GM, ex-dealers heading to trial

GM argued the dealers should sue individually because of different circumstances in each termination. But Strathy ruled: “It is not realistic to think that an individual franchisee, who has experienced the loss of their business, is financially or psychologically equipped to engage in protracted, complicated and very expensive litigation with one of the largest corporations in North America and a major Canadian law firm.”

The Toronton Star
March 3, 2011

GM, ex-dealers heading to trial
Closed dealerships win class-action status in dowwnsizing suit
Tony Van Alpen

General_Motors.jpg

A GM vehicle is seen on the lot of a North Vancouver, B.C. auto dealer Thursday, Feb 24, 2011. GM posted its first annual profit since 2004 on Thursday stating that they had earned $4.7 billion in 2010. THE CANADIAN PRESS/Jonathan Hayward

A major confrontation between General Motors and some of its former dealers over the downsizing of GM’s store network in 2009 is heading to trial.

The Ontario Superior Court of Justice has granted class-action status for a claim by Trillium Motor Corp. on behalf of about 215 dealers across the country who are seeking $750 million in damages from GM and a Bay Street law firm for the termination of their franchises.

Trillium alleges GM breached the dealers’ franchise contracts by not providing proper disclosure and pressuring them to quickly sign wind-down agreements during the company’s fight for survival two years ago.

The former Toronto dealer also charged that law firm Cassels Brock & Blackwell was in a conflict of interest by representing the dealers’ umbrella group and the federal government, which pressed for more store closures before it would provide aid to the teetering company.

“It’s a monumental victory for the dealers,” David Sterns, a lawyer for Trillium, said Wednesday after the decision. “They were given the short end of the stick during GM’s restructuring and were forced to take the fall so the company could stage its recovery. Now it’s time for the dealers to mount a recovery.”

Sterns said a trial date could be set within the next year. But that could be delayed if GM or the law firm seeks leave to appeal the decision.

Ontario Superior Court Justice George Strathy, who granted class action status, also alluded in his decision that it could take years before the high-profile case is resolved.

Last year, a group of 19 other GM dealers reached an out-of-court settlement in a lawsuit against the company after alleging it ended their franchise agreements in a “high-handed, oppressive and patently unfair” manner. The two sides did not disclose terms of the settlement.

In the latest court battle, Strathy ruled Trillium met the key criteria to qualify for class action status, including common issues for litigation by an identifiable group of plaintiffs.

GM argued the dealers should sue individually because of different circumstances in each termination.

But Strathy ruled: “It is not realistic to think that an individual franchisee, who has experienced the loss of their business, is financially or psychologically equipped to engage in protracted, complicated and very expensive litigation with one of the largest corporations in North America and a major Canadian law firm.”

Cassels requested that the court stay or halt proceedings against the firm but Strathy rejected that, too.

GM told dealers in late April 2009 that it would soon terminate franchise agreements and close about 240 out of 705 dealers in efforts to gain government aid and stay alive.

The company offered wind-down agreements to cover some closing costs.

But the automaker indicated dealers would have to decide within six days or else it would face “the strong possibility” of seeking bankruptcy court protection which could mean even more dire consequences.

GM said it needed approval from all of the affected dealers. About 85 per cent of them accepted the agreements and the company didn’t apply for court protection.

http://www.wheels.ca/article/asset/794261


Brought to you by WikidFranchise.org

Risks: Conflict of interest, Incompetent or predatory: for the small business investor, the outcome is the same, Class action lawsuits are an unproven form of remedy, Credence goods, Credence good fraudulent expert, Credence goods: taking advantage of the innocents, Fiduciary duty, Independent franchisee association betrayal, Intimidation, Lawsuits, class action, Lawyers trying to play both sides of dispute, Reputation risk, Sue the franchisee association and officers, Sue the lawyer, Termination of franchisee, mass, Trust, Waiver of legal rights, Canada, 20110303 GM exdealers

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License