Honda Sweetens Settlement Pot for Dealers

Honda Motor Co. has won a judge’s approval to add $60 million to a $316-million settlement of allegations that executives of Japan’s No. 3 auto maker demanded kickbacks in exchange for shipments of hot-selling Accords and Preludes.

U.S. District Judge Frederick J. Motz in Baltimore concluded that Honda’s offer to sweeten the settlement pot was “an appropriate resolution” to resolve claims that the auto maker tricked dealers into settling their bribery lawsuits for less than they should have.

The additional payment should end litigation that has embarrassed Honda for more than 10 years. Former executives of Honda’s U.S. unit have been convicted of demanding cars, cash and other gifts from dealers in exchange for extra car shipments.

“There’s a time for litigation to end,” Motz said at a hearing in federal court Tuesday. “It’s in the public interest.”

Honda representatives said they are satisfied with the settlement, which covers more than 1,800 dealers. “We are pleased that their issues are resolved and that these matters are now behind us,” the company said. Motz approved the $316-million settlement in 1998. It called for dealers to get cash, auto parts, signs and dealership improvements in exchange for dropping their claims over the kickbacks.

But after the settlement was approved, dealers who opted not to join it charged that Honda’s lawyers had hidden evidence of management’s involvement in the bribery scheme that could have opened the company to larger financial liability.

A handful of dealers this week continued to object to Honda’s mandatory settlement offer. They contend that the auto maker is getting off too cheaply and say that by approving the settlement, Motz is rewarding Honda for hiding evidence and threatening dealers who challenged its actions.

“What is at issue here is the resolution of a civil dispute,” Motz said. “If I don’t approve this because of my outrage at what Honda is alleged to have done, I wouldn’t be doing my job.”