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Canadian Dealers Sue GM

Seeking $750 million under franchise laws.

by on Jan.26, 2010

Ousted Canadian GM dealers are suing the company for $750 million.

A class action lawsuit seeking $750 million in damages has been filed on behalf of 215 Canadian auto dealers terminated by GM as it reorganized last year under the threat of bankruptcy.

The suit was filed in the Ontario Superior Court of Justice and claims that GM of Canada Limited breached franchise laws as it selected dealers for elimination.

The suit also takes aim at a Canadian law firm, CBB, which had been retained in advance to represent Canadian dealers in a GM restructuring or bankruptcy.  The suit claims the law firm failed to disclose to the dealers that it was simultaneously acting on behalf of the Canadian Government in the GM auto bailout. CBB is denying the allegations.

(Over 1,200 ousted U.S. GM and Chrysler dealers file for arbitration. Click Here for that  story.)

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The lawsuit noted that the Canadian Government insisted that GM scale back its dealership network as a condition of its multi-billion dollar bailout funding. The bailout was the largest government subsidy given to a corporation in Canadian history.