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Back in June of 2009, Chrysler terminated relationships with 789 dealerships in an effort to cut its dealer network down by 25 percent. A few of those dealerships didn't think too highly of the move, which was orchestrated in part by the federal government. As a result, 64 former Chrysler franchisees have reportedly filed a suit against the United States Treasury and are seeking at least $130 million in damages.

Was the move to terminate these dealerships a violation of the U.S. Constitution? According to the lawsuit, the automotive task force violated the Fifth Amendment, which essentially states that property cannot be taken away and used for public purposes without adequate compensation.

[Source: Automotive News – sub. req. | Image: Drew Phillips/AOL]


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  • 23 Comments
      • 4 Years Ago
      To my knowledge no dealership that was closed down has been converted to a school, playground, or police headquaters. Their license to sell Chrysler's was revoked that is all. While yes it sucks perhaps said dealerships should have had better contracts or back up plans since this was months in the making and not a over night deal.

      Locally within 2 months of Saturn shutting down their local dealership and the last of their cars sold it became a KIA dealership. A Pontiac/Buick dealership got shut down and they decided to just sell used cars and expanded their bodyshop. Its not like these dealership don't have options.
      • 4 Years Ago
      Everything's complicated when the government owns a business here, isn't it.

      Supposed to be other other way around.. corporations own the government.. ;)
      • 4 Years Ago
      2 wheeled manace, as a matter of fact i did buy gold. And you know what? I made money! Damn that crazy bastard Glann beck and his lies and retoric!
      • 4 Years Ago
      I agree that the dealers should have at least a "buyout clause" if they were "selected for termination", but then again, if Chrysler disappeared via Chapter 7, they would have gotten nothing anyway.
        • 4 Years Ago
        Chrysler was technically never owned by the government. They borrowed money from the government. GM was owned by the government. So, while I do not think the process was fair, I think these people may have an issue with pointing out the fifth amendment. The Government technically did not have ownership.
        • 4 Years Ago
        Good point, Julius.
      • 4 Years Ago
      the Gov did have a hand so pay the dealers and keep it moving...The outcome is good for everyone...
      • 4 Years Ago
      Seems more like a state-level issue than Federal, as the franchise laws are at the state level. I don't recall property being taken away, just the ability to get any more cars to sell. They still owned the lots and current inventory, though it was pretty much worthless once they couldn't be a certified repair center anymore.

      I'll have to find a source that isn't 'subscription required' to see some more specifics though.
        • 4 Years Ago
        No, though technically it is a State issue re: franchising (and I agree, I don't think any property was technically confiscated), because the major owner of Chrysler at the time was the US Treasury the lawsuit has to go to the US Federal courts.
      • 4 Years Ago
      A dealer pays lots of money to get the franchise, just go see how much you need to invest prior to opening the doors of a new franchise. And for all the smarty pants out there, answer this, "How is it in the best interest of Chrysler to have a franchise pulled from one dealer and give it to thier competitor, right down the street. In some cases, within one mile of the original dealer." And if you can actually find a reason, then tell me where in our Constitution is says that the Govt has the power to do it. Because if we allow them to do this, which they have already done, you really have to ask your self, what are they going to do next? Huh.......
      • 4 Years Ago
      I think the dealerships have every right to protest this, even to the point of taking it to the courts. And I for one hope they win. The reason? The government has been acting like a huge bully lately and the unfortunate and sad truth is that it is almost impossible for everyman to go up against the government in a legal matter because of its sheer size. So you have 2 problems: the government cites eminant domain or whatever in order to get ehat it wants, regardless of if it is right to do so or not, and the leagal system is such that if you go up against somebody with much deeper pockets than you it is difficult to win a legal battle against them because they will simply bleed you dry before you get to a verdict. At least in this instance there seems to be enough dealerships banded together that they will have the means to take this to the end, and hopefully we will end up with some legal prescedent that this kind of thing does not continue to happen. Oh, and in case you were wondering, I watched a close family friend who owned a bank recently be told by the government that in order for the government not to shut his doors he needed to raise several million dollars in capital, which he did, largely out of his own pocket. Once he did that the government still shut his doors, taking what amounted to basically all his life savings and left him jobless and broke. It's not just the auto industry and I'm sure they won't even be the last if this doesn't get stopped.
      • 4 Years Ago
      Also if I remember correctly, most of the 789 dealerships that were closed down donated money to the R.N.C. Democrat gestapo at it's best.
        • 4 Years Ago
        Remember correctly from what.. Glenn Beck's show?

        Shouldn't you be buying some gold right about now?
        • 4 Years Ago
        While I don't dispute your statement I can't help but think that most of the dealerships that didn't have their franchises revoked donated to R.N.C. as well. Regardless, it should be investigated to see if a greater percentage of those revoked were R.N.C. contributors.
      • 4 Years Ago
      "Report: 64 axed Chrysler franchisees file suit against U.S. Treasury"-----hmmmm car dealers vs. Treasury Secretary who did not pay his taxes. That is a tough one.
      • 4 Years Ago
      Good luck tying the ideals franchise ownership to the 5th amendment.
      • 4 Years Ago
      So, what would have happened to these dealerships had Chrysler been allowed to fail?
        • 4 Years Ago
        Then they fail, and the laws of economics (supply & demand) cleans up the mess. Where does this intrusion into private business end?
        • 4 Years Ago
        Tom, the point is they are complaining about government intervention, but without it, the entire company would have ceased to exist.
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