Chrysler wins court challenge by dismissed Calif. dealer
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DETROIT -- Chrysler Group has prevailed in its defense against a dismissed dealer suing for reinstatement after the company terminated 789 franchises during its 2009 restructuring.
A federal judge in California dismissed the case brought by Star Chrysler-Jeep in Glendale, Calif., saying Chrysler met federal requirements when it offered the dealership a chance to return.
The dealership won reinstatement through arbitration proceedings established by Congress and signed into law in 2010. Chrysler had sent a letter of intent to Star agreeing to restore the franchises with terms the carmaker contends were "usual and customary."
Star Chrysler-Jeep disagreed and argued in the suit that Chrysler's terms were "oppressive and unreasonable" and required it to go far beyond what was expected of other reinstated dealers.
But U.S. District Judge Gary Allen Feess sided with Chrysler in a judgment filed Monday, saying the company "fully complied with its sole obligations to Star."
In a statement, Chrysler said the ruling reaffirms the company's position that it acted lawfully in the terms it offered to reinstated dealers.
Of the 789 dealerships that lost franchises in 2009, 418 have brought claims against Chrysler using the federal arbitration process. Chrysler resolved 310 of them short of a hearing and has prevailed in another 76 cases.
In March, U.S. District Judge Sean Cox in Detroit ruled that dealers who have won reinstatement don't automatically have the right to reopen stores. The judge found that federal arbitration doesn't trump state laws governing dealer market competition.
Cox's ruling is expected to be appealed.
