Ford just started delivering its brand-new supercar: the Ford GT.
The car makes 647 horsepower — the most ever out of a V6 engine — yet it still carries Ford’s EcoBoost label. Built entirely out of carbon fiber, this spectacular supercar weighs in at 3,054 pounds, a lightweight by today’s standards. With an estimated 216 mph top speed, it should immediately vault Ford into the major leagues of automotive performance.
Perhaps the only thing faster than the new Ford GT’s road performance is how fast it got itself into court.
Ford just sued John Cena, a famous professional wrestler, actor, TV celebrity and car geek most readers recognize. The complaint? It seems that, shortly after plunking down $463,376.50 to buy his Liquid Blue Ford GT, Cena flipped the car for an assumed substantial profit.
Ford’s lawsuit against Cena goes against the “I paid for it so I can do what I want with it” normal reality, but the parties entered into a contract that altered that reality.
Allocating scarcity
According to the complaint, Ford knew that it was going to have many more buyers than Ford GTs. To allocate its chosen limited production run (150 each in 2017 and 2018), it adopted the Ford GT Selection Program to “select individuals who are best suited to enjoy the Ford GT.” Prospective purchasers were required to complete an online application that requested information about, among other things, their:
- Relationship with Ford products
- Car collections
- Public influence
- Involvement in the motorsports community
- Vehicle-related charitable activities
Ford claims Cena submitted an appealing application, portraying himself as “an enthusiast of high-end automobiles, as well as the Ford brand, by attaching to his application photographs, video clips, and Web posts of himself in, and promoting, high-end cars. Moreover, Mr. Cena is a known car collector, and referenced numerous limited-edition and high-end vehicles that he owned and collected at the time of his application, including a model year 2006 Ford GT.”
Ford reserved the GTs for those who desired a “special ownership experience,” who would be “influencers and ambassadors of the vehicle and the Ford brand,” and who would not own the car for “purposes of reselling, flipping, or brokering the vehicle, or for price speculation.” Ford contends that Cena’s immediate sale of the GT cost it “almost two years of ambassadorship and brand value that Mr. Cena would have offered by owning the vehicle for the contractually required time.”
Devilish details
As always, the devil is in the details. Based upon Ford’s complaint and its exhibits, it isn’t totally clear just how Cena committed to Ford that he wouldn’t resell the car for 24 months. Ford is quite clear that its expectations were dashed, but one party’s expectations are not always the same as the other party’s legal commitments.
To analyze this situation, one must start with the question: Exactly what did Cena contractually promise to Ford?
Cena signed an “Affidavit of Eligibility and Release,” under which he agreed to abide by the terms and conditions of the Program. The affidavit also states, “I understand and acknowledge that any rights obtained by me in connection with the Program are not transferable.”
The last part means Cena can’t transfer his opportunity to buy the GT, but that shouldn’t mean that he couldn’t sell the car after he gets it.
The Program terms and conditions don’t mention a 24-month resale restriction either. The first apparent mention of such a restriction is in an email to Mr. Cena from the Ford GT Concierge Team notifying him of his deadline for ordering the car and reminding him that “your opportunity to purchase this vehicle is non-transferable and you agree to retain ownership for a minimum of 24 months after delivery and not to re-sell the vehicle within this period of time.”
This language seems to come out of the blue, and it is not part of the Program terms and conditions. It appears to be a new term added after the fact, which would need to be supported by additional consideration given to Cena to be enforceable.
The same 24-month restriction appears again in an order confirmation that Cena subsequently signed. But the apparent purpose of this form is to confirm the colors and options selected for Cena’s Ford GT. This also appears to be an attempt to add a new term to the deal — again not supported by additional consideration.
Based upon these contractual issues, it may be difficult for Ford to establish that Cena actually committed not to resell the GT for 24 months. If he didn’t commit, then he didn’t breach the contract.
Damages uncertain
Another apparent hurdle with the breach-of-contract claim is proving damages.
Ford claims that Cena’s resale of the GT causes it to lose Cena’s brand ambassadorship and the publicity his ownership would generate, but monetizing those claims into a specific dollar value could be near impossible.
What is the value of Cena’s promotional presence? He has already produced a 4:26-minute video clip posted on his vlog, “John Cena: Auto Geek,” that extols the virtues of the GT. The clip has scored an enormous number of hits. What is that worth, and should that offset or eliminate Ford’s damages? And, we don’t see any contract provision that actually requires Cena to ever take the GT out of his garage. Keep in mind that it is Ford’s duty to prove its actual damages.
Misrepresentation and fraud
Perhaps sensing those problems, Ford states alternative claims for misrepresentation and fraud. Ford claims that Cena lied on his Program application, that he wouldn’t have been selected to buy a GT if he had been truthful, and that he should be forced to give up his resale profit.
Winning those claims requires that Ford prove that Cena lied when he submitted his application. If he was truthful about his intent at that time but later changed his mind, it’s not misrepresentation or fraud — it’s just a guy changing his mind.
Further, Ford alleges that Cena told them that he sold the GT, along with other assets, to “take care of expenses.”
The unholy trinity
Could Ford have done better with its contracts? We have to appreciate that Ford is caught in an uneasy triangle, an unholy trinity, with its customers and dealers.
Understand that Ford did not sell this car to Cena — the Program terms make it crystal clear that “sales of the GT will be made by Ford dealers…The purchase price and all terms of sale will be determined by the seller [dealer]… [on] such terms…as the seller may establish.”
All across the country, automobile dealers have exerted their local political clout to enact state laws restricting manufacturers from selling their cars except through their dealers. And it has been made clear that the manufacturer cannot control the price and terms of their dealers’ sales.
Ford has to skate this line carefully. As Ford is unable to sell directly to the customer, there is only so much it can do to control what the purchaser chooses to do after the sale.
Ford’s Program terms made it clear that the dealer could impose restrictions on the buyer — perhaps greater restrictions than Ford could hope to impose. But did Cena’s dealer do that? It is telling that this lawsuit was brought only by Ford, and not by the dealer who sold the car.
Why care?
Given all of these problems, why does Ford care?
Wesley Sherwood, Ford Performance Communications Manager, explained that the position taken in the lawsuit is essentially the real story. Ford took a chance with its earlier-version GT, and its success gave them the confidence to take the GT to the next level. The goal was to build an exciting, iconic car that would advertise the Ford brand in ways that weren’t possible otherwise.
“By its nature, we can’t build that many,” Sherwood said. “It’s a balancing act between serving demand and keeping the car truly special and super desirable. At this rarefied air, that means lower production numbers.”
Sherwood’s vision of a perfect GT owner is one who has brand loyalty and access to channels that will amplify the Ford GT story. The ideal owner will drive the GT, both on the street and on the track.
“This car belongs on the track at the end of the day,” Sherwood said.
Sherwood said Ford hopes the owner will drive it to highly visible locations, “whether Monterey Car Week or just along Rodeo Drive.”
Ford’s goal is to get the GT in front of as many people as possible, to connect with as many customers as possible, and especially customers with whom Ford may not normally make contact.
Basically, Ford sees its GT owners as a marketing machine. Why would Ford need that to sell 300 cars? Sherwood doesn’t hesitate to say that a successful Ford GT ownership group — and its visibility — will “absolutely sell more Mustangs. The GT exists for more reasons than the handful of customers who buy it.” That is why Ford carefully selected its Ford GT “brand ambassadors.” When the owner flips the GT to a collector who parks it in his garage and doesn’t drive it in order to “preserve its value,” all that is lost.
Genesis of litigation
So there we have it. Two parties each have legitimate views about what is appropriate in a given circumstance. Their contractual documents are less than clear, and the “right” answer is not easy to find.
Many times, that’s what lawsuits are made of. ♦
JOHN DRANEAS is an attorney in Oregon. His comments are general in nature and are not intended to substitute for consultation with an attorney. He can be reached through www.draneaslaw.com.