GM dealers sue in fight to stay in business

GM should determine what it would take to make these dealers happy and end the lawsuits, said Rick Gauthier, president of the Canadian Automobile Dealers Association. The CADA provided financial support to an earlier lawsuit by 21 dealers that was settled after GM lost several rounds in court. The organization, which represents about 3,000 new-car dealers in Canada, is not involved in the class-action suit.

The Globe and Mail
April 12, 2011

GM dealers sue in fight to stay in business
Anger over the General Motors’ Chevrolet franchises the focus of the latest lawsuits filed against the auto maker
Greg Keenan

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General Motors has been ordered to reinstate a St. Mary’s, Ont., dealership the received a termination notice in 2009. Darren Calabrese/for the Globe and Mail

Almost two years after terminating about one-third of its dealers, General Motors of Canada Ltd. (GM-N30.930.160.52%) is facing new turmoil in its distribution network amid fresh lawsuits and an order to reinstate one dealership that it wanted to close.

The latest lawsuits, following one court action GM has already settled and another that has been certified by the Ontario Superior Court as a class-action suit, stem from dealers’ anger about the way in which the auto maker awarded Chevrolet franchises to surviving Buick-GMC dealers.

Chevrolet is the new cornerstone of GM’s business in Canada and is critical for dealers’ survival now that the company has eliminated Pontiac, Saturn and other brands to move forward with just Chevrolet, Buick, Cadillac and GMC.

Two Buick-GMC dealers in eastern Ontario have launched a suit, claiming GM failed to live up to a promise to award them Chevrolet franchises. Thomas Pontiac Buick GMC Ltd. in Cobourg, Ont., added in court documents that a Chevrolet Cadillac dealer about nine kilometres away was granted the right to sell Buick and GMC vehicles.

That move, the court documents said, puts the future of Thomas’s business in jeopardy.

In a separate court action, Paul Sadlon Motors Inc. in Barrie, Ont., wants the Ontario Superior Court of Justice to issue an injunction stopping GM from awarding a Chevrolet franchise for the southern part of the city to Georgian Pontiac Buick GMC Inc.

The allegations made in the two cases have not been heard in court.

GM spokesman Tony LaRocca said the company will not comment on the lawsuits or provide any responses it might have filed with the courts.

The entire file in the Barrie case was not available in the Ontario Superior Court’s filing room on Monday.

In another case, GM has been ordered by an arbitrator to reinstate Downtown Pontiac Buick (1983) Ltd., of St. Marys, Ont., one of about 240 GM dealers in Canada that received termination notices in May, 2009 as GM’s parent company, General Motors Corp., was on the verge of tumbling into Chapter 11 bankruptcy protection.

Meanwhile, GM is seeking leave to appeal an Ontario Superior Court decision that certified a lawsuit by about 200 dealers who were terminated and signed wind-down agreements in May, 2009. Those dealers argue that they were not given enough time to properly assess the agreements and that the law firm hired to advise the Canadian Automobile Dealers Association was in a conflict of interest because it was also advising the federal government on a potential GM bailout.

GM should determine what it would take to make these dealers happy and end the lawsuits, said Rick Gauthier, president of the Canadian Automobile Dealers Association. The CADA provided financial support to an earlier lawsuit by 21 dealers that was settled after GM lost several rounds in court. The organization, which represents about 3,000 new-car dealers in Canada, is not involved in the class-action suit.

“The decision to bring this to a quick and peaceful end rests with General Motors,” Mr. Gauthier said Monday, pointing to the lawsuits as a “distraction” for senior managers at the company.

“This is what I told the executives at GM: I think you would be better off putting these things behind you. As long as you keep fighting these particular dealers you’re not doing what you should be doing and that’s focusing on selling cars and trucks.”

http://www.theglobeandmail.com/report-on-business/gm-dealers-launch-suits-in-fight-to-stay-in-business/article1980934/


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