Dealers' fraud suit against Mahindra can move ahead, U.S. judge rules
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Five U.S. dealers who claim they were defrauded by Mahindra & Mahindra have won their first small legal victory against the Indian automaker -- the right to be heard.
A U.S. District Court judge in Atlanta has refused Mahindra's request to dismiss the dealers' lawsuit, which claims Mahindra misled dealers into believing it planned to create a new U.S. truck brand.
In the ruling, U.S. District Judge Thomas Thrash in Atlanta wrote that the dealers had met the legal criteria to continue their lawsuit alleging fraud by Mahindra and its management.
"The plaintiffs have alleged facts that allow a reasonable person to infer that Mahindra USA was involved in a plan to deceive the dealers," the ruling says.
A statement released by Mahindra on Thursday says that Mahindra is “confident that the evidence will demonstrate that Mahindra acted in good faith.”
The statement says that Mahindra’s decision not to enter the U.S. market was a difficult one. But it says, “The current litigation by prospective dealers for Mahindra vehicles who were disappointed by Mahindra’s decision is unfounded and Mahindra is convinced that it will ultimately prevail in the cases.”
Little has gone right for Mahindra's would-be dealers up until now, including on the legal front.
Mahindra spent four years working with a private U.S. distributor, Global Vehicles U.S.A. Inc. of suburban Atlanta, to distribute compact diesel pickups made in India in the U.S. market. At one time, Global Vehicles had a dealer network of 350 retailers signed up to sell the trucks, with other products to follow.
The project was marked by delay after delay as Mahindra worked to obtain U.S. regulatory approval for the truck.
But the distribution deal abruptly ended in 2010, leaving dealers with unopened showrooms and lost investments.
A U.S. District Court in Missouri dismissed one dealer case against Mahindra last year, saying the franchise agreement had been with Global Vehicles and not with the Indian manufacturer.
An independent arbitration panel in London also dismissed U.S. claims against Mahindra brought by Global Vehicles.
The current suit was filed in 2012 by five dealers in New Hampshire, Florida, California, New Jersey and Washington state. Global Vehicles is not a party to the suit.
Michael Diaz, the Miami attorney representing the dealers, says that other Mahindra dealers have expressed a desire to join the suit in light of the Atlanta ruling.
You can reach Lindsay Chappell at lchappell@crain.com.
