The high number of car dealers appealing auto makers’ termination notices has taken the American Arbitration Assn. by surprise.
It had expected to hear a few hundred cases, says India Johnson, a senior vice president at the organization. Instead, it will hear from about 1,500 dealers who have lost or stand to lose their franchises fromCo. and Group LLC.
Because of the unexpected high volume of cases, “it took weeks to sort it all out,” she tells Ward’s.
The hearings currently are under way. Congress ordered the arbitration after dealers called many of the franchise terminations – the result of the two auto makers’ post-bankruptcy reorganization plans – unjust and unwarranted.
“I’m excited so many dealers picked arbitration, and we are moving very quickly now,” Johnson says.
Here’s how it works. “First, we do a hearing conference and map out the case,” she says.
Then dealers and their lawyers pick their arbitrators, either one person or a panel, from an AAA pool. Dealers’ lawyers can review the arbitrator’s credentials, much like picking a personal attorney.
The New York-headquartered AAA employs more than 600 people and works with thousands of arbitrators nationally who are mostly lawyers or retired judges.
The total number of dealers filing for arbitration has been fluctuating because some dealers filed their intentions with auto makers and some are dropping their cases. The number AAA counts now is about 1,553 filers, but that too could change, Johnson says.
What remains unknown is how many dealers will stay on to see the cases through, she says. Some contesting dealers believe dropouts could occur among those who either don’t have the financial means to carry through or give up for other reasons.
Johnson says so far, “nobody has asked for reduced rates, special consideration or waiver of fees.”
Cases should prove interesting. The AAA is not an expert in how the automotive industry works, she acknowledges.
“A lot of dealer (advocate) groups spent a lot of time educating Congress on the rights of the terminated dealers,” Johnson says. That could account for the high number of arbitration cases.
A tall order is that all cases must be completed by June 14, six months from when the law was signed by President Obama.