More than 20 former Chrysler dealerships in Michigan, Wisconsin, California, Ohio, Nevada, and Florida may not reopen even though they have regained their franchise agreements.
On Tuesday, Judge Sean Cox of U.S. District Court in Detroit ruled that the federal Consolidated Appropriations Act of 2010 does not trump previous state laws governing dealer markets. In other words, former Chrysler Group LLC dealers who lost their franchise agreements and regained them in federal arbitration aren’t guaranteed the right to reopen.
Simply put, those dealerships will be treated as if they are starting a brand new business and may not be able to enter the market if another dealer offers the same brand of cars within the area. Those returning dealers also do not have the right to seek a court order and aren’t able to seek financial damages from Chrysler.
“Congress intended to provide dealers that had been rejected by old Chrysler an opportunity to be added to new Chrysler’s dealer network by means of a letter of intent to enter into a sales and service agreement,” Cox’s ruling states.
As part of its reorganization in 2009, Chrysler closed 789 of its 3,200 dealerships. 418 of those brought claims in federal arbitration, but Chrysler had resolved 310 of them in short of a hearing.
[Source: Automotive News]