PORTLAND, Ore. - General Motors plans to make it easier and cheaper to resolve disputes with its dealers by requiring mediation in its year 2000 dealer agreements.
The mediation process, which is expected to be unveiled to dealers in the next month, could cost as little as $1,500 and generally take no more than 75 days. Litigation can take years and easily cost hundreds of thousands of dollars.
Under the new program, GM splits the costs with the dealer and the actual mediation session should take no more than a day. The outcome will be binding only if both parties agree to a resolution.
'It's just a business meeting,' said John Waite, mediation and litigation manager for GM, who explained the mediation process to state regulators here during a meeting of the National Association of Motor Vehicle Boards and Commissions.
GM's goal: Meet with dealers informally to resolve complaints before the dealers seek more expensive, protracted remedies through the courts or state agencies. Mediation does not require hiring a lawyer and expert witnesses, and GM is willing to fly the mediation panel to the city closest to the dealer. The mediation panel includes another dealer, a GM representative and a trained facilitator with a legal background - generally an attorney or retired judge. The program will be supervised by a committee of three dealers and three GM representatives.
The program also will give all the GM divisions a common dispute resolution procedure. Currently, the divisions have different programs, and Cadillac is the only division offering mandatory, nonbinding mediation to dealers.
YES, WITH RESERVATIONS
GM is soliciting feedback on the mediation program from dealers, state regulators and the National Automobile Dealers Association. So far, the program seems well-received.
'My experience has been that 99 percent of this stuff can be resolved if people just sit down at a table and talk about it,' said Frank Ursomarso, president of Union Park Automotive Group in Wilmington, Del., and the GM line chairman for NADA.
NADA objects to mediation or arbitration only if it prevents a dealer from pursuing litigation when the dispute is unresolved. 'Our problem is when you put the words `mandatory' and `binding' together,' said Bill Newman, NADA's chief of public and legal affairs.
Although he is not familiar with details of the GM program, Newman is concerned it won't be broad enough. In the past, for example, some factory dispute resolution procedures have not covered attempts by GM to add a dealer in another dealer's territory or to relocate an existing dealer.
Waite said mediation will address add-point and relocation cases. But the mediation panel will not tackle cases that should be handled by governments, such as franchise termination due to insolvency, dealer closing, license revocations, fraud or felony convictions.
Walter Forehand, a dealer attorney specializing in franchise law, says at least half of the cases that go to court involve add-points and relocations. The vast majority of dealer-factory disputes aren't litigated. Generally, the disputes involve warranty and incentive chargebacks that are best addressed through mediation, he said.
'I don't see a problem with mediation. Usually it is helpful for people to sit down in an informal setting and see if they can come up with a good conclusion,' Forehand said. 'The downside is for the smaller dealer mediation adds another layer of expense for a case that goes on to court. You don't have to use a lawyer, but most people feel like they need to.'
Although state regulators initially seemed suspicious of the program, Waite seemed able to ease their concerns. The biggest worry had to do with time constraints. No matter how speedy a process, mediation could cut into the time dealers have to file a protest with state dealer boards and commissions. Many states set limits on the time dealers have to file a protest with the department of motor vehicles and requiring mediation could cause dealers to miss the deadline.
'The dealer may want to file a protest with the state simultaneously when he requests mediation (from an independent administrator that GM has appointed to manage the process),' Waite said. Some states also will put the case on hold while the dealer goes through the manufacturer's dispute resolution process.
And the dealer should have plenty of time to prepare a case for the state if mediation fails. 'Most states take three or four months to get to the hearing stage,' he said.
After the program is introduced to dealers this fall it will be available to them as an option for resolving disputes. It will be incorporated into the GM dealer agreements Nov. 1, 2000.