Wednesday, May 25, 2011

Mahindra Class Action Gains Momentum, Dealers File Complaints at State Level

A lawsuit initiated by St. Louis-based would-be Mahindra pickup dealer Jerry Ackerman, has piqued the interest of 45 other expectant dealers seeking refunds and punitive damages from Indian automaker, Mahindra & Mahindra Ltd (Mahindra) and US importer, Global Vehicles USA (GV).  Additionally, another 70 dealers recently met in Atlanta to discuss joint legal action directly against Mahindra & Mahindra.

Class Action Claim
As we reported in April, Ackerman and Automotive Leasing Corp. filed a federal class action claim against both Mahindra and GV.  The claim states that despite Ackerman’s requests, both Mahindra and GV have refused to release the money paid for three Mahindra franchises.  The class action lawsuit is open to any entity that entered into at least one Dealer Sales and Services Agreement and paid money for the right to sell Mahindra products and accessories.  The suit seeks actual and punitive damages for breach of contract.

According to Automotive News (via Autoblog), around 45 (of around 350) other dealers have shown interest in joining Ackerman’s class action claim.

State Grievances
Another 70 dealers met in Atlanta (GV is headquartered in nearby Alpharetta) Georgia last month to discuss taking legal action directly against Mahindra.  Global Vehicles has not responded to email requesting response on the Ackerman claim, but Mahindra Planet is surmising that they are the organizers of the Atlanta meeting and are possibly encouraging the dealers to organize and seek legal action against Mahindra directly.

The 70 Mahindra franchisees, lead by New Hampshire car dealer Joseph Yergeau, intend to file complaints against Mahindra directly with their state motor vehicle law enforcement agencies.  These dealers feel that Mahindra and its failure to deliver its over-promised compact diesel pickups lies solely with Mahindra itself.  Yergeau says, “Our beef is with Mahindra, not Global.  Mahindra refuses to to talk to us.  But at some point they are going to have to deal with their dealers.”

A Third Action
Since Mahindra claimed that its distribution agreement with GV was null and void back in August of 2010, GV has focused on litigation and an arbitration process to come to an accord with Mahindra and satisfy the empty-handed dealer network they began developing in 2008.  After being forced to drop their federal lawsuit directly against Mahindra in February, GV has focused entirely on the arbitration set to begin in August of this year. 

According to Automotive News, some dealers have been contributing to a legal defense fund in support of GV’s arbitration efforts.  After an arbitration decision is rendered, GV will once again have the option of filing another federal lawsuit against Mahindra if they choose to do so.

With three separate actions occurring simultaneously: 1) federal class action, Dealers v. Mahindra and GV; 2) Dealers v. Mahindra, via state law enforcement; 3) GV v. Mahindra arbitration, a clear outcome and conclusive arrangement may not emerge for quite some time.

As an anonymous dealer on a dealer’s forum put it:

“In a nutshell, for my investment to be worth a plug nickel, Mahindra needs to do one of three things: 1) Give an absolute confirmation, "Global's Dealers are Mahindra's dealers regardless of the outcome of the Arbitration; or, 2) Global needs to win the Arbitration; Or, 3) Mahindra needs to buy either a majority interest in Global's stock (thus we become Mahindra's dealers) or buy out Global's Assets including all the franchise agreements (thus we become Mahindra's dealers).

Clearly, there is little here we dealers have contol over!

You're right--What a Mess!”

1 comment:

Truckbuyguide said...

Its a great shock that one of the branded automotive company like Mahindra is facing such a grievance.Its one of the brand name in India ,it's trucks and cars are in great demand,with this it's market value can be decreased.