The U.S. Court of Federal Claims has ruled against Chrysler dealers who lost their franchises during the automaker's bankruptcy, saying they failed to establish that the government forced Chrysler into using bankruptcy as a means to terminate them.
Dealers had asked the court to award them the fair value of their stores when the franchises were terminated in May 2009, with requests for damages ranging from $524,000 to $8.8 million per rooftop among the seven model plaintiffs represented by Bellavia Blatt & Crossett in Mineola, N.Y. If the dealers had succeeded, the court could have ordered the Treasury to pay as much as $850 million to the terminated dealers.
The nearly 300 dealers who joined the lawsuit waited almost a decade for the matter to go to trial. About 500 dealers chose not to participate. Len Bellavia, a lawyer for the dealers, on Monday said they plan to file an appeal later this week or early next week.
"While it was not disputed that Chrysler would have preferred for the government to have given Chrysler billions of dollars outside of bankruptcy, there was no evidence to show that Chrysler was directly forced into accepting the government's assistance when bankruptcy became Chrysler's only option," the court ruling said.
Bellavia said the dealers have always understood that this case would not end at this stage, regardless of which side prevailed at trial, and would work its way up the appellate ladder, possibly all the way to the U.S. Supreme Court.
"We feel the court erred in misunderstanding the 'coercion' argument," Bellavia said in email to Automotive News. "It was never plaintiffs' argument that the government forced it to file bankruptcy, but rather that the loan agreement drafted by the government mandated that the Chrysler dealership network be reduced. The court failed to address this key claim."