In February, a U.S. federal court judge in Newark ruled that the 1999 price-fixing lawsuit could proceed as a class-action complaint. As a class action, the lawsuit could affect more than 100,000 buyers - anyone who purchased new Mercedes-Benz vehicles in the New York metropolitan region from Feb. 1, 1992, through Aug. 30, 1999.
The lawsuit also alleges that Sheft Kahn & Co., an accounting firm in Jericho, N.Y., conducted regional dealer meetings for Mercedes at which prices were disclosed and discussed and that dealers were told not to compete with each other on price.
Two settlements have been proposed. The first, initially filed in March, includes four dealers: Rallye Motors Inc. in Roslyn, N.Y.; Silver Star Motors Inc. in Long Island City, N.Y.; Benzel-BuschMotor Car Corp. in Englewood, N.J.; and Contemporary Motor Cars Inc. in Little Silver, N.J. The four dealers would pay a settlement of $3.9 million, according to court documents. The settlement cost would be split: 37 percent for Rallye Motors, 34 percent for Benzel-Busch, 19 percent for Contemporary Motor Cars, and 10 percent for Silver Star Motors, according to court documents. An explanation for the percentages was not given.
Competition Imports Inc. in Smithtown, N.Y., has agreed to a separate preliminary settlement for $687,500 that was filed with the court in May.
Court documents say the dealers want to "avoid the uncertainties of litigation" and "the distraction of burdensome and protracted litigation and thereby to put to rest this controversy with their valued business customers." Attorneys for the five dealers either declined comment on the settlement agreements or did not return phone calls. Paul Gallagher, a lawyer with Cohen, Milstein, Hausfeld & Toll PLLC in Washington, and one of the lead plaintiffs' attorneys, said no discussions have covered the disbursement of the initial $4.6 million in proposed settlement funds. "We are ultimately hoping to get a larger amount in settlement," with the remaining 20 dealers, Gallagher said.
The discovery stage of the class action will run until June, he said. The plaintiffs have asked for a jury trial, he said. The 20 remaining dealers are continuing in the class-action lawsuit. The U.S. Justice Department also is conducting a criminal investigation into the price-fixing allegations.
Martin Margolis, principal partner of the Margolis Law Firm in Verona, N.J., said his client Ray Catena Motor Car Corp. in Edison, N.J., the area's largest Mercedes dealer, would continue to fight.
"I represent a client who believes when you are responsible you should be responsible," Margolis said. "And when you're not responsible, it would be a travesty to be forced to pay."
Margolis said neither Catena nor anyone affiliated with the dealership ever attended meetings with the Jericho, N.Y. accounting firm. He said the kind of information provided at the meetings "is no different in my estimation than any given in dealer 20 Groups, and there are hundreds of those throughout the country."
The attorneys for several other dealers who did not settle declined to comment on the case.
Donna Boland, a spokeswoman for Mercedes-Benz USA LLC, in Montvale, N.J., said the company wouldn't settle. "The dealers' actions have no impact on our decision," Boland said. "We maintain the allegations are false, and we are completely confident that we will be vindicated in court."
