American Honda's sales boss has warned his national sales force not to discriminate against dealers who are suing the company.
At the urging of company lawyers, Dick Colliver, executive vice president of American Honda Motor Co., issued a communique last week to the national field organization in response to a surprise legal development.
Last week, U.S. District Judge Frederick Motz of Baltimore heard arguments that Honda may be trying to punish dealers who are suing the company and its Japanese parent, Honda Motor Co. Ltd.
The cornerstone of the charges: a secretly tape-recorded conversation in which a Honda factory representative refers to a company decision not to give anything 'extra' to dealers who are suing Honda.
The tape appeared as Motz prepares to rule next week on whether several dozen Honda dealer lawsuits should be granted class-action status. The suits grew out of the Honda management bribery scandal of 1994-95.
Motz had previously ordered American Honda not to pressure or harass dealers who are - or may become - involved in the suits.
Motz heard allegations of two types of retaliation. One was that the Honda sales force has been instructed not to give 'extra' port cars to litigating dealers. The other alleged that American Honda plans to make it tougher for those dealers to renew their franchises.
Port cars are unallocated vehicles that American Honda gives dealers at its discretion.
Honda's lawyers told Motz that there has been no company order to discriminate against its litigating dealers.
'Dealers will be treated all the same, whether they've sued Honda or not,' Honda attorney Robert Van Nest assured Motz. Motz conducted the hearing by a conference call in which Automotive News was permitted to participate.
Motz's U.S. District Court in Baltimore is presiding over 70 to 80 dealer lawsuits against American Honda and its Japanese parent company. He responded to the allegations by instructing American Honda to turn over all internal documents that relate to the treatment of its retailers.
The judge also was told that a Honda district sales manager, Greg Savoy of the New Jersey sales zone, may have committed perjury this month in a statement to the court. Motz told Honda attorneys that he may turn the matter over to the U.S. Justice Department for further investigation.
Four years ago, when another federal judge heard allegations of perjury by a Honda sales executive in a civil suit, he, too, called for a Justice Department investigation. That move resulted in 21 criminal convictions of American Honda managers and dealers for fraud and perjury. In addition, more than 40 American Honda personnel resigned or were fired.
That scandal, in turn, prompted the mountain of current lawsuits. Most of the suits allege that American Honda is responsible for two decades of management corruption, during which certain dealers received unfair vehicle allocations and additional franchises by bribing company managers.
The new developments emerged just as Motz prepares to make a crucial decision in the case. Attorneys representing the 70 to 80 suing dealers are pressing for class-action status for all American Honda dealers. All lawsuits on the subject nationwide have been combined in Motz's court.
Motz is scheduled to rule on the class-action question next week.
Under a class-action ruling, any financial settlement reached in the case would be divided among all Honda dealers - even those who did not file suit.
In last week's hearing, lawyers for the Honda dealers claimed the factory is trying to pressure dealers into dropping their lawsuits.
Dealer Jeffrey Dorf of D&C Honda in Tenafly, N.J., said he received a phone call from his zone manager, John Seybold, in which Seybold allegedly told the dealer that his suit would damage the company.
In a sworn statement filed this month, Seybold confirmed that he spoke to Dorf about his suit's potential harm to Honda. But Seybold asserted that he knows of no policy to treat litigating dealers different from others.
Dorf also alleged that he was informed by district sales manager Greg Savoy that the sales force has been told to give the dealers 'their fair share' but no more. American Honda holds about 5 percent of its volume at the port. That allows the field sales staff some discretion in giving vehicles to dealers beyond their earned allocations.
Dorf also alleged that Savoy told him that litigating dealers will be scrutinized more closely than others for franchise renewals.
On July 1, Savoy denied the comments in a sworn statement. But on July 3, Dorf produced a tape of the alleged conversation, recorded secretly during lunch at a Tenafly delicatessen. (See story above.)
The Honda attorneys informed Motz last week that Savoy has been placed on administrative leave and 'will probably be terminated' because of the statements.
Van Nest said that as a result of Savoy's comments, the manager is a subject of a 'renewed investigation' inside the company.
'If our investigation shows that Mr. Savoy had any instructions from anyone else,' Van Nest told the judge, 'they, too, will be disciplined, including termination, if appropriate.'
Efforts to reach Savoy for comment last week were unsuccessful.
Lawyers for the dealers also alleged that American Honda is using outside legal firms to gather information on Honda dealers whom the company suspects of supporting a class-action lawsuit.
In response, Motz ordered that any communications between an outside law firm and Honda dealers be turned over to the court.
Neither Honda nor the litigating dealers have put a dollar figure on the likely cost of a class-action lawsuit. Speaking to Automotive News in February, Colliver warned that the litigating dealers 'should be concerned about the potential risks to them,' in diverting financial resources away from product and advertising.
Colliver's quote also was brought to Motz's attention last week. A dealer's attorney characterized it as subtle pressure on dealers involved in the litigation.