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Arbitration plan for rejected dealers advances in Congressional bill

November 16, 2010

Franchisees rejected this year by General Motors Co. and Chrylser Group would gain access to third-party arbitration under criteria broader than that planned by the automakers, under legislation that Congress could pass shortly.

Arbitrators under the automakers’ plans were to apply the original criteria used by the companies in marking them for termination. But dealer groups said few dealerships would be restored under these criteria because they were circular and self-fulfilling.

House Majority Leader Steny Hoyer (D-Md.) and Assistant Senate Majority Leader Dick Durbin (D-Ill.)—each the No. 2 Democrat in his respective chamber of Congress—said Dec. 8 that House Resolution 3288 would require arbitrators to balance the economic interests of dealers, the companies and the public. The bill includes the revised version of the LaTourette amendment to assist rejected GM and Chrysler dealers.

Under the bill, dealers who appeal their termination and win in arbitration would receive a letter of reinstatement from GM or Chrysler within seven business days of the arbitrator’s decision, the joint statement said.

The bill was to be attached to a financial services spending measure and considered this month by a conference committee of congressional leaders.

The legislation contains no compensation for rejected dealerships, and it falls far short of a bill pushed last summer by dealer groups to reverse closures of 789 Chrysler stores and the planned termination of 1,350 GM dealerships by October 2010. That bill passed the House but stalled in the Senate.