Dealers to get piece of $1 billion bounty from price-fixing cases

Thousands of U.S. dealerships that overpaid for vehicles because of price fixing by suppliers are poised to receive a payoff.

The dealerships will share in the settlements of an international investigation that snared 47 suppliers for rigging bids on parts over nearly two decades.

But not all stores harmed by the scheme — which led to the largest antitrust investigation in U.S. history — will reap the benefits.

About 8,000 dealerships in 29 states and the District of Columbia, representing every franchise, are eligible for compensation. More than 4,350 have filed claims to share in more than $335 million from about 50 supplier settlements, according to lawyers representing the dealerships. And with 20 settlements pending, dealerships in those states may still stake a claim.

But stores in 21 other states will get nothing, because laws in those states prohibit recovery of damages for indirect victims of price fixing.

Dealerships can get "injunctive relief" — through which a court would order suppliers to stop fixing prices — but no money, even though they suffered the same financial injury as stores being compensated.

For eligible dealerships, the first tranche of settlement checks is likely to be issued in spring and a second batch in summer, said Jonathan Cuneo, co-lead counsel on the legal team representing dealerships.

In a statement, the lawyers said dealers "with an active business throughout the class-[action] periods will receive thousands of dollars, with the largest dealer groups receiving more than six-figure payouts when all the cases are concluded."

They added that the payouts will "depend on the sales volume, brands, and models sold by each dealership."

The U.S. Department of Justice's investigation surfaced in 2010 when the FBI raided the offices of Yazaki North America Inc., Denso International America Inc. and Tokai Rika Group North America.

Investigators in the U.S. initially focused on Japanese suppliers and their U.S. subsidiaries, but parallel investigations launched in Asia and Europe.

The first plea agreement, in September 2011, involved Furukawa Electric Co. of Japan. Three U.S.-based executives agreed to plead guilty and the company agreed to pay a $200 million fine.

Altogether, 65 individuals and 47 companies have been charged, with the vast majority agreeing to plea bargains involving large fines and prison time for executives. Most also agreed to cooperate with investigators, according to the Justice Department's antitrust division.

Individuals and companies have agreed to pay more than $2.9 billion in fines, but the money did not go to vehicle manufacturers, dealers, parts retailers and consumers, which followed up with scores of civil suits in federal court against the companies.

In February 2012, the suits were consolidated and transferred to Judge Marianne Battani in U.S. District Court in Detroit, who retains jurisdiction over the civil litigation. Thus far, more than $1 billion has been set aside for affected parties, including the $335 million for dealerships, according to the plaintiffs' lawyers.

Figuring out what individual dealerships are owed is complex, in part because most suppliers shipped components to multiple automakers, which used the parts on some but not all of their vehicles.

One vehicle might have an alternator, a wire harness, an ignition coil and an inverter all sold to the automaker at inflated prices and thus subject to a settlement.

A vehicle from a different manufacturer might have one or two of those components, plus other affected parts. Also, some price fixing took place almost two decades ago, and some is alleged to have occurred as late as 2016.

To save money on administering dealership claims, lawyers representing retailers in the class actions have bundled the settlements and come up with a formula that bases the claims on the types and number of vehicles sold with the affected parts.

Dealerships filing claims, however, need only submit year-end statements filed with their manufacturers as proof of claim for a given year.

"It's a weighted calculation based on the number of vehicles you've sold over those time frames, weighted by the model and the make," said co-lead counsel Shawn Raiter of St. Paul, Minn. The plaintiffs used a consultant to draw up the process, which was later approved by the court.

Raiter said the average payout per rooftop cannot be easily calculated. He said the price fixing "affected the whole industry," so the weighted claims process takes into account the impact on sales of competitive vehicles as well as those directly affected.

Claims for the first two rounds of payouts have been completed, while two more expected rounds remain open as settlement negotiations proceed, the plaintiffs' lawyers said. Dealers who file a successful claim in an early round won't have to refile for subsequent rounds.

"There are about 8,000 NADA members in these covered states, and we've had a claims rate over 50 percent, which is astonishingly high," said co-lead counsel Don Barrett of Lexington, Miss.

As direct buyers of the price-fixed parts, automakers — and a second, smaller class of heavy-duty truck manufacturers — can recover their damages regardless of their location. But the situation is more difficult for dealerships and consumers because of a 40-year-old U.S. Supreme Court case involving masonry.

To have a chance at a share of the settlement, dealership claimants must live in the District of Columbia or one of these 29 states: Arizona, Arkansas, California, Florida, Hawaii, Illinois, Iowa, Kansas, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Oregon, South Carolina, South Dakota, Tennessee, Utah, Vermont, West Virginia and Wisconsin.

Those in other states are ineligible.

San Francisco antitrust attorney Jeff VanHooreweghe said the different treatments by state result from a 1977 Supreme Court case, Illinois Brick Co. v. Illinois.

"The issue is that, on the federal level, there is generally no recovery for damages for indirect purchasers, with some exceptions," VanHooreweghe said. "A lot of states decided that they did not like that ruling, so they passed what are known as Illinois Brick repealer statutes to allow recovery of damages."

VanHooreweghe said such splits are common in cases such as the auto parts price-fixing investigation. "In practice, we defend against claims under the repealer statutes all of the time, as indirect purchasers often file private civil suits following an antitrust criminal investigation."