An Ohio judge in June removed the Ohio Automobile Dealers Association as a plaintiff in a suit against American Honda Motor Co. That leaves a group of 18 Honda dealers fighting the company. There are 45 Honda dealers in Ohio, but not all support the suit.
The decision will increase legal fees for the 18 remaining dealers because the association may no longer share the tab. U.S. District Judge Sandra Beckwith cited the dealer association's link to the entire dealer body as a main reason for her decision.
"OADA has pitted the interests of its membership against one another, has wandered from the purposes for which it was formed and therefore, destroyed the theoretical basis for the legitimacy of its representation," Judge Beckwith said in her decision.
Dealers in Ohio and California sued Honda after the division decided last fall to disband its 81 dealer ad associations, which had their own ad agencies, and to set up 10 regional offices under one national agency, Rubin Postaer & Associates, Santa Monica, Calif. The change took effect April 1.
The dealers claimed the new program removed local control of advertising and was coercively funded by a cut of 2 percentage points in the dealer discount.
Honda argued the money from the Jan. 2 margin cut goes into a general fund, but the marketing program coincidentally is funded largely by that money.
Also last month, Honda prevailed over an Ohio dealer, which had asked that the disputed cut in the dealer margin be placed in escrow. The judge ruled the dealer was unable to prove damage if the money weren't placed in escrow.
An official of the Ohio dealer association declined comment on the rulings.
Earlier, Honda won a round against southern California dealers who tried to move their complaint about the new ad program from the California New Motor Vehicle Board to state Superior Court. Dealer attorneys felt they might have a better chance in superior court. But the court refused to hear the case and referred it back to the vehicle board, which is to take up the case again July 18.
Mr. Rechtin is a reporter with Automotive News.