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GM Dealers File Suit Against General Motors

28 January 1999

GM Dealers File Suit Against General Motors To Preserve Local Advertising Program

    CHICAGO, Jan. 27 -- In order to maintain its successful local
advertising program, more than 60 General Motors dealers in Illinois and their
dealer trade associations filed suit against General Motors today
in the Circuit Court of Cook County, Illinois, challenging the legality of
General Motors' recently announced Field Marketing Strategy Program.  The
program, scheduled to begin April 1, 1999, involves unilateral changes by
General Motors to the way dealers' advertising money is spent on a local and
regional level.
    The suit alleges that General Motors' new marketing program is in
violation of Illinois law because it takes monies belonging to General Motors
dealers and reallocates it to General Motors' advertising programs without
dealer approval.  The dealers named in the lawsuit have sued on their own
behalf and as class representatives of all General Motors dealers in Illinois.
    "The GM dealers are very disappointed that General Motors has taken action
on this issue without any meaningful discussion or input from its largest
customer, the 9,000 dealers it relies on to sell its products every day," said
attorney Samuel K. Skinner, co-chairman of Hopkins & Sutter and counsel for
the GM dealers in the lawsuit.  "This money is the dealers' money -- not
General Motors'.  There has been a long established understanding as to how
these monies would be spent.  General Motors is now trying to take control of
these funds in violation of the Illinois Motor Vehicle Franchise Act.  We hope
to resolve this matter quickly, and let the dealers get back to their business
of addressing the needs of the consumer."
    In their complaint, the dealers and their associations allege that General
Motors' new program violates the Illinois Motor Vehicle Franchise Act.  The
Act prevents automobile manufacturers from requiring dealers to fund
manufacturers' advertising campaigns at their own expense.
    Under the present system, the dealers have authorized General Motors to
collect one percent of the suggested retail price from car sales and transfer
the monies to local dealer marketing groups formed by the dealers to pay for
advertising in their areas.  For example, amounts paid by the Chicago-area
Chevrolet dealers have been asked to fund the Chicago Chevy Dealers
Association that has used Michael Jordan as its spokesman for years.  Under
the new program, General Motors would simply keep the dealers' money.
    The dealers and associations have asked in their complaint for an
injunction that would halt the implementation of the new program and for the
court to rule that the program is unlawful.  The suit also provides for the
return of any funds that General Motors may collect in connection with the
program, and for punitive damages permitted by the Act.