Some people might not realize it, but when General Motors stripped over 200 car dealers of their dealerships in May of 2009, it had major implications for the local communities they were in, too.
Gary Cooper is one of 207 former GM dealers involved in a $750-million class action lawsuit against General Motors Canada and the Toronto law firm of Cassels Brock and Blackwell, which the dealers claim had an “undisclosed conflict of interest.”
None of the allegations have been proven in court.
Cooper said many car dealers are generous in their communities, but without their dealership affiliation, they now have to struggle to stay alive and much, if not all of that community work, has ceased.
He said it has been three years now since he was able to support the Fergus Devils Junior C hockey team, to which he had given over $100,000 over the years. The Elora Rocks senior hockey team received many sponsored sweaters, plus other equipment, and that has also ceased.
Cooper said he supported food banks, paid for the Birds of Prey demonstrations to go into local schools and sent impoverished children to summer camps. He remembers one child without proper shoes, so he paid for that clothing, too.
He supported Big Brothers Big Sisters. When the local food bank had events, he supported those.
But, since the dealership affiliation was removed, “All that stuff’s gone.” He went from employing 43 people and is now down to 19, leaving many to hunt for new jobs to pay their mortgages.
“There’s a whole human element side effect to what’s happening,” he said.
And, since he does not have new vehicles to offer, he cannot bid to supply trucks to Centre Wellington Township. He said he usually bid low to support the community, so now taxpayers have to pay perhaps a little more for new trucks.
“It wasn’t about making money,” he said, adding he used to win many of the bids and was simply proud to see his name on community owned vehicles. Cooper said people want to buy cars locally and not shop in Guelph. He said there are few Guelph dealerships sponsoring anything in Centre Wellington.
The court approval for a class-action lawsuit accuses General Motors of Canada Ltd. of using “shock and awe” tactics to pressure them into closing their dealerships.
The lawsuit launched last year alleges GM used high-pressure tactics in 2009 to get dealers to sign away legal rights in “wind-down agreements,” giving them six days to decide. That move to close dealerships came as the car maker held bailout talks with the Canadian government and it allegedly told its dealers they had to accept the wind-down agreements or the car company could face bankruptcy.
The dealers claim GM violated franchise laws that state franchisees must be given at least 14 days to consider a franchise agreement. GM disputes its offers were legally franchise agreements.
David Sterns, the dealers’ lawyer, of Sotos LLP, said the decision “is a validation of our claim from start to finish.” He told the Globe and Mail, “You have multi-generational dealers, who have been selling cars for years … and then all of a sudden, wham-bam, you’ve got six days to decide the fate of your business.”
The suit alleges Cassels Brock & Blackwell was retained by the Canadian Automobile Dealers Association and advised GM dealers as they faced the possibility of shutdowns. But, unknown to the dealers, the suit alleges, Cassels was also retained by the federal government, which was pressuring GM to cut costs by shutting down those same dealers.
According to the judge’s ruling, Cassels argues it was only retained by the dealers for advice in the event GM Canada went into bankruptcy, which did not occur. The firm said the dealers behind the lawsuit retained their own lawyers to look over the agreements.
Strathy refused a request by Cassels’ lawyers for a stay in the case pending the results of the allegations against GM.
Harriston Motors and Ken Weeks, of Fergus, also lost their GM dealership. Both owners were out of town and unable to respond to questions.
