Dealers hit snag in legal battle to recoup Mahindra franchise costs
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The legal battle by U.S. dealers franchised to sell Mahindra pickups hit another obstacle when a federal judge in St. Louis tossed out their breach-of-contract suit against the Indian manufacturer.
The suit against Mahindra & Mahindra Inc. will be refiled in Georgia, said Melissa Zensen of St. Louis, a lawyer for the prospective dealers.
U.S. District Judge Rodney Sippel ruled that Missouri courts lack jurisdiction over Mahindra. But his decision didn't address the merits of the dealers' claims against either the manufacturer or against Global Vehicles U.S.A. Inc., which had planned to import the vehicles and distribute them to almost 350 U.S. dealers.
Under the state's so-called "long-arm statute," the plaintiffs failed to prove that Global Vehicles was an agent with the power to alter legal relations between Mahindra and a third party, such as a dealer, Sippel said. The long-arm statute determines whether its courts have jurisdiction over out-of-state firms that transact business or make contracts in Missouri, either directly or through an agent.
"The judge was only looking at the [jurisdiction] issue raised by Mahindra," said Theresa Lynch, a St. Louis attorney for Atlanta-based Global Vehicles. She said she could not comment further.
Dwight Davis, an Atlanta attorney who represents Mahindra, called it "a very significant ruling for us."
He added: "We certainly believe our relationship with Global Vehicles is over."
Sippel's decision is one of two recent setbacks for U.S. firms wanting to sell the vehicles.
Mahindra revealed in a filing this month to the Bombay Stock Exchange that a British arbitration panel had refused to uphold a 2006 exclusive distribution agreement between Mahindra and Global Vehicles. (See related story, above.) The arbitrators found that the contract, for which Global Vehicles paid $8.5 million, had expired and that Mahindra hadn't violated any U.S. laws.
In the Missouri case, the dealers sued Mahindra and Global Vehicles to recoup franchise costs.
The plaintiffs unsuccessfully argued that Global Vehicles, which had negotiated a dealership agreement with a Missouri company, was Mahindra's agent and, thus, they could sue Mahindra in that state.
Zensen, the plaintiffs' lawyer, said her clients will sue Mahindra and seek class-action status in Georgia, where another court has upheld that state's jurisdiction over the manufacturer. She said their claims against Global Vehicle will be transferred from Missouri to the new lawsuit.
"We're moving forward," Zen- sen said, "and we're not discouraged."
Where it stands: Judge says no; dealers plan new suit in Georgia.
You can reach Eric Freedman at freedma5@msu.edu.
