General Motors has run into another snag in its efforts to consolidate dealerships nationwide under its Project 2000 program, this time in Ohio.
Spitzer Management Inc., headed by Alan Spitzer, owner of Auto World Chevrolet in North Canton, Ohio, had plans to swap the dealership for a new store down the road in the same town.
Spitzer's dealership was one targeted for relocation under GM's Project 2000, the automaker's effort to restructure its dealership organization and reduce the number of dealers.
Competing dealers filed protests, but a hearing examiner concluded in early 1997 that GM had established good cause for moving the dealership.
GM had claimed the other dealers were not meeting their sales and service obligations.
In July 1998, the competing dealerships - Doug Bigelow Chevrolet in Green, Ewing Motors Inc. of Canal Fulton and Progressive Chevrolet of Massillon - filed a legal challenge in the Court of Common Pleas in Franklin County, Ohio, against GM over the proposed relocation of Auto World Chevrolet.
The dealers claimed GM's plan violated Ohio franchise laws. The Ohio Motor Vehicle Dealers Board also joined in the suit.
This month Magistrate Pamela Browning sided with the competing dealers and reversed the earlier decision of the hearing examiner.
She ruled that the hearing examiner had failed to analyze the relevant market area, as defined by Ohio law, which GM had used to determine whether the dealers were measuring up to their sales and service performance levels.
The law in Ohio and many other states, which has been used often by GM and other carmakers to reduce the number of dealerships and relocate dealerships, allows the relocation of a dealership within the exclusive territory of other dealers if those dealers fail to meet performance and service standards.
Browning found GM had based its conclusions regarding the performance of the other dealers on an area smaller than the 10-mile radius required by Ohio law.
Christopher DeVito, a partner in the Cleveland law firm of Morganstern, MacAdams & DeVito Co. L.P.A. and co-counsel for the competing dealers, has won other key relocation suits against GM.
He praised the magistrate's decision for recognizing that GM had tried to gerrymander the territorial lines in its efforts to prove the dealers were not performing up to standards.
GM attorneys said they will appeal the decision.