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Ex-GM Dealers Win Round in Court

But the fight’s not over.

by on Mar.04, 2011

A Canadian court certifies a dealer class action against GM seeking $750 million in damages.

More than 200 Canadian dealers who went out of business as General Motors Corp. re-organized in 2009 have succeeded in getting their $750 million class action suit certified.

An Ontario court granted the former Canadian dealers the ability to present their suit, which claims that General Motors of Canada Limited breached provincial franchise laws in eliminating the dealerships.  As part of the maker’s 2009 bankruptcy it decided to eliminate several thousand dealers on both sides of the border.

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Eventually, however, a sizable share of the American retailers were brought back into the fold, either by GM reversing positions or by appealing their case through an arbitration system set up by the U.S. Congress.

Also named in the suit is Cassels Brock & Blackwell LLP (Cassels), a major Canadian law firm retained to act for the Canadian GM dealers in anticipation of a GM restructuring. The dealers claim that Cassels was in a conflict of interest by simultaneously acting for the Government of Canada in connection with the GM auto bailout. Like the U.S., one of the conditions for GM to access billions of dollars of Canadian government funding was the elimination of a large number of its dealers.

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