Part of the deal for the federal bailouts of Chrysler and General Motors was that both organizations were required to trim their vast array of dealerships. This move did not sit well with the people that would be losing out on franchises, though, and in Chrysler's case, 148 of the shuttered dealers have fought for money they feel they are entitled to.

These dealers believe that they should be compensated by the federal government, as Chrysler wouldn't have trimmed its sales centers had it not been ordered to by Uncle Sam. Now, thanks to the ruling of three judges on the US Court of Appeals for the Federal Circuit, the dealers will get a chance to argue their point.

According to Automotive News, the dealers argue that the mandatory shuttering of dealers was unconstitutional, because the federal government was taking property without compensation. If the dealers are victorious, not only would the government be out millions of dollars, but a precedent could be set that would allow similarly closed GM dealerships to cash in.

To win, though, the dealers will need to prove that the government actively coerced Chrysler into closing down dealers. There would also need to be a demonstrable value to the dealership franchises, had there not been government interference.

"We have to show the government bailout was not the only avenue," said Leonard Bellavia, the lawyer in charge of the dealership team. "If they would have pursued another, those dealers would not have been terminated."


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  • 31 Comments
      Douglas Schroeder
      • 8 Months Ago
      A local dealer in my backyard lost their dealership while a larger one that had other brand franchises remained. This happened even though the smaller family owned business with loyal customers outsold the other in this town. I understand it was pick and choose by Chrysler and Obamas car czar, and not giving the smaller business owners consideration. If the dealership couldn't make a profit, then let them fall on their own
      churchmotor
      • 8 Months Ago
      Easy fix. They should claim they are Illegal Immigrants, and the Obama administration will bend over backwards to help them.
        tump
        • 8 Months Ago
        @churchmotor
        This is why there's never been a right wing political humor show that's survived.
          Arizonarelax
          • 8 Months Ago
          @tump
          Yea, all the facts are used on the right wing radio shows where people engage in conversations. Must have broken your heart to see Jon Stewart go after Chevy.
          Susan
          • 8 Months Ago
          @tump
          Aren't Raunch Limberger, Fox News, and equivalents right-wing clown shows?
        Arizonarelax
        • 8 Months Ago
        @churchmotor
        Now - now, there are no such things as illegal immigrants in the USA. :)
          churchmotor
          • 8 Months Ago
          @Arizonarelax
          True, they are just undocumented Democrats.
        Chsutera
        • 8 Months Ago
        @churchmotor
        Such an ignorant comment. This country was founded by immigrants. You me everyone in America is the descendant of an immigrant.
          churchmotor
          • 8 Months Ago
          @Chsutera
          So YOU are claiming EVERYONE in the USA came here ILLEGALLY! REALLY!
        jtav2002
        • 8 Months Ago
        @churchmotor
        I'd rather help illegal immigrants who actually come here to work and make a better life for themselves before helping the countless people who are actually citizens of the US who do nothing but milk off every system possible, don't want to work, and complain they can't afford the kids they keep popping out. New immigration policy, for every 1 illegal immigrant we make legal, we send 2 worthless US citizens who don't want to work back to Mexico. Down vote away.
      Kuro Houou
      • 8 Months Ago
      Another reason to get rid of Dealerships. When a car company struggles and goes through bankruptcy of course others will suffer too, its sad but you can't expect the government to bail everyone out. Should just get rid of dealers in general, would save consumers probably at least 1500 dollars on average if not more. Can't believe I got robbed with a few hundred dollars in dealer fees that are "unavoidable" no matter how hard I tried. No sympathy for these dealers who screw customers over ever day!
        Fountain42
        • 8 Months Ago
        @Kuro Houou
        I don't understand your point?
          m_2012
          • 8 Months Ago
          @Fountain42
          A manufacturer, without being tied to protectionist laws for dealers, would be able to trim showrooms as demand dictated. They would be able to control supply and sales force to match demand.
        SECORAUTOPARTS
        • 8 Months Ago
        @Kuro Houou
        Maybe you should just go to 'buy here, pay here." used car places.
      ken
      • 8 Months Ago
      Without government bailout, there will be no Chrysler. Just because someone can survive, it doesn't mean the government, or literally: taxpayers, is financially responsible for people who it didn't save. Otherwise, if government had bailed out banks, why there are foreclosures on millions of American household? Aren't they have more to lose?
      icemilkcoffee
      • 8 Months Ago
      This line of argument is just ludicrous. Chrysler never took their property. Chrysler simply chose to stop the manufacturer/dealer relationship with them.
        moderate fringe
        • 8 Months Ago
        @icemilkcoffee
        Which has value like property.
          Edsel
          • 8 Months Ago
          @moderate fringe
          Exactly. It's sad to see so many poorly informed commenters who are misinformed about the basics of business.
      johnb
      • 8 Months Ago
      lawyers are making out like a bandit on this one.
      Fountain42
      • 8 Months Ago
      My .02cents. ALL big companies seem to have forgot the small business owners who made them who they are. The small town car dealer got broomed because they did not produce the amout of cars needed to make there books look good. Well guess what? They were loyal and worked just as hard as the big metro dealers. I still dont understand this. Each dealer PAYS for there own inventory, property tax, and all other fees that it cost to run a dealership. Even the brochures are paid for by the dealership!! So I would like to know the answer to this too.
        tump
        • 8 Months Ago
        @Fountain42
        Your two cents bounce off the fact that all dealerships would have CLOSED ENTIRELY without a bailout and these were the dealerships chosen FOR A REASON.
          Fountain42
          • 8 Months Ago
          @tump
          I also know of several dealerships that were asked to spend a rediculas amount of money to remodel them to the franchise "new" standards..1 mill plus
          Fountain42
          • 8 Months Ago
          @tump
          no they were not. If you want to argue I will. they were stand alone dealerships and the ones that I know personally performed well for there area.
          m_2012
          • 8 Months Ago
          @tump
          Part of being a franchise. They couldnt or wouldnt do it, so bye-bye. Same thing with McD stores or anyone else - get the right building and signage or get out.
      Cool Disco Dan
      • 8 Months Ago
      Just like GM stock holders got screwed its always the man at the bottom of the hill that stands in the piss puddle.
        churchmotor
        • 8 Months Ago
        @Cool Disco Dan
        I don't know. Some would say the Investors are at the top, and the UAW were at the bottom. Obama handed Billions over to the Union and kicked the Investors to the curb.
      tump
      • 8 Months Ago
      That was during the credit crunch, so no private credit = limited options.
      westex74
      • 8 Months Ago
      This is a great example of how screwed up the dealership system is in the USA. I wouldn't think that anybody would have an eternal never ending right to sell cars for a manufacturer. I would think that a Manufacturer would be able to discontinue the agreement for a variety of reasons.
        Bob
        • 8 Months Ago
        @westex74
        you missed the whole point. sure you read the article? Chrysler closed some of the dealerships simply to meet the number to be closed designed by the government. any dealer who balked at becoming an 'all' makes/models dealer had their business agreement torn up. Not the way a business should operate, government should not have 'required' the action..
      ffelix422
      • 8 Months Ago
      There should have been a clause in their bankruptcies that allowed the dealerships left in dust the right to sue both companies if/when those companies recovered. This is sad. I would be angry if I was constantly reading about their record profits.
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