20 former Chrysler dealers have no guarantee to reopen, Detroit judge rules

Article by Christian Andrei, on March 29, 2012

Judge Sean Cox of U.S. District Court in Detroit has ruled that the Chrysler Group LLC former dealers, who lost their franchise deals and got them back in federal arbitration, do not necessarily have a right to reopen under the same market conditions as before, the judge said in its written ruling issued on Tuesday. He found that the federal Consolidated Appropriations Act of 2010, which gave rise to the arbitration procedure for terminated dealers, does not outrank the previous state laws over dealer markets. 

In essence, at least 20 former Chrysler dealers in Wisconsin, Michigan, Ohio, California, Florida and Nevada are the only ones that have deals with Chrysler to be included into its dealership network just like as if they were beginning an all-new business.

They may not be allowed to penetrate a market where another dealer is offering the same automobile brand and is disputing their presence. In addition, the dealers-at-issue are barred from requesting an order from a court to uphold a favorable arbitration ruling. They also cannot demand for any financial damages from Chrysler. Under his written ruling, Cox noted that Congress intended to offer to the concerned dealers a chance to be included into the new Chrysler's dealer network through a letter of intent.

He added that Congress chose not to draft the arbitration law in a way that the new Chrysler is mandated to enter into a sales and service agreement with any dealer that succeeded in its arbitration.

He further stated that the court concurs that the law was "carefully crafted by Congress" in order to avoid conflict with the state dealer acts "that have governed this area for decades." The company's attorneys sought an order from Cox to rule that the automaker complies with the Consolidated Appropriations Act. They have also asked for a declaration that the law does not require "unconditional reinstatement" or pre-empt a Michigan law governing dealer markets.

Topics: chrysler

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