Chrysler Reveals Final Results of Arbitration Process
AUBURN HILLS, Mich. — Announcing that the arbitration process for rejected dealers is now complete, Chrysler Group revealed that arbitrators favored the company in more than 70 percent of decisions.
More specifically, the company said it prevailed in 76 of the 108 arbitration decisions. About 3 percent of the 789 dealers who were rejected as a part of the bankruptcy process won their arbitration proceedings.
Many dealers dropped out of the process, were given early reinstatement by Chrysler or elected not arbitrate. For others, settlements were apparently reached.
Discussing the results, Chrysler management said, "Chrysler Group LLC is pleased that hearings in the dealer arbitration process have concluded and is looking forward to completing its dealer network plans. The decisions to select dealers for the company's optimized dealer network were carefully considered as part of Chrysler's Genesis Project.
"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. What is needed are more profitable, better performing dealers to provide better customer service," the statement indicated. "Indeed, plans to place all of our brands under one roof in well-located facilities has already resulted in enhanced dealer profitability and greater investment by existing dealerships on track with the $500 million investment plan Chrysler announced on Nov. 4, 2009."
The automaker went on to say that its actions to improve its dealer network were necessary for interim financing and the proposed sale to Fiat during the bankruptcy process.
"Among the requirements placed on Chrysler Group LLC was to reshape its dealer network to better meet the requirements of the market. As such, on June 9, 2009, Federal Bankruptcy Court Judge Arthur Gonzalez approved Chrysler's motion to ‘reject' the contracts of 789 dealers," the company explained.
"In its approval, the court concluded the company used sound business judgment, and affirmed the rationale used by the company to determine which dealers were affected," according to the manufacturer.
However, Chrysler said things changed when "On Dec. 16, 2009, the U.S. Congress passed H.R. 3288 enabling the 789 affected dealers to pursue binding arbitration in order to secure an opportunity to join Chrysler's dealer network. The bill stipulated that dealers who prevailed in binding arbitration would receive a customary and usual Letter of Intent to enter into a sales and service agreement with Chrysler Group LLC, provided they meet financial and operational prerequisites."
A few dealers who won reinstatement in the arbitration process turned to filing lawsuits against Chrysler, claiming that it is not fair that they have to meet specific requirements to rejoin the dealer network that other dealers remaining in the network are not required to do. The dealers contend the Letter of Intent they received is not "customary or usual."
Ultimately, the arbitration process kicked off in May and concluded July 23, officials reported.