State - Detroit The lot of some car sellers up in the air Auto dealers facing closure will soon know fate

By Dee-Ann Durbin AP Auto Writer DETROIT (AP) -- An appeals process that spared hundreds of U.S. auto dealers from closure will soon be over, but Chrysler Group LLC could still face months of litigation with dealers in state courts. Federally appointed arbitrators are down to just 35 cases out of nearly 1,600 General Motors Co. and Chrysler dealers who appealed their closures, according to India Johnson, senior vice president of the American Arbitration Association, the dispute resolution service that handled the cases. Hearings are set to wrap up Wednesday, with the final decisions due by the end of next week. But already, Chrysler is facing legal action from some dealers who have rejected the automaker's terms. Congress required the arbitration hearings after GM and Chrysler announced plans to shutter 2,800 dealers last year as part of the automakers' plan to rebound from U.S. government-led bankruptcies. The companies said their U.S. sales didn't justify having so many dealers -- nearly 10,000 between them. By comparison, Toyota has only about 1,200, even though it's the second-largest automaker by U.S. sales. But dealers protested that many stores had been in their families for generations, and that the market should determine whether dealerships are viable. Since the hearings began in February, a majority of the cases have been resolved with settlements outside of arbitration, either because the automakers agreed to reinstate the dealers or the dealers dropped out of the process. Some dealers closed, while others started selling other brands. In early March, GM announced it would keep open more than 660 dealers it had threatened with closure, sharply narrowing the list of dealers who were planning to appeal. Chrysler also agreed to restore about 80 franchises. GM won't release numbers until the arbitration process has ended. But the automaker has been less aggressive than Chrysler in closing dealerships, including giving dealers a year's warning instead of closing them immediately, as Chrysler did. At the beginning of June, GM was waiting for decisions in 300 cases. Chrysler spokesman Mike Palese said of the 418 cases filed by Chrysler dealers, 56 have been decided in the company's favor. Dealers have prevailed in 21 cases. Palese said 150 cases were settled and 130 were abandoned or dismissed. Chrysler's decision to close dealerships immediately, however, has led to some difficult legal situations. For example, an arbitrator recently ruled that Chrysler should reinstate a Dodge dealer in Deland, Fla., that was terminated last year. But Chrysler has already awarded Deland Dodge's franchise agreement to another dealer across the street. Deland Dodge general manager Jeremy Kiel said Tuesday that Deland Dodge has filed a motion in a local court to enforce the arbitrator's ruling. The dealership also disagrees with Chrysler's terms for reopening, including upgrades it must make and a clause that gives its competitor the right to protest. "We just want what the law was intended to do," he said. "We just want to start selling cars again." Palese said the company is negotiating with individual dealers and will let the legal process run its course. "The decisions of a great majority of the arbitrators reflect the belief that the company's dealer network decisions were not only appropriate, but essential to its future success," he said. Johnson said the process was one of the most complicated to ever come before the association, since the time frame was so short and the cases were complex. Some hearings lasted multiple days and had as many as six attorneys involved, she said. Published: Thu, Jul 15, 2010

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