Judge OKs dealers' suits against feds
Dealers terminated during the General Motors and Chrysler bankruptcies have received the go-ahead for lawsuits against the U.S. Treasury Department that allege the government violated the Constitution by taking the plaintiffs' franchises.
Two rulings last week by a U.S. Court of Federal Claims judge in Washington denied the government's motion to dismiss two lawsuits -- a suit on behalf of the terminated GM and Chrysler dealers that seeks class-action status, and a private group-action suit by ex-Chrysler dealers.
The suits are similar in their claim that the Obama administration violated the Fifth Amendment's protection against seizure of private property for public use without just compensation.
The rulings clear the way for lawyers in both cases to obtain key documents from the administration's auto task force, which engineered the restructuring of GM and Chrysler.
"We received a very important decision," said Leonard Bellavia of Mineola, N.Y., a lawyer for the 75 former Chrysler dealers seeking at least $200 million in damages.
"The next step is to prove that Chrysler eliminated these dealers at the direction of the government and as a condition of receiving the bailout money," he said.
The suit seeking class action, initially brought by a GM dealer in Mississippi and a Chrysler dealer in Iowa, has been joined by more than 90 plaintiffs, said lawyer Richard Faulkner of Richardson, Texas.
Faulkner said the plaintiffs stand a good shot of proving that the government was determined to reduce the numbers of dealers.
"Rather than comply with the law and buy out these dealers, they decided to sacrifice them," Faulkner said. "The president called for shared sacrifice and the dealers were the sacrifice."
Faulkner said he now plans to ask the court to certify the class action.
A spokesman for the Treasury Department referred questions to the U.S. Justice Department. A Justice Department spokesman declined to comment. Neither Chrysler nor GM is named in the suits.
In his written opinions, Judge Robert Hodges Jr. cited the cases' novel approach as one reason he's allowing them to move forward.
The allegations, he said, don't fit the framework of a typical "takings" case -- a suit brought against the government for seizing private property for public use, such as when the government knocks down a house to build a highway.
For that reason, Hodges opined: The dealers "should have the opportunity to develop a case that may turn out to be unique."