Toronto, Ontario – A class action lawsuit filed by over 200 former Canadian GM dealers can go ahead, following a decision by an Ontario court. The dealers are seeking $750 million in damages, claiming that General Motors of Canada breached provincial franchise laws in eliminating the dealerships.
The terminations were in connection with GM’s 2009 auto bailout by the governments of Canada and Ontario.
The lawsuit also names Cassels Brock & Blackwell LLP, a major Canadian law firm retained to act for the Canadian dealers in anticipation of a GM restructuring. The claim alleges that Cassels was in a conflict of interest by simultaneously acting for the government of Canada in connection with the bailout. One of the conditions for GM to access government funding was the elimination of a large number of GM dealers. The suit alleges that after GM presented a termination package to the affected dealers, Cassels told them to consult their individual lawyers in the limited time which they had to respond to the package. Unable to negotiate as a group and without group legal counsel, the vast majority of dealers signed back the termination package as presented, rather than risk GM filing for a formal insolvency proceeding, as the automaker said it would do if the dealers rejected the offer. The dealers had between two and four business days to accept the package as offered. In Canada, unlike in the United States, GM avoided a formal insolvency proceeding.
The Honourable Justice G.R. Strathy, who made the decision, concluded that justice would be best served by allowing the dealers to proceed as a class action, and said that “it is not realistic to think that an individual franchisee, who has experienced the loss of their business, is financially or psychologically equipped to engage in protracted, complicated and very expensive litigation with one of the largest corporations in North America and a major Canadian law firm.”
Trillium Motor World Limited, a former Toronto GM dealer, has been designated to represent the terminated dealers in every province.