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Former Chrysler dealers sue U.S. Treasury for $130 million in damages

February 23, 2011

By Jim Hagerty
Staff Writer

A group of former Chrysler dealers who lost their franchises in the company’s 2009 bankruptcy filed suit against the United States government last week, claiming they were not properly compensated in the transaction.

Sixty-four dealers charge that the U.S. Treasury violated their rights and blocked them from receiving more than $130 million and violated the United States Constitution. Dealers claim that by stripping them of their franchises, Chrysler and the government maliciously and intentionally disrupted the U.S. auto industry.

“This is a loss that should not, however, be borne by a few auto dealers, but must in fairness and justice be borne by the public as a whole,” the suit states.

Out of 789 Chrysler franchises lost, 80 were restored after a late 2009 lobbying campaign. The reinstatement hasn’t been good for business, nor does it help the remaining 709 that were forced to close or downsize, lawyers said Friday, Feb. 18.

General Motors also made massive cuts in its bankruptcy case, placing what was initially reported as 800 dealerships on the cut list. The company saved 660 dealers after they, too, lobbied Congress to keep the wheels turning.

The suit against Chrysler and the U.S. Treasury filed in the U.S. Court of Federal Claims, names dealers in 29 states.

Meantime, White House officials said the Obama administration was not involved with Chrysler’s or G.M.’s decision to pull franchises. The Presidential Task Force on the Auto Industry was formed to assess restructuring plans and made recommendations that hinged upon the amount of federal bailout funds each company would receive.

From the Feb. 23-March 1, 2011, issue

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