Robinson and 19 other dealers continue their battle with automaker

A group of car dealers from across Ontario is claiming that the giant auto­maker’s method of review of Canadian car dealerships was a sham and dictated by company conflicts and was interfered with by its American interests.

Twenty dealers from across Ontario are now in a legal bat­tle against GM of Canada Limited (GMCL) for its actions in ending their sales and ser­vice agreements in May 2009.

Cindy Robinson, of Robin­son Pontiac Buick GMC is among those who sued the Canadian division of GM for what they believe was an arbitrary decision to end the deal­ers’ sales and service agree­ment.

She said in an interview on Monday one of the important parts of the case was the 20 dealers won the right to act as a group, instead of having to deal piecemeal with the auto giant through the courts. “They want­ed single arbitration.”

The dealers stated a top GM official has already  admitted the American parent com­pany prevented the the Cana­dian manu­facturer from revers­ing any termination deci­sions.

The dealers stated the com­pany’s “management re­view process was a sham,” in their latest court filing in reply to the company statement of defence in the case. “Not a single dealer has been re­instated.”

That court statement came after pre-trial testimony from Marc Comeau, GM’s vice-president of sales, service, and marketing, who said reinstating dealers “was not in the plan.”

The company had to cut its dealership network by 40 per cent or about 250 retailers in Canada to cut costs under a survival plan that needed the ap­proval of the Ottawa and On­tario governments so GM and Chrysler could obtain billions of dollars in public loans and equity investments.

The dealers are charging that the federal and provincial gov­ernments never asked or told the company to terminate dealers.

“The purported termina­tions were issued by GMCL in compliance with a directive from its parent company in the U.S.,” the dealers said, adding that it was “Made without con­sultation with or notice” to the GMCL, the dealers added.

The group also rejected the claim that the company’s ori­ginal criteria for closures – in­cluding sales effectiveness, cus­tomer satisfaction, market share, location, facilities – was fair. In the U.S. the automaker used similar criteria in drop­ping dealership  but then it chang­ed that decision after ad­mitting there were flaws – and it reinstated some dealers.

The dealers also charge the Canadian divi­sion had conflicts of interest because it kept several under performing deal­er­ships where the company had a stake or control, at the ex­pense of profitable retailers in the same or nearby markets who lost their stores.

“As a result of these eco­nomic interests, GMCL did not design and implement a fair evaluation process nor did it apply proper business judg­ment,” the dealers group said.

GM announced the deci­sions on closures in May last year. It offered pay­ments rang­ing from $115,000 to $1-milli­on for dealers being dropped. About 85 per cent of those deal­ers accepted that proposal.

The company said in its de­fence that it came close to applying for bank­ruptcy court protection and that the ob­jec­ting dealers would have prob­ably received nothing as un­secured creditors.

When the dealer group sued GM, it sought an injunction to remain open for at least another five years after expiry of their current contracts, which is at the end of October.

GM offered to extend the agreements until the end of January. A trial is scheduled to start in November.

Robinson is hoping her com­pany will be reinstated as a GM dealership. It currently deals with  GM representa­tives and, “We have a wonderful relationship with them … It’s business as usual. We’ve been in business 45 years and we don’t want to change now.”