Dealer's day in court
Judge rejects Suzuki's attempt to end fraud suit
A Georgia dealership group can pursue RICO, fraud and related claims against American Suzuki Motor Corp., a federal judge has ruled.
U.S. District Judge Clay Land rejected American Suzuki's effort to dismiss a suit in which Jay Automobile Group, which has sold Suzukis since 1991, accuses Suzuki of making false statements about sales and marketing plans.
The suit alleges that from 2005 through at least 2009, Suzuki repeatedly but falsely told Jay Automobile that it would substantially increase the number of vehicles it would distribute regionally and would intensify marketing, advertising and promotion in an effort to triple sales.
The suit also contends that Suzuki reported false sales numbers to dealers, the press and trade journals, including Automotive News, and conspired with other dealers to report inflated sales numbers. The intent, according to the suit, was to induce dealers to invest more money in their Suzuki businesses and purchase more vehicles and to deter Jay Automobile from terminating its franchise.
In 2007, Jay Automobile signed a new agreement with American Suzuki and invested more than $1.5 million to build and equip a larger store. However, the suit alleges, Suzuki failed to provide promised promotional support or supply requested models, providing instead "less marketable vehicles," including ones overloaded with options and too expensive for the community's demographics.
In 2008, the dealership group closed its store built under American Suzuki's Suzuki Square program -- the grand opening of which then-American Suzuki President Koichi Suzuki had attended -- and now sells Suzukis at a multifranchise store in Columbus, Ga.
The suit contends that the situation worsened in 2010 when Suzuki attempted to induce Jay Automobile to terminate its franchise voluntarily by, among other things, releasing misleading customer satisfaction reviews and reducing the number of vehicles distributed regionally. The dealership estimated its loss at more than $1 million for 2007 through 2010 and is seeking compensatory, punitive and triple damages.
Suzuki spokesman Jeff Holland said Jay Automobile remains an active franchisee but added that Suzuki policy precludes commenting on pending litigation.
In his decision, the judge said the allegations are specific enough to support Jay Automobile's allegations of fraud, misrepresentation and RICO, or Racketeer Influenced and Corrupt Organizations Act, violations. He also let stand claims under Georgia's dealer's day in court and motor vehicle franchise laws.
Dealership group lawyer Joel Wooten Jr. of Columbus, Ga., confirmed that pretrial discovery is now starting but said he cannot comment on other aspects of the case.
In a similar case against American Suzuki by former Alabama dealer Gary Linam, discovery is nearly complete, said plaintiff's lawyer Thomas Baddley Jr. of Birmingham, Ala. After that, he said, the judge will rule on motions by both sides for partial summary judgment, which, if granted for either side, would whittle down the claims or issues to be tried.
Where it stands: Federal judge refuses to dismiss case; pretrial discovery begins.
You can reach Eric Freedman at email@example.com.