Supreme Court Lets Stand Ruling Denying Chrysler Dealership

A sign stands at the Hollywood Chrysler Jeep dealership on December 3, 2013 in Hollywood, Florida.(Photo: Joe Raedle / Getty Images)


Washington – The U.S. Supreme Court on Monday again refused to consider whether a law that allowed Chrysler dealerships to appeal to reopen after a 2009 bankruptcy is constitutional.

The High Court refused to hear the appeal of an Ohio dealer who had sued to block a nearby dealer who had won the right to reopen. The dealer, Fred Martin Motor Co. in Akron, argued that state franchise laws trumped the federal law in 2009 that gave dealers a chance to reopen. The dealership sued to block the reinstatement of Spitzer Autoworld Akron LLC and argued that Congress had violated federal bankruptcy laws.

The justices on Monday let stand a lower court ruling that said the law doesn’t interfere with a bankruptcy court order.

In 2009, Chrysler decided to close 789 of its nearly 3,200 dealers as part of its bankruptcy restructuring. The dealers had just 22 days’ notice before they were required to close. That December, Congress passed legislation giving dealers that were closed by Chrysler and General Motors Co. the right to arbitrate their closings. President Barack Obama signed the legislation.

Fred Martin argued that the law would give Congress the ability to meddle in future bankruptcies but the Supreme Court declined to take up the case.

Chrysler offered letters of intent to 50 former Chrysler dealers before arbitration. Of more than 400 dealers who went to arbitration, Chrysler won 76 cases while 32 dealers won arbitration; the rest were settled by other means. The letter of intent didn’t reinstate a dealership but set the framework for reaching an agreement on the terms to reopen.

But some dealers who didn’t close sued to block reinstated dealers from opening. In January, an appeals court ruled on behalf of reinstated dealers.

This is the second time the Supreme Court has refused to get involved in the issue after it declined in June to hear Fiat Chrysler’s appeal of a ruling that allowed four former Chrysler dealers to get reinstatement letters and that the law preempted state franchise laws.

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