Breaking: 64 Culled Chrysler Dealers Sue Feds For $130m

Edward Niedermeyer
by Edward Niedermeyer

Automotive News [sub] reports:

Sixty-four dealerships that were terminated during Chrysler’s 2009 bankruptcy reorganization sued the U.S. Treasury Department today, seeking at least $130 million.

The suit, filed in the U.S. Court of Federal Claims here, alleges the government violated the Constitution by taking the stores’ franchises and their state legal rights without adequate compensation.

Lawyers for the plaintiffs say that more dealers could come on board, as the 64 suing dealers represent only eight percent of Chrysler’s cull. Neither Treasury nor Chrysler (which is not named in the suit) have commented. The suit, which can be read in its entirety in PDF format here, claims violation of Fifth Amendment rights, arguing that:

served the public purpose of promoting stability to the financial system of the United States… This is a loss that should not, however, be borne by a few individual dealers but, by reason of its broad and salutary public purpose, must in fairness and justice be borne by the public as a whole.

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  • Thirty-three Thirty-three on Feb 17, 2011

    The dealer cull was part of a large set of changes to promote the stability of the financial system. The changes were borne by the American public as a whole. The costs are not equally distributed, but they are borne by everybody.

  • Nrd515 Nrd515 on Feb 18, 2011

    I wish they had been more logical in picking the dealers to cut in the first place. Maybe some of these suits could have been avoided. The one local dealer they got rid of should have been jettisoned a decade ago. There's another one about 25 miles away that's just as bad, or worse, but they stay open. I would have bet money they would get the axe. When I bought my Challenger, they were the only dealer in about 100 miles with a Detonator Yellow one equipped the way I wanted, but the dealer I wanted to buy through wouldn't even do a trade with them! About 25 miles away from that weaselship, Chrysler chopped a dealership that was well liked, and sold a lot of cars. A friend of mine is a cousin of the owners, and has bought about a dozen cars from them over the last 30 years and couldn't believe they got the axe. I haven't looked yet, but I would bet they would be one of the plaintiff's in this suit.

  • LectroByte LectroByte on Feb 18, 2011

    With all due respect, just reminds me how whiney bitches always blame Obama for everything.

    • JustPassinThru JustPassinThru on Feb 18, 2011

      You mean he's not? Who, then? If this was a BANKRUPTCY, as BANKRUPTCY laws are written and understood, the SECURED CREDITORS should have gotten first dibs. Supplier - yeah, and UNION - contracts would have been nullified. Franchise law, I do not understand. But this was not a letter-of-the-law bankruptcy. This was an extralegal construct, done to protect union friends. Instead of having no contract, as the law requires...they wound up with an equity ownership. Nor were the dealers given equal standing and protection of their rights. I'm not going to hash out the political aspects of this culling here; but let it suffice that the dealers chosen to go was highly arbitrary and not tied to sales performance, volume or customer satisfaction.

  • Jacad Jacad on Feb 18, 2011

    The canceled Chrysler dealers held a franchise, not a contract. This franchise was granted based on criteria dictated by Chrysler and among other things required facilities meeting Chrysler's specs that were built or acquired at great cost and in many cases virtually useless without the franchise. This franchise was arbitrarily taken from them with the consent and direction of the Federal Government. There were never conclusive studies presented supporting the validity of the need for this action and subsequent to these actions much has been written by automotive experts supporting the view it was in fact counter-productive. No facts have been presented that these actions have in any way been a vehicle to higher profits or productivity by the manufacturers involved. What we have witnessed is an unprecedented taking of billions of dollars worth of American businesses and the elimination of tens of thousands of American jobs. Actions that have proved to have produced absolutely no positive results for the "common good". Do they owe? Damn right they do!

    • SSLByron SSLByron on Feb 21, 2011

      Do you owe? That's the question. That whole last line of the complaint isn't just a thinly-veiled anti-government slam. It's the dealers saying that the taxpayers owe them money. Assuming you're a taxpayer, you are "they." If you think you owe, by all means, mail them a check.