DETROIT - Chrysler has broadened its federal court request for discretion in where to place reinstated dealers who prevailed in arbitration, reported Automotive News.

The automaker asked for this latitude in reinstating more than 20 dealerships in Michigan, Ohio and four other states.

In September, the company had made a similar request in a case in U.S. District Court here involving Colleen McDonald's Livonia Chrysler Jeep in suburban Detroit. Chrysler maintains it should be able to give franchises to the reinstated dealerships wherever it wants. The dealers contend they should have their old stores back in the original locations.

The original case was consolidated earlier this month with others affecting more than 20 dealers in at least six states.

More Interpretation

The new litigation could have a much broader reach.

Chrysler wants the judge to rule that reinstated dealers have won back a right to be dealers again, but not necessarily to the same locations and market conditions as before. They also may have to satisfy other state regulations or meet market conditions before they can reopen.

“(Livonia Chrysler Jeep's) interpretation of the (dealer arbitration) Act contradicts the plain language of the Act, and its civil action… seeks to fashion a remedy that is nowhere to be found in the Act,” attorneys John Berg and Cynthia Filipovich of Detroit law firm Clark Hill argue in their counterclaim on behalf of the automaker.

“(So) Chrysler respectfully requests … a declaration that the Act limits the arbitrator's power to the determination of whether or not the covered dealership should be added to the (OEM's) dealer network…”

Also waiting to open in the Detroit area market are the owners of Bruce Campbell Dodge in Redford Township, Village Chrysler Jeep in Royal Oak and Fox Hills Chrysler Jeep in Plymouth.Those four are among more than 20 in the consolidated lawsuit from Michigan, Ohio, Wisconsin, Montana, Colorado and Illinois, out of 32 terminated dealers that have prevailed in arbitration hearings.

Chrysler prevailed in 76 arbitration cases after closing 789 dealers in 2009, 14 of which were in metro Detroit. The closures reduced its 3,200-dealer network to about 2,400 as part of its bankruptcy restructuring.

“It (the new counterclaim) was a strange thing for Chrysler to do because a lot of this ruling is going to come down to how you view state franchise law, which is different in Michigan from these other states,” said Robert Davis, a lawyer representing McDonald and Bruce Campbell.

Same as It Ever Was

Davis and partner James Brennan said a ruling like the one Chrysler seeks would be a first of its kind in the nation and disrupt the entire reinstatement process.

Livonia Chrysler, for example, may not be able to reopen in its old location because it would compete too closely with Crestwood Dodge Chrysler Jeep Ram in nearby Garden City and run afoul of a state law governing “like-line” dealers in overlapping markets.

Crestwood received Livonia's franchise from Chrysler, before the McDonald dealership prevailed in arbitration.

“Our position in litigation is, we have to be put back to the way life was. You have to give back (to Livonia) what you took and gave to Crestwood,” Davis said. “Why else would Congress have created this process for reinstatement? Not to just put us into a whole new other fight in court.”

Chrysler and several of the dealers in the combined lawsuit also have competing motions to dismiss the case or for summary judgment, which attorneys expect to be heard in March.