GM to retain 13 dealers it wanted to close

Jonathan Lisus, a lawyer representing the dealers’ group, said he could not comment on whether the compensation for the closing dealers was significantly more than the earlier GM “wind down” offer. “The lawsuit has been resolved to the mutual satisfaction of the plaintiffs and GM,” he said.

The Toronto Star
August 24, 2010

GM to retain 13 dealers it wanted to close
Auto giant agrees to keep dealers open and give more compensation to stores that will close
Tony Van Alphen

General Motors of Canada Ltd. has reached an out-of-court settlement with a group of 21 dissident dealers that will allow 13 of them to remain open under the company’s restructuring plan while the other store owners receive additional compensation for closing.

GM confirmed Tuesday the automaker had resolved the group’s high-profile lawsuit that claimed the auto giant breached franchise laws by arbitrarily withdrawing their option to renew multi-year contracts during the company’s financial crisis in 2009.

However GM and members of the dealers group said they could not disclose key terms of the settlement because of confidentiality agreements.

Tony LaRocca, GM’s director of communications, added he could not even reveal which dealers would continue operations beyond Oct.31 when the company had originally planned to end their franchise agreements.

However some dealers and industry sources disclosed the identity of the 11 continuing retailers including Giles Chevrolet in Stouffville, Niagara Motors in Niagara-on-the-Lake, Robinson Pontiac Buick GMC in Guelph and Dave Hitchcock Chevrolet in Essex near Windsor.

“There are a number of dealers who have been retained,” said Cindy Robinson, dealer principal for Robinson Pontiac Buick GMC. “We’re pleased to be one of them under this settlement.”

Some surviving dealers including Robinson will drop the Pontiac name as part of the company’s phase out of the brand and operate as Buick GMC stores.

GM had announced in 2009 that it would cut its dealership network in Canada by 40 per cent or about 240 retailers to reduce costs under a survival plan which included $10.6 billion in aid from the federal and Ontario governments.

But members of the dealers’ group rejected “wind down agreements” which offered them between $200,000 and about $1.5 million depending on sales. About 85 per cent of the affected dealer network accepted the terms despite complaints the compensation wouldn’t cover severance and closing costs.

The dissident group sued and claimed GM ended the dealers’ franchise agreements in a “highhanded, oppressive and patently unfair” manner. It described the company’s process of reviewing the terminations as a “sham” and skewed by corporate conflicts of interest.

The group sought an injunction to remain open for at least another five years and an Ontario court had set a trial date in November. However negotiations to resolve the legal dispute accelerated in recent weeks.

In its defence, GM said significant cuts in the dealer network were necessary because of falling auto demand. GM noted it was close to seeking bankruptcy court protection last year which would have probably left the dealers with nothing.

Jonathan Lisus, a lawyer representing the dealers’ group, said he could not comment on whether the compensation for the closing dealers was significantly more than the earlier GM “wind down” offer.

“The lawsuit has been resolved to the mutual satisfaction of the plaintiffs and GM,” he said.

Bob Slessor, president of Robert Slessor Pontiac Buick GMC in Grimsby and a member of the dealer group, acknowledged he would be closing his store after receiving undisclosed compensation.

“I’m pleased we have put this long ordeal behind us,” he said, noting the 55-year-old GM store will continue selling and servicing used autos. “We are also exploring additional opportunities in our market.”

Hopper Pontiac Buick GMC in North Bay, Bud Rier Chevrolet in Paisley, Lanoue Chevrolet in Tilbury, Dennis Searles Chevrolet in Caledonia, Stoneleigh Motors in Midland, Upper Canada Motor Sales in Morrisburg, Walthers Pontiac Buick GMC in Vernon, B.C., Reid Motors in Outlook, Sask. and Island Chevrolet Cadillac in Charlottetown, PEI are the other dealerships that will remain open under the settlement’s terms.

Meanwhile, another GM dealer seeking damages on behalf of more than 200 other terminated dealers against the company will seek class action status later this year.

Trillium Motor Corp., which operated as Trillium Pontiac Buick here until last year, filed a claim in January in the Ontario Superior Court of Justice that also alleged the company breached franchise laws and failed to disclose a conflict of interest during restructuring proceedings.

http://www.thestar.com/business/article/851932--gm-to-retain-13-dealers-it-wanted-to-close


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