WASHINGTON -- General Motors Co. has started to contact rejected dealers with offers to begin settlement discussions to reinstate their franchises.
But GM is requiring dealers to consider excluding some documents from arbitration if they want to go forward with the talks.
Some dealer lawyers fear that their clients could be left without ammunition if talks break down and they want to return to arbitration.
The one-page letter requests the dealer's signature to authorize the beginning of settlement talks that could result in the dealership “being added or reinstated” in the company's network, a copy of the GM letter obtained by Automotive News shows.
The dealer's signature would also indicate an agreement to the conditions set out in the letter, it says.
One condition would allow GM and the dealer to designate as confidential “certain documents or written information” to be used during the talks, the letter says.
Need to know basis
These documents could be shared only with representatives such as the dealer's attorney and financial advisor who have “a direct need to know,” it says.
Finally, the documents “shall not be admissible by anyone in the arbitration or in any other proceeding of any nature for any purpose whatsoever,” the letter says.
GM spokesman Dave Roman authenticated the undated letter and said it has started going out over the last couple of days to some rejected dealers seeking arbitration.
He declined to say how many would be sent or over what period of time, citing the confidentiality of the automaker's discussions with rejected dealers.
Roman added that the company would spell out more of its plans for settlement talks over the next week or so.
One dealer lawyer who has reviewed the letter said its conditions “raise questions about GM's sincerity” in talking about reinstating dealerships.
“If GM decides to designate key documents we need as confidential, we can't accept that,” said lawyer Ronald Coleman of Davies Pearson in Tacoma, Wash. “GM seems to be opening the door for settlement talks but slamming it with the confidentiality designation.”
The conditions in the letter will discourage a number of dealers from participating in settlement talks, said Coleman, who has about 10 arbitration clients.
Citing a hypothetical example, he said GM could try to stamp as confidential some documents showing that the company used erroneous information in compiling a dealership performance score.
“We'd need those documents in arbitration if settlement talks were to break down,” Coleman said.
In restricting the documents to dealers' representatives, he said, GM could also keep dealers from sharing the information with each other through the Committee to Restore Dealer Rights, a group that offers an electronic bulletin board for rejected dealers.
Coleman said he has discussed the letter with two other dealer lawyers, and they share his concerns.
He said he plans to contact GM lawyers for clarification of the company's intent.
GM spokesman Roman declined to address Coleman's concerns.
Settling many claims
GM CEO Ed Whitacre and Mark Reuss, president of GM North America, have indicated they'd like to settle many of the 1,160 arbitration claims that have been filed by the company's rejected dealerships.
"I'd like to settle out of arbitration as many as we can because we want a mutually agreed-upon decision,” Reuss said at the National Automobile Dealers Association convention last month. “If someone needs to arbitrate, we'll arbitrate."
Under the law signed by President Barack Obama in December, rejected GM and Chrysler Group dealerships can seek reinstatement -- but not compensation -- through arbitration.
But the companies have the option of settling claims outside of arbitration by offering reinstatement or compensation, saving arbitration expenses.
About 2,000 showrooms have been targeted for elimination by GM by October.