Jones: General Motors Must Treat Over 2,600 Dealerships Closures 'Fairly and Honorably'

BIRMINGHAM, Ala., April 28, 2009: Former U.S. Attorney G. Douglas Jones called on embattled automaker General Motors today to honor existing dealerships closure agreements and to treat the over 2,600 dealerships that are to close "fairly and honorably."

"We understand that GM needs to reduce the number of dealerships in order to survive the financial crisis that they have gotten themselves into, but GM must honor the legal and contractual obligations they have to their loyal dealers," Jones said. "Bond holders and union members are not the only groups that have financial obligations due to them by GM."

GM announced late yesterday that they were to slash auto dealerships by 42 percent from 2008 to 2010 levels. Dealerships will be reduced by 2,641 locations from 6,246 to 3,605.

"GM and its financing arm GMAC now have the moral obligation to treat the closing dealerships fairly and honorably," said Jones. "As reported last month in the Detroit Free Press, GM appears to have intentionally engaged in deceptive and unsavory business practices against its own auto dealerships. Before yesterday's announcement, GM and GMAC have arbitrarily and capriciously altered dealership financing terms and requirements, and have wrongfully withheld rebates, warranty claims, and funds due to its dealerships under established franchise agreements in an effort to drive them out of business and thus allowing GM to avoid their legal and contractual obligations to these dealers."

Jones, who captured national attention as a U.S. Attorney in 2001 for successfully re-opening and prosecuting the 16th Street Baptist Church Civil-Rights Bombing Case of 1963, is leading a legal challenge against GM and GMAC on behalf of a family-owned Chevrolet dealership that has been serving the Hartselle, Alabama area for over 52 years. Jones is now a partner with the Haskell Slaughter Young & Rediker, LLC law firm in Birmingham, Alabama.

In a 12-page complaint filed in February by Jones and attorney Jeffrey E. Friedman, GM and GMAC are accused of trying to shakedown a $300,000 cash security deposit and withholding over $160,000 in rebates and warranty funds from the family-owned dealership, Abercrombie Chevrolet. GM knew the dealership could not fulfill the unreasonable and unconscionable credit obligation of posting $300,000 cash. Even more stunning, GM rejected an offer for a second mortgage on Abercrombie's property which had over $1.3 million in equity.

Jones served as U.S. Attorney for the Northern District of Alabama from 1997 through 2001. Friedman is a principal of the Friedman, Leak, Dazzio, Zulanas, and Bowling law firm in Birmingham.