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Automobile Dealer Arbitrations

The automobile dealer arbitrations for GM and Chrysler are finished, and I believe they offer insight into how powerful a tool arbitration can be for franchisees (and franchisors).

I wrote about the program when it was starting. Although I couldn't write much at the time as I had been appointed an arbitrator in ten cases, all of my cases have settled, which allows me to write now.

Essentially, Congress passed a statute that allowed dealers to appeal their termination by General Motors or Chrysler.  The appeal had to be through the American Arbitration Association, had to be handled in 180 days in a cost-effective manner, and was to be decided by a series of public policy factors that I mentioned in my prior column.  (For more information, see here and here.)

From my vantage point, the AAA did a spectacular job in developing a panel of qualified arbitrators, training the arbitrators for the special requirements of these arbitrations, and stressing the demand for speed and cost-effectiveness.  I learned of the cases I was picked on in about 60 days, and was ready to schedule prelimary hearings promptly.  Counsel in the cases appeared to be quite cooperative and willing to work together to lower costs and speed resolution.

Janet Sparks' news piece, which is one of the first summary articles I've read that reports on how attorneys have viewed the process, suggests Dady & Garner were pleased with the process.  And anecdotally I've heard favorable reports from other attorneys.  I'd enjoy hearing more reactions if any BMM readers can report directly or second-hand.  This will be a major project to evaluate and learn from.

While this process is materially different from standard arbitration, I still think we can learn a lot from it.  The arbitration was mandatory, and it was a fixed AAA panel, two aspects that franchisees regularly criticize.  Yet with training, diligence on all sides, and good counsel,the cases were handled quickly and inexpensively, and (from what I've heard so far) fairly.  This is what arbitration should be about.

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About Peter Silverman

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PETER R. SILVERMAN is a partner with Shumaker, Loop & Kendrick, LLP, focusing on commercial litigation and alternative dispute resolution.