Thwarted Mahindra dealers win a round

Federal judge in Georgia allows suit to proceed

U.S. dealers had planned to sell Mahindra pickups.

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• Automakers
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• Mahindra & Mahindra
• Global Vehicles USA Inc.
• John Perez

In most civil lawsuits, one party will attempt to have the case dismissed, the judge declines, and it's a nonevent.

But for five auto dealers attempting to sue India's Mahindra & Mahindra Ltd. for failing to bring its diesel pickup into the United States as planned, a federal judge's ruling to let the suit move forward is a rare bit of good news.

U.S. District Judge Thomas Thrash in Atlanta has refused Mahindra's request to dismiss the dealers' suit, which alleges that the company intentionally misled retailers into believing it planned to create a new U.S. truck brand.

Until now, Mahindra's dealers and its would-be U.S. importer, Global Vehicles U.S.A. Inc. of Alpharetta, Ga., have had no luck seeking legal relief.

A U.S. District Court in Missouri dismissed a dealer case against Mahindra last year, saying that the group's franchise agreement had been with the importer and not the manufacturer, and so they could not sue Mahindra. An independent arbitration panel in London also dismissed U.S. claims against the company brought by Global and its CEO, John Perez.

Perez: Claims dismissed

The new Atlanta court ruling found that the dealers have met the legal criteria to continue their lawsuit alleging fraud by Mahindra and its management.

The complaint, filed in 2012 by five dealers in California, Florida, New Hampshire, New Jersey and Washington, alleges Mahindra obtained trade secrets for retailing in the United States and caused dealers to spend $100 million in preparation.

"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.

Mahindra said in a statement that the decision not to enter the United States was difficult, and that it was "confident that the evidence will demonstrate that Mahindra acted in good faith."

Neither Global Vehicles nor Perez is a party to the Atlanta suit.

Perez spent four years working with Mahindra to distribute Indian-made compact diesel-equipped pickups in the United States. Global at one time had recruited a dealer network of 350 retailers, who paid up to $200,000 per franchise to sell the trucks and other products to follow.

Mahindra, a maker of old-technology military SUVs in 2006 when the U.S. project began, now markets the Scorpio crossover and other vehicles primarily in India and Asia.

The effort to enter the United States was delayed as Mahindra undertook design changes and worked to obtain U.S. regulatory approval for the pickup.

But the distribution deal abruptly ended in 2010, leaving dealers with unopened showrooms and lost investments. Mahindra blamed Perez for allowing his U.S. distribution contract to expire.

Perez now lives in Miami, where he is the distributor for Car-Bio, a printed and digital vehicle history for pre-owned car sales.

Since 2010, Mahindra has acquired an ownership interest in South Korean automaker Ssangyong Motors. Ssangyong has stated its intention to enter the U.S. market on behalf of Mahindra.

Michael Diaz, the Miami lawyer 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.

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