Ruling leaves dealers in uncertainty

DETROIT — Chrysler dealers who lost their franchise agreements in 2009 are still digesting a ruling this week by U.S. District Court Judge Sean Cox in U.S. District Court that does not automatically give them the right to reopen lost their franchises.

"It's not a slam dunk either way," said Colleen McDonald, who lost three dealerships in 2009 during Chrysler's bankruptcy restructuring. "I think we are at the point where we have to delve into what the ruling is."

McDonald won the chance to have her Livonia, Mich., Chrysler Jeep dealership reinstated through federal arbitration.

But Cox ruled that former Chrysler dealers who lost their franchise agreements and then regained them in arbitration do not have a right to reopen under the same market conditions as before. He also ruled that the dealers are not owed monetary damages.

The judge noted that after Chrysler Group LLC emerged from Chapter 11 bankruptcy, it was established as a new company.

"Because the rejected dealers have never had franchise agreements with new Chrysler, they cannot seek either 'continuation' or 'reinstatement' of a franchise agreement with new Chrysler," Cox said in his ruling.

There are about 20 dealers that won arbitration cases to regain their Chrysler, Jeep, Dodge and Ram franchises after the automaker terminated 789 dealer agreements during its 2009 bankruptcy restructuring.

Based on Cox's ruling, those dealerships only have an agreement to be added to the network, not a right to reopen at their old locations.

Chrysler said Wednesday it is pleased with the decision because it does not grant the dealers automatic reinstatement.

"Chrysler Group complied fully with the law by issuing its customary and usual (letter of intent) to prevailing dealers, which was the only remedy available under the federal dealer arbitration law," the company said in a statement.

Chrysler has 2,335 dealers in the U.S. today, or about 25 percent fewer than before bankruptcy.

The lawsuit was filed by Chrysler and surviving dealers that didn't want the arbitration winners to come back to locations that surviving dealers now consider their own.


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AP-WF-03-28-12 1938GMT

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