to all franchised dealers.”
Alliance attorney Eric Chase expects that an appellate opinion against the Blue Oval program will affect similar price-tier award programs in effect at other auto makers, among them Volkswagen/Audi and Hyundai/Kia.