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Arbitration Cases Settled For Chrysler Dealership

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On: Thu, Jul 29, 2010 at 10:04AM | By: Sherry Christiansen

Arbitration Cases Settled For Chrysler Dealership

The verdict is in for Chrysler arbitration cases; final count: 73 wins and 32 losses for Chrysler Corporation resulting from law suits that were filed against the company when it closed 789 dealerships after bankruptcy in 2009. The arbitration hearings, which were mandated by Congress, began in April this year and continued through the middle of July, with the final decisions being announced this week.

The arbitrators that ruled in favor of Chrysler made reference to the company’s post bankruptcy strategy to merge Chrysler, Dodge, Ram, and Jeep together into single dealerships. 

For the dealerships that won their cases, the main factors that supported the decisions were how fast Chrysler closed the dealerships, as well as how many total dealerships were closed; in fact, the Inspector General for the U.S. Troubled Relief Program had investigated those issues as well.

Lawyers who represented the dealers stated that more of them would have won provided the audit by Neil Barofsky had been released, giving arbitrators access to the information gathered from the audit before making their final decisions.

According to a recent Automotive News report: “The decisions to select dealers for the company's optimized dealer network were carefully considered as part of Chrysler's Genesis Project. The decisions of a great majority of the arbitrators reflect the belief that the company's dealer network decisions were not only appropriate but essential to its future success.”

According to one lawyer, “Chrysler had absolutely no proof that dealership closing would save Chrysler a nickel; had this report been available at arbitration, I believe all the dealers would have been successful in arbitration. All Chrysler relied upon was unproved theory and tried to dress it up as fact. It was the king's new clothes.”

29 dealerships that won their cases have signed agreement letters so far and although the decision is final, there continues to be some post-arbitration discussion between Chrysler andmany of thedealerships that will be reinstated in an attempt to negotiate the conditions of the dealerships re-opening.

Chrysler spokesperson Michael Palese stated in an interview with Automotive News, "Chrysler Group is complying fully with the letter and intent of the federal dealer arbitration statute by issuing a customary and usual letter of Intent to prevailing dealers and looks forward to engaging in constructive discussions with these dealers.”

There are still some issues related to Chrysler’s requirement of the reinstated dealershipsthat goesabove and beyond what the existing dealerships are forced to do as far as facility upgrades, and two dealerships so far have filed lawsuits regarding those issues.


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