General Motors’ Settlement Offer to Rejected Dealers has Strings Attached

General Motors Company has begun contacting some rejected dealers who have filed for arbitration to discuss reinstating their franchises. GM’s reinstatement offers, however, require dealers to exclude certain documents from the arbitration hearings if they want to precede with the settlement negotiations.

The fear among some dealers and their attorneys is that they could find themselves in a no-win situation if the talks fail and they decide to opt for arbitration at a future date.

In a one-page letter sent out to dealers, GM requests their signatures in order to authorize the commencement of negotiations that could lead to their being added or reinstated to the automakers dealer network. By signing the document, dealers also agree to the conditions outlined in the letter.

One such condition would give GM and the dealer the right to designate certain documents or written information used during the negotiations as confidential. Such documents would only be shared with persons with a direct need to know – presumably a dealers financial advisor or attorney.

The letter goes on to state that such documents shall not be admissible by anyone in the arbitration or in any other proceeding of any nature for any purpose whatsoever.

General Motors’ spokesman, Dave Roman, said the letter has been sent to dealers seeking reinstatement through third-party arbitration over the past couple of days.

Citing the confidential nature of communications between GM and the dealers, he declined to comment on how many dealers will be receiving the letter or the time period during which they might be contacted. He said that GM will provide additional details of its proposed settlement talks in the coming weeks.

Attorney Ronald Coleman said the conditions included in the letter raise questions about GM’s sincerity. He said, If GM decides to designate key documents we need as confidential, we can’t accept that, and added, GM seems to be opening the door for settlement talks but slamming it with the confidentiality designation.

Coleman, who is representing about 10 rejected dealers, said the confidentiality stipulations included in the letter will no doubt discourage dealers from engaging in settlement talks with GM.

Hypothetically, he said, GM could claim as confidential, documents that prove its decision to reject a particular dealer was based on arbitrary information. Coleman said if that happened to one of his clients, We’d need those documents in arbitration if settlement talks were to break down.

He also said the confidentiality clause would prevent dealers from sharing information with each other and the Committee to Restore Dealer Rights which was instrumental in the passage of the law that required GM and Chrysler Group to agree to arbitration.

GM would like to settle with as many of the 1,160 arbitration claims as possible in order to avoid the cost and time investment of arbitration.

General Motors of North America president Mark Reuss said, “I’d like to settle out of arbitration as many as we can because we want a mutually agreed-upon decision, but added, If someone needs to arbitrate, we’ll arbitrate.

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