A federal judge has dismissed a suit by the West Virginia Automobile & Truck Dealers Association that accuses Ford Motor Co. of violating a state law requiring all customers to be charged the same document fees.
At issue was whether Ford could require dealerships participating in its AXZD-Plans -- a discount program for manufacturer and dealership employees, retirees and surviving relatives -- to refund allegedly excess fees. Ford’s program rules cap the fees at $75 or $100, depending on the individual plan -- A, X, Z or D -- even if individual states allow higher fees.
U.S. District Judge Irene Keeley held that because the program was voluntary for dealerships, Ford could legally order them to refund document fees in excess of $75 or $100 per vehicle.
“Neither Ford, the program rules, the sales and service agreements, the automobile market nor any other external forces require dealership participation,” she said.
‘Free to opt out’
The ruling stems from the actions of Corwin Ford Sales Inc. in Mannington and Bert Wolfe Ford in Charleston, which, despite Ford’s program rules, charged AXZD customers $175 in document fees, the maximum permitted by West Virginia law and the same amount non-AXZD customers paid.
Ford told Corwin and Wolfe to refund the excess to customers, but the dealerships objected and went to the Ford Dealer Policy Board, which held against them.
The West Virginia Automobile & Truck Dealers Association then sued Ford on the dealerships’ behalf.
The association argued that Ford’s maximums violate the state consumer credit law by requiring dealerships to charge different fees to different customers. It also claimed it would hurt dealerships financially if Ford forced them to lower fees for all customers. It contended that Ford violated the dealer law by requiring Corwin and Wolfe to enter into a “prejudicial” agreement or face potential audits, “termination of their businesses,” customer lawsuits and loss of their licenses.
Ford disputed the allegations and emphasized that the stores could simply charge all customers $75.
The judge, in her decision, acknowledged that following Ford’s suggestion “would result in a significant financial loss to the dealerships.” For example, in 2012, a $75 fee would have cost Corwin $30,000, she said, and refunding everything above $75 to all customers would have cost Wolfe $317,000.
But she added: “The issue is whether the dealerships have a viable alternative, or are they required to engage in the unlawful practice. Because the dealers are free to opt out of the AXZD-Plans and charge all customers a $175 doc fee, or participate in the AXZD-Plans and charge all customers a $75 doc fee, Ford has not forced them to violate the state dealer board’s mandate that all customers be charged the same amount.”
‘Fairly and equitably’
Ruth Lemmon, president of the dealer association, said: “We only want to make sure our members are operating the way the law is intended” and following “the directions we get” from the state.
She said the association will work with the West Virginia Division of Motor Vehicles to seek clarification after the decision and hopes to “remedy the issue without further litigation.”
Lemmon noted that the $175 maximum document fee was set after a DMV study of dealerships’ costs to prepare paperwork. Dealerships are free to charge less as long as their fee is the same for all customers, she added.
“We want everyone to be treated fairly and equitably,” she said.
Ford spokeswoman Elizabeth Weigandt said she could not comment because of the litigation.