A federal magistrate in Boston has ordered a Chrysler-Plymouth-Jeep-Eagle dealership to arbitrate its dispute over the factory's plan to relocate another dealer to a nearby town.
The dealership's agreement with Chrysler Corp. requires it to use arbitration, rather than to sue in court, to resolve such disagreements, U.S. Magistrate Judge Robert Collings ruled.
Seacoast Motors of Salisbury (Mass.) Inc., a Chrysler franchisee since 1992, wants to block another dealership from moving to a site eight to 11 miles away.
Chrysler approved the relocation stemming from the sale of McGregor-Smith Leasing & Sales Inc. in Plaistow, N.H. The purchaser, who handles Chrysler and Plymouth, intends to relocate to a new site across the Massachusetts border in Haverhill, which is four miles south of its present location.
Seacoast claims the relocation would create unfair competition and adversely affect its business in violation of the Massachusetts franchise law. Its suit alleges infringement on its relevant market area.
Massachusetts law defines the relevant market area as where two-thirds of a dealership's retail sales or service originates, according to Judith Shumaker of the Chrysler general counsel's office. The law allows dealers to object, but Seacoast's franchise agreement does not contain a similar provision, she said.
Seacoast's lawyer, Nicholas DeCoulos of Peabody, Mass., said two-thirds of his client's business is in that area. 'We don't want them there (in Haverhill),' he said. 'It will cut into our business.'
DeCoulos said either a successful lawsuit or successful arbitration could block the relocation. However, an unfavorable trial court decision can be appealed, but 'I don't have any judicial remedy for mistakes on the arbitrators' part.'
He said Seacoast has not decided whether to appeal.
Shumaker and Robert Cultice and George Mykulak, the Boston lawyers handling the case for Chrysler, said Seacoast had signed an optional agreement to arbitrate franchisor-franchisee disputes.
Collings, the federal magistrate, ruled that state law does not prohibit enforcement of such an arbitration agreement. He said, 'If the legislature wanted to prohibit claims under (the dealer law) from being arbitrated, it would have said so explicitly.'