20100510-NEWS--6-NAT-CCI-CL_--
6
5/7/2010
2:45 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
MAY 10-16, 2010
Closed auto dealers gain small victory in bankruptcy case Performance scores on which Spitzer, others shuttered by Chrysler were judged now open By DAN SHINGLER and NEIL ROLAND
Alan Spitzer and about 250 other rejected Chrysler Group dealerships currently in arbitration proceedings with the automaker will gain access to their Chrysler Spitzer performance scores — and those of their competitors — under a decision by a federal bankruptcy judge last week. Mr. Spitzer was the largest Chrysler dealer in the nation to lose his franchises, with seven of his eight stores affected. His dealerships in Akron, Cleveland, Columbus, Lakewood and Sheffield all were cut from the Chrysler network, as were locations in Pennsylvania and Florida. U.S. Bankruptcy Court Judge Arthur Gonzalez in New York has unsealed each dealer’s spreadsheet of about 30 performance categories for use in arbitration, a copy of the judge’s decision shows. The judge also held that each dealer can get copies of the performance charts of rivals to whom the dealer was compared when the dealer was terminated, according to the decision. “Gonzalez, who had ruled against the dealers at every turn, surprisingly ruled in the dealers’ favor,” said Mr.
Spitzer, who co-chairs and helped found the Committee to Restore Dealer Rights, which lobbied Congress to force Chrysler into arbitration last year. “I’m just wondering if he’s starting to realize he was in fact duped by Chrysler, because he was,” said Mr. Spitzer, who has maintained all along that Chrysler has not been forthcoming with accurate information in its bankruptcy case and its decisions to close dealers. Mr. Spitzer said his lawyers are working to get the spreadsheets he needs from Chrysler. In the meantime, he said he hopes the company will negotiate a settlement with him to keep at least some of his dealerships open. If that doesn’t happen, Mr. Spitzer said, he will go to arbitration. So far, Chrysler has won three of the four arbitration cases that have been heard, including one in Cincinnati. But Mr. Spitzer said only two of those cases — both in Florida — were adequately defended by their dealers. Those two cases were split, with one ordered to close and Chrysler forced to keep the second open. “As far as I’m concerned, the score is one to one,” Mr. Spitzer said.
OPEN THE CASE Last week, a federal bankruptcy judge ruled Alan Spitzer and other auto dealers in arbitration proceedings can access their Chysler performance scores, which include about 30 performance categories used in arbitration. Additionally, these auto dealers can access their rivals’ scores, which were used when comparing each other when it came to termination. Mr. Spitzer hopes being forced to share more information with dealers may force Chrysler to settle. “I’m guardedly optimistic that they’ll wake up and do the right thing some day,” Mr. Spitzer said.
Ray of hope Losing a case and being forced to release more information to dealers might put pressure on Chrysler to settle, Mr. Spitzer said. “I wouldn’t say I’m significantly more optimistic, but I’m guardedly optimistic that they’ll wake up and do the right thing some day,” he said. In arbitration, dealerships can use these spreadsheets to evaluate the validity of Chrysler’s explanations of why they were shuttered, said dealer lawyer Leonard Bellavia, of Mineola, N.Y. “We intend to show the many discrepancies between what Chrysler asserted in the bankruptcy hearings
as criteria for rejection against what they now allege in the arbitrations, to show that Chrysler will argue whatever suits its purpose at that given time,” Mr. Bellavia said. Chrysler has described each spreadsheet as “a historical track record” of sales and financial performance that incorporates comparisons between a dealership and competitors in its market area. In the wake of Judge Gonzalez’s decision, Chrysler said it already was producing the spreadsheets sought by individual dealers. “This decision validates what Chrysler Group is already doing and that the company is properly following both the Bankruptcy Court rulings and the discovery provisions of the Federal Dealer Arbitration Statute,” the company said in an e-mail. Chrysler added: “The process to determine which dealership contracts were rejected evaluated dealership performance and market factors using data-driven criteria and was applied to every dealer.”
Limited cooperation alleged Mr. Bellavia disputed Chrysler’s statement, saying the company has been producing only fragments of dealer performance scores in arbitration. “Chrysler had been providing only a very limited excerpt from the arbitrating dealer’s spreadsheet, which redacted all of the performance metrics,” he said.
Mr. Spitzer said Chrysler so far has not been willing to share with dealers the criteria the company used to decide which dealerships to close — and he still wants to see it. “In our view, they have not complied with the law in terms of the criteria,” Mr. Spitzer said. “The legislation requires them to give the specific criteria that was used to terminate the dealer and they’ve never given it.” Another dealer lawyer, Mark Ornstein of Orlando, agreed. Mr. Ornstein, whose arbitrations on behalf of three Florida clients were completed last week — he won one and lost two — said he tried to obtain from Chrysler the criteria used to terminate the dealers. “All we got were fragments,” he said. “We went into the hearing totally blind. I don’t think my clients were ever given the real reason why they were terminated.” Last week, a rejected-dealers’ group urged all its members in arbitration with Chrysler to have their lawyers obtain their individual spreadsheets from the automaker immediately, as Mr. Spitzer already is doing. Mr. Spitzer said he still hopes to resolve his situation by midsummer. ■ (Dan Shingler is manufacturing reporter with Crain’s Cleveland Business and Neil Roland is Washington reporter with Automotive News, a sister publication.)
A CALFEE ATTORNEY knows that industry expertise is the key to valuable counsel.
We work hard every day to earn the title of trusted advisor. By immersing ourselves in your industry, we can better understand the complexities and nuances of your organization. This commitment allows a Calfee attorney to offer true value: interpreting the law to help you achieve your business objectives.
Calfee, Halter & Griswold LLP www.calfee.com