Canadian dealers file suit against GM

Thu Jan 21, 2010 6:12pm EST
 
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TORONTO (Reuters) - More than 200 former General Motors' dealers from across Canada filed a C$750 million ($714 million) lawsuit on Thursday against the auto giant, nearly a year after they were terminated as part of the multibillion-dollar government bailout of the company.

The class action suit by 215 former GM dealers was filed in court in Ontario, Canada's car manufacturing hub, and targeted GM subsidiary General Motors of Canada Ltd.

The lawsuit also named a Canadian law firm Cassels Brock & Blackwell LLP (CBB), alleging that it failed to disclose to dealers that it was simultaneously acting for them and for the Canadian government in the GM auto bailout.

The law firm, which could not be reached for immediate comment, was reportedly retained in advance to represent Canadian dealers in a GM restructuring or bankruptcy.

"The offer they (dealers) were handed gave them a fraction of what their businesses were worth, but they had no collective representation and precious little time," David Sterns, one of the lawyers for the lead plaintiff, said in a statement.

The suit was filed by representative plaintiff Trillium Motor World Ltd, and needs to be certified as a class action before it can proceed.

The suit essentially alleges that dealers were pressured into signing deals individually after being terminated, without having the opportunity to negotiate as a group.

The Canadian government insisted GM scale back its dealership network as a condition of its $9.5 billion bailout of the automaker.

At the time, GM had manufacturing plants in Oshawa and St. Catharines, a parts distribution plant in Woodstock, a transmission plant in Windsor, and a joint-venture plant with Suzuki in Ingersoll, all in the province of Ontario.   Continued...