US Court allows terminated Chrysler dealers to sue US Treasury Department

Article by Anita Panait, on February 29, 2012

The U.S. Court of Federal Claims has allowed Chrysler’s dealers terminated during the period that the company underwent bankruptcy in 2009 to proceed with a legal action against the U.S. Treasury Department, alleging that the U.S. government violated the Constitution by taking their store franchises. The court also denied the U.S. government motion to dismiss the case. 

The lawsuit alleges that the current administration violated the Fifth Amendment, which states that the government cannot take private property for public use "without just compensation." The suit, filed in February 2011, alleged that the dealers’ terminations violated state legal rights by taking their franchises without providing adequate compensation.

Leonard Bellavia of Mineola, N.Y., the lawyer representing the dealers expressed delight for the ruling, saying that they received “a very important decision.” Bellavia said the decision means the case cold now move to discovery, adding that he will seek depositions from Treasury's auto task force. 

Bellavia added that following the decision, he expects other dealers who suffered the same fate as his clients to join the lawsuit, which currently involves 72 dealers and seeks around $200 million in compensation.

Although the carmaker was one of the main characters in the 2009 financial debacle, dealers didn’t name Chrysler in the lawsuit. Due to Chrysler’s impending bankruptcy in 2009, the Treasury’s auto task force, headed by financier Steven Rattner, asked General Motors and Chrysler to make more drastic cuts than the carmakers had originally planned. 

As part of Chrysler's turnaround plan, 789 U.S. dealers were terminated, which comprises roughly a quarter of the carmaker’s entire US dealer population. [source: Autonews]

Topics: chrysler

If you liked the article, share on:

Comments

Recommended

McLaren has already shown some interest in electrifying their models. And initially, we thought that they will just use hybrid systems to use across their current lineup. Nevertheless, we have...
by - August 19, 2017
Fifty years after its glorious victory at the 24 Hours of Le Mans, Ford launches the 2018 Ford GT ’67 Heritage Edition at the 2017 Monterey Car Week. The red...
by - August 18, 2017
Hyundai has recently unveiled an unnamed pre-production model of its new fuel cell SUV. We don’t know what to call this model just yet, but sources say that this model...
by - August 18, 2017
This weekend at the 2017 Pebble Beach Concours d’Elegance, the BMW Z4 Concept will make its first public appearance. The good news is that we will finally have a real...
by - August 18, 2017
While Honda’s new 2018 HR-V will be rolling out at the dealerships with just a few updates, the company is certainly not giving up its spot as the best-selling vehicle...
by - August 18, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries