Ernst Lieb’s exit paves way for settlement of Mercedes-Sonic legal dispute

Article by Christian A., on March 6, 2012

The dismissal of Ernst Lieb last fall as the Mercedes-Benz USA chief has cleared the way for the settlement of a legal dispute between the automaker and Sonic Automotive Inc. with regard to dealership design standards. Sonic President Scott Smith said in an interview with Automotive News last week that his company is now happy to do Autohaus renovations for its seven Mercedes shops.

He also related that the departure of Lieb was key to the resolution of the legal battle. Mercedes and Sonic, which is the third biggest automotive retailer in the U.S., jointly publicized on February 24 that they had entered into a settlement over the dispute surrounding Sonic's 2008 lawsuit against the automaker.

Smith commented that they had "a very good relationship" with the automaker prior to its former leadership. He does not believe that they would have been able to reach a settlement with the former leadership. On the contrary, Smith shared that the new leadership is "fantastic." He added that they were "thrilled" to have this matter behind them. Additionally, Smith said that they are looking forward to growing with the automaker.

Replacing Lieb as Mercedes-Benz USA's CEO in December was Steve Cannon. Lieb was abruptly dismissed in October for alleged misuse of company funds and ethics violations. Additionally, Lieb had led the charge in pushing through the automaker's controversial Autohaus dealership design requirements for dealers.

The Mercedes-Sonic dispute, which concerned Autohaus, started in February 2008 when Sonic agreed to purchase a Mercedes store in Charlotte, N.C. The automaker blocked the purchase, and Sonic filed a lawsuit over allegations that Mercedes was attempting to force renovations that are uncalled for at four of its nine Mercedes stores. At that time, Smith asserted that the company was attempting to "extort" the renovations by holding the acquisition hostage.

The North Carolina Division of Motor Vehicles ruled in October 2008 that the automaker had wrongfully denied the transaction. Sonic sealed the deal. However, it later sold the Charlotte store after the automaker threatened to establish a third franchise to the market that would have diluted the investment of Sonic, Smith explained. [source: Autonews]

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