GM wrong to block Motor Werks' Cadillac dealership relocation, but more still can be done, judge says

By Scott Holland | Oct 2, 2015

A federal judge has sided with a Barrington-based dealer of luxury automobiles in the dealership’s ongoing dispute with General Motors over the automaker’s attempt to block the relocation of its Cadillac dealership — but only to a point.

Motor Werks had sued GM because the auto dealer is trying to move its standalone Cadillac dealership in Barrington to a newly renovated auto mall. GM blocked the move, saying the auto mall is too close to its competitors.

Motor Werks had filed its complaint against GM in Cook County Circuit Court in December 2013. GM removed the case to federal court in Chicago in January 2014.

Motor Werks opened a Cadillac dealership at the South Barrington Road auto mall in 1989, moving to its current Barrington location, 206 N. Cook St., in 2000. It asked GM for permission to return to the mall in 2013, saying the renovated space “would substantially increase service capacity while simultaneously satisfying (GM’s) image standards.” Motor Werks told GM the Cadillac area “would have its own showroom, service entrance, dedicated stall, and technicians. Unlike the present facility, however, the new auto mall would feature cars other than Cadillacs, including defendant’s competitors in the luxury category.”

The memorandum opinion from U.S. District Judge Manish S. Shah references a 2012 dealer agreement between the two parties, which gives GM “final decision in light of dealer network planning considerations.” At the time, GM had a written policy indicating “non-GM products should not be sold or serviced at GM dealerships.”

After extended negotiation, GM “refused to approve the relocation until Motor Werks provided full physical separation for Cadillac sales and services,” Shah wrote.

That ultimatum prompted Motor Werks to file its six-count complaint, which included an allegation GM violated three sections of the Illinois Motor Vehicle Franchise Act, which governs what automakers can demand of their franchise dealers.

Shah’s ruling, issued Sept. 29, is a summary judgment on Motor Werks’ fifth and sixth counts. Count five asked the court to force GM to approve the relocation without requiring the standalone Cadillac facility. Count six was a request for compensatory damages.

However, Shah noted, since filing its request for summary judgment, Motor Werks has said it wants the court to determine GM’s opposition to the relocation plan violates the IMVFA, not an injunction compelling GM to approve the move. The question, then, is if GM directly or indirectly conditioned relocation approval on Motor Werks’ willingness to “enter into” an agreement that effectively forced it to keep the Cadillac facilities separate from other vehicles.

GM contended it did not ask Motor Werks to sign anything at the time of the 2013 relocation request, but Shah said the agreement between the two parties is a case of GM “indirectly conditioning relocation on the entering into of an exclusive use agreement” because the language was part of the 2012 franchise relationship renewal documents. In effect, GM “did something that could not be done all at once and did it sequentially.”

Shah disagreed with GM’s interpretation of a clause in the IMVFA regarding whether a manufacturer can compel a dealer to underutilize its facilities. The statute’s language, he writes, “is plain and unambiguous … no established Illinois precedent will be offended.”

However, while Shah backed Motor Werks’ contention GM’s action violated the state law, he said remaining factual disputes make full summary judgment inappropriate.

According to the statute, GM is entitled to deny the relocation request if it makes “separate and reasonable consideration” to Motor Werks, which has not yet been offered. GM’s written non-dual policy itemizes what benefits might be offered, and that, along with other ongoing factual disputes, led Shah to reason GM still has the chance to respond to Motor Werks’ relocation request without violating the state statute.

Motor Werks was represented in the action by attorneys with the firms of Bass Sox Mercer, of Tallahassee, Fla., and Hardt Stern & Kayne, of Riverwoods.

GM was represented by the firms of Kozacky Weitzel McGrath P.C., of Chicago, and Jones Day, with offices in Columbus, Ohio, and Chicago.

Want to get notified whenever we write about any of these organizations ?

Sign-up Next time we write about any of these organizations, we'll email you a link to the story. You may edit your settings or unsubscribe at any time.

Organizations in this Story

Bass Sox Mercer General Motors Hardt Stern & Kayne Jones Day Kozacky and Weitzel, P.C.

More News

The Record Network