Supreme Court Refuses To Hear Dispute Over Chrysler Dealerships

On Monday, the U.S. Supreme Court 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. 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. This week, the justices let stand a lower court ruling that said the law doesn’t interfere with a bankruptcy court order.

Back in 2009, Chrysler made the decision to close 789 out of its nearly 3,200 dealerships as part of its bankruptcy restructuring, with the dealers receiving just 22 days of notice before they were forced to close. In December of that year, Congress passed legislation giving dealers that were closed by Chrysler and General Motors the right to arbitrate their closings, with President Obama signing the legislation.

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

Before arbitration, Chrysler offered letters of intent to 50 former Chrysler dealers. Out of more than 400 dealers who went to arbitration, Chrysler won 76 cases while 32 dealers won arbitration, with the rest having been settled by other means. The letter of intent didn’t reinstate a dealership, but it did set the framework for reaching an agreement on the terms to reopen. However, some dealers who didn’t close sued to block reinstated dealers from opening, with an appeals court ruling on behalf of reinstated dealers in January.

This marks the second time that the Supreme Court has refused to get involved in this 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.