Ontario court rules in favour of sidelined GM dealerships

An Ontario court has dismissed an application by General Motors of Canada Ltd. that would move a fight with dealers to individual binding arbitration instead of allowing them to pursue a trial as a group. Justice Sarah Pepall ruled Tuesday that the National Automotive Dealer Arbitration Program can’t resolve a major dispute over the termination of their franchise agreements last year.

The Toronto Star
April 21, 2010

Ontario court rules in favour of sidelined GM dealerships
Rejects automaker's argument to move lawsuit to arbitration
Tony Van Alphen

An Ontario court has dismissed an application by General Motors of Canada Ltd. that would move a fight with dealers to individual binding arbitration instead of allowing them to pursue a trial as a group.

Justice Sarah Pepall ruled Tuesday that the National Automotive Dealer Arbitration Program can’t resolve a major dispute over the termination of their franchise agreements last year.

GM, which forced the closure of the stores in efforts to cut costs under a major restructuring plan, objected to a group of 19 dealers suing the company in court because it said they agreed to arbitration in settling such disputes.

Furthermore, GM (GMCL) said if the court did allow the continuation of civil litigation, each dealer should file an individual claim.

The dealers, who refused “wind-down” agreements and partial compensation, sued GM last November for millions of dollars and an injunction to remain open for at least another five years.

They argued that GM breached franchise laws and their agreements by unilaterally withdrawing their option to renew multi-year contracts.

In her 35-page decision, Pepall said the rules of the arbitration program clearly contemplate that claims where dealers have a common interest in pursuing the auto maker as a group “are to be excluded.”

“Individualized disputes are arbitral but disputes affecting all dealers are excluded from arbitration,” she said.

Pepall also said the dealers’ filed evidence, which GM didn’t challenge, about a lack of financial resources to pursue their claims individually in court or through arbitration.

“In summary, the plaintiffs’ claims are not arbitrable, are properly joined and should not be severed,” Pepall said in a 35-page decision. “As such, GMCL’s main motion is dismissed.”

GM of Canada said the company slashed its dealer network by about 240 stores or about 40 per cent and phased out the Pontiac brand so it could cut costs and qualify for billions of dollars in aid form the federal and Ontario governments.

http://www.thestar.com/business/article/798284--court-rules-in-favour-of-former-gm-dealers


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