In the News...

Bill would fine Chrysler for ignoring Colorado dealer-rights law

Friday, April 23 2010

The Denver Business Journal
By: Ed Sealover
April 23rd, 2010

A bill that is expected to be introduced Friday in the Colorado Legislature proposes to fine Chrysler Group LLC as much as $25,000 for each day that it does not comply with a dealer-restoration bill signed into state law one month ago.

House Bill 1049, which Gov. Bill Ritter inked on March 22, requires that any auto manufacturer that closed dealerships due to bankruptcy — specifically Chrysler and General Motors — offer those dealers first right of refusal if the car makers decide to reopen a franchise within five miles of the dealerships within five years of termination. If the manufacturer already has re-awarded a franchise in the area, the bill also states, then it must offer the terminated dealer the opportunity to take back that franchise.

General Motors announced it was closing 25 Colorado dealers and Chrysler 14 in the state last year as part of their federal bailout and restructuring deals. But while General Motors has given its dealers time to shut down, Chrysler closed its dealers quickly and, in some cases, re-awarded franchises shortly afterward to other area dealers, several dealers testified to legislative committees earlier this session.

After the signing of House Bill 1049, three specific dealers — Jim Fynes of Phil Long Littleton, Yale King of King Auto Group Longmont and Dave Fitzgerald of Northglenn Dodge — went to Chrysler dealerships and demanded back their franchises that had been re-awarded. But each were told that Chrysler had no intention of complying with the new Colorado law, said Melissa Kuipers, vice president of government relations and communications for the Colorado Automobile Dealers Association (CADA).

Chrysler officials did not immediately respond to a request for comment.

So, the Senate sponsors of HB 1049 — Sens. Shawn Mitchell, R-Broomfield, and Chris Romer, D-Denver, worked with CADA to come up with the new legislation, which Mitchell confirmed that he plans to introduce Friday. The bill is expected to move quickly to a committee hearing next week, Mitchell added.

The new measure will give the Colorado Motor Vehicle Dealer Board the authority to impose penalties of between $10,000 and $25,000 per day on any manufacturer that does not comply with House Bill 1049. If passed, the bill would take effect immediately upon Ritter’s signature and likely would apply only to Chrysler initially, since General Motors has not re-awarded the franchise of any terminated dealers, Kuipers said.

“Chrysler’s announcing that it will ignore the Colorado law and telling its terminated dealers to go pound sand is outrageous,” said Mitchell, who added that he was given a forwarded e-mail that included a Chrysler official saying it would not comply with HB 1049. “In more than a decade in the Legislature, I’ve never seen a company say: ‘We’re going to ignore your law.’”

Colorado law currently allows for only a one-time penalty of $2,500 for anyone that ignores the state’s franchise laws.

Supporters of the new bill are still looking at whether there can be further penalties, Kuipers said. One idea that has been proposed is to suspend an auto manufacturer’s license to operate in the state if there is non-compliance with franchise laws. However, that idea is unlikely to move forward in that form, as that would prohibit Chrysler from supplying vehicles to any dealership in the state, she noted.

Kuipers said that CADA has not talked to Chrysler officials about the company’s actions, noting that it did not feel it would get a response after Chrysler did not even bother to testify against HB 1049 when it reached a Senate committee.

The original bill passed the House by a margin of 60-5 and the Senate by a margin of 35-0.