Chrysler dealerships sue US Treasury Department for violating 5th amendment

Article by Christian Andrei, on February 22, 2011

A lawsuit was recently filed against the U.S. Treasury Department by 64 dealerships that were terminated during Chrysler's 2009 bankruptcy reorganization. The suit, which seeks at least $130 million, was filed in the U.S. Court of Federal Claims.

The dealerships assert that the government violated the Constitution by taking the stores' franchises and their state legal rights without providing adequate compensation.

They claim that the Obama administration violated the Fifth Amendment, which states that private property shall not "be taken" for public use "without just compensation."

According to the dealers' attorney, Leonard Bellavia of Mineola, N.Y., it became evident that the president's auto task force, which acted under the condition of issuing the bailout funds, directed Chrysler's actions along with the dealer cuts, which were later determined to be “ill-conceived and arbitrarily implemented."

The suit is evident of the growing backlash against the federal government and its role in the dealer terminations that took place together with the bankruptcies of Chrysler and General Motors.

Last September, a similar suit was filed by a GM dealership in Mississippi and a Chrysler dealership in Iowa against the government in the same court.

The plaintiffs' lawyer, Richard Faulkner of Richardson, Texas, said that the complaint, which seeks class-action status on behalf of all terminated GM and Chrysler stores, has been joined by 68 other dealerships. [via autonews - sub. required]

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