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Chrysler Dealer Arbitration Returns to Court

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On: Wed, Dec 29, 2010 at 10:45AM | By: Sherry Christiansen


Chrysler Dealer Arbitration Returns to Court

In the auto dealership world, there are strict regulations when it comes to having like-branded dealerships competing with each other in the same geographic zone. This issue is causing a lot of headaches for former Chrysler dealerships as they try to get back into business with the automaker.

Before Chrysler went belly-up in 2009 the company had around 3,200 dealerships spread out across the country. As part of its immediate bankruptcy needs, many of those dealerships were closed. Now with Chrysler on the rebound, those same folks want back in. Unfortunately for some, other dealerships have already beaten them to the punch. Such is the case with the Livonia Chrysler Jeep Inc. dealership that has been prevented from reopening at their previous location because of the nearby Crestwood Dodge Chrysler Jeep Ram dealership. It is now in the hands of a Detroit federal judge to sort out this mess.

Chrysler thinks they have the right of way in this case and has told as much to U.S. District Judge Sean Cox. The Detroit automaker would like the courts to declare that Chrysler is in compliance with the newly passed Consolidated Appropriations Act of 2010. This law specifically created the arbitration process now being used by former dealers as they try to deal once again. Under the terms of the law, it does not automatically grant “unconditional reinstatement” or supersede Michigan laws concerning auto dealer markets.

“Livonia's interpretation of the (dealer arbitration) Act contradicts the plain language of the Act, and its civil action … seeks to fashion a remedy that is nowhere to be found in the Act,” so says attorneys John Berg and Cynthia Filipovich of Detroit-based Clark Hill PLC who are retained by Chrysler. “Chrysler respectfully requests … a declaration that the Act limits the arbitrator's power to the determination of whether or not the covered dealership should be added to the dealer network.”

Waiting in the wings are around 20 other dealerships who are in the same predicament. One court ruling will either set them free or have them looking for a new franchise location.




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