Scott Brown, a Chevrolet dealer on Long Island, wouldn't think of taking on Newsday one-on-one in court. The daily newspaper is owned by Tribune Co., a media conglomerate that could easily outspend him.
Instead, Brown is one of 50 Long Island dealers who have joined to sue Newsday. They allege its advertising practices violate antitrust law by favoring large dealership groups over individual stores. The newspaper calls the lawsuit groundless.
Brown says his involvement in the case over the past two years has cost less than $15,000 since the plaintiffs share legal expenses. Had he sued Newsday individually, he says, he might have had to pay hundreds of thousands of dollars in legal fees.
"We have a lot more strength in numbers," Brown told Automotive News. "As soon as I got wind of the suit, I wanted to be a part of it."
Other dealers have combined to file "mass action" lawsuits against the Big 3, challenging the automakers' reimbursement policies for parts covered by factory warranties. Legal experts believe that similar suits on other issues will follow.
The mass-action strategy gives dealerships the financial muscle to spar with corporate giants without having to meet the more stringent legal requirements of a class-action suit.
By definition, there are so many plaintiffs in a class action that they practically cannot be named individually. The number of plaintiffs in a mass action is generally smaller.
Plaintiffs in a class action also must be identically situated. In a mass action, plaintiffs need only be similarly situated.
Lew Goldfarb, a former attorney for DaimlerChrysler Corp., says mass-action dealer suits offer a formidable challenge to automakers.
"It is easier to defeat a class action than it is to overcome a 40-dealer (mass action) lawsuit," says Goldfarb, who now works with corporations to resolve disputes out of court. "In a mass action, (plaintiffs) don't have to worry about getting certified as a class."
Challenging class-action status in a lawsuit is often corporate defendants' first line of counterattack, Goldfarb says.