An arbitration panel awarded a Connecticut Ford dealership nearly $300,000 in damages and costs after concluding that a unit of Reynolds and Reynolds Co. breached its contract with the retailer by requiring it to buy a new computer system to run upgraded software.
Now the Reynolds unit has filed a lawsuit in federal court to toss out the award.
Reynolds requires its dealership customers to resolve disputes through arbitration. But it chose to go to court after the arbitration panel ruled against the Reynolds subsidiary.
"This is a classic example of an arbitration panel exceeding its authority and really disregarding established law," says Tom Schwartz, a Reynolds spokesman. "That would be the basis for why we are going forward. I'd go so far as to say the panel appeared to ignore the terms of the contract."
The arbitration panel's ruling was encouraging news to 70 dealerships involved in a class-action lawsuit challenging Reynolds, one of the two largest suppliers of dealership management systems in the United States. These dealers don't want to buy a new $100,000 computer system from the Reynolds unit to run the latest version of software.
Another 70 dealerships are embroiled in arbitration hearings and individual lawsuits over the mandatory upgrade, say attorneys representing the dealerships.
Based on just the 70 dealerships in the class-action lawsuit, the Reynolds unit, Dealer Computer Services Inc., could lose potential sales of about $7 million.