DETROIT -- Handing a legal setback to General Motors Co.'s Canadian operations, an Ontario judge this week ruled that 19 rejected dealers who are suing the automaker can pursue legal action against it in court and as a group.
Superior Court Judge Sarah Pepall dismissed GM of Canada Ltd.'s petition asking the court to require the plaintiffs to submit their disputes individually to binding arbitration through the National Automobile Dealer Arbitration Program.
In her April 20 ruling, Judge Pepall said that language of the resolution program rules “clearly contemplates that claims in which dealers had a common interest in pursing the manufacturer as a group, are to be excluded.”
“In summary, the plaintiffs' claims are not arbitrable, are properly joined and should not be severed,” the judge wrote.
GM Canada spokesman Tony LaRocca said the company had no comment.
Robert Slessor, owner of Robert Slessor Pontiac-Buick in Grimsby, Ont., said the court's ruling paves the way for the group to have its arguments heard in a public forum. Binding arbitration would have been expensive for individuals and conducted behind closed doors, Slessor says.
Canadian taxpayers who loaned the automaker money last year have a right to hear the proceedings, he said.
“For GM it would have been divide and conquer and control the flow of information,” Slessor said.
The lawsuit was filed late last year by 12 rejected dealers in Ontario provincial court in Toronto; seven others have joined since then.
It accuses GM Canada of breaching dealer agreements when it sent e-mails to dealers saying the company will not renew sales and service agreements that expire Oct. 31, 2010.
It also alleged the wind-down money offered to dealers covers dealership severance and other close-down costs but provides “no compensation at all to the plaintiffs.”
In the United States, 1,573 rejected GM and Chrysler dealers in the United States have applied to get their dealerships back through arbitration. They were rejected by the automakers last year under the companies' bankruptcy restructurings.
But GM later offered reinstatement to 661 of those dealerships and offered settlement talks to the others.
GM Canada did not seek bankruptcy protection.