WASHINGTON -- Colorado Gov. Bill Ritter has signed a bill imposing fines of up to $25,000 a day on Chrysler Group if it continues to defy a new dealer reinstatement law, but enforcement of the new law and another rejected-dealer law enacted in March was suspended at least until July 30.
This week Ritter, a Democrat, signed the legislation levying the fines, said Mike Saccone, a spokesman for the Colorado attorney general’s office.
The earlier Colorado law requires Chrysler and General Motors Co. to offer a rejected dealership the right of first refusal if either company wants to open a point in the rejected dealer’s old market. If the automaker already has awarded such a franchise, it must offer to reinstate the rejected dealership or compensate it.
Chrysler has told at least one rejected Colorado dealer that it has no intention of offering reinstatement under the new state law.
The second state law sought to add enforcement muscle to the first.
"Chrysler Group believes Colorado's rejected dealer amendment and sactions legislation are unconstitutional attempts to pre-empt existing federal law," the company said in a statement.
"The actions to right-size Chrysler Group's dealer network were a necessary part of Chrysler Group's viability, approved by a federal bankruptcy court and essential to the interim U.S. government financing and proposed partnership with Fiat. The only alternative would have been complete liquidation."
The Colorado governor’s office offered no immediate comment today.
But Colorado authorities and Chrysler reached an agreement to suspend and stay enforcement of the two laws until July 30, according to an order by U.S. Bankruptcy Judge Arthur Gonzalez in New York.
After July 30, Colorado can begin enforcing these laws by giving Chrysler 30 days’ notice that it is terminating the suspension and stay, the said the order, dated Monday, June 7.
The 30-day notice would give Chrysler time to seek a preliminary injunction preventing the laws from being enforced, the order said.
As part of this agreement, Chrysler also said it would not open any new points in Colorado at least until July 30.
In April, Chrysler asked the Bankruptcy Court to block Colorado’s dealer reinstatement law. The automaker’s request was similar to the action it took last December seeking to keep similar new laws in four other states from taking effect.
The company’s suits, which argue that federal bankruptcy law pre-empts state law, continue against Illinois, Oregon and Maine. North Carolina backed down from enforcing its law in an April settlement with Chrysler.
One thing that remains unclear: How many rejected dealers might be affected by these four states’ laws?
Arbitration of reinstatement claims by rejected dealers, provided under federal law, continues through July.
Wrote Gonzalez: “As a result of these arbitrations, application of the Colorado dealer law may become moot.”