Class Action Filed on Behalf of Pennsylvania Purchasers of GM Vehicles
28 April 2000
Class Action Filed on Behalf of Pennsylvania Purchasers of GM VehiclesLANCASTER, Pa., April 27 A class action lawsuit was filed yesterday in the Lancaster County Court of Common Pleas against General Motors Corporation (NYSE: GM). The suit seeks certification of a class of thousands of purchasers of GM vehicles in Pennsylvania between September 1988 and April 1, 1999. Joseph F. Roda, of the Pennsylvania firm of Roda & Nast, P.C., filed the lawsuit on behalf of a Lancaster County resident who purchased a new 1998 Pontiac Grand AM. The lawsuit alleges that General Motors, in violation of the Pennsylvania Board of Vehicles Act, forced dealers to participate in advertising at their expense. This forced participation caused dealers to pass on the charge to buyers, and ultimately injured consumers. Roda said that beginning in the 1960's and continuing through the early 1990's, many GM dealers formed associations to engage in the local advertisement of GM products. Dealers who belonged to these associations funded them through voluntary assessments that dealers paid when purchasing new vehicles from GM. The assessments were in no fixed or set amount, and payment of an assessment was not required for dealers to purchase a GM vehicle. Dealers originally paid these assessments directly to their associations, but at the dealers' request, GM undertook to collect the voluntary assessments when it sold dealers its vehicles, and then passed the money along to the associations. In the fall of 1998, GM implemented mandatory dealer participation in its advertising. Under programs called "Marketing Initiatives," GM added 1% of the Manufacture Suggested Retail Price to the invoice price of new GM vehicles. Dealers then passed the mandatory increase on to the buyer. On April 1, 1999, GM terminated the 1% mandatory assessments because of litigation brought by GM dealers against GM. The lawsuit is brought under Pennsylvania's Board of Vehicles Act, 63 P.S. S818.1, et seq., which became effective January 1, 1984, and provides that a manufacturer may not require a dealer to participate monetarily in an advertising campaign. The same law also provides that any person who is injured by a violation of the statute may sue for damages. The lawsuit contends that the retail customers of the vehicles covered by the 1% mandatory assessments were injured because they ultimately had to pay the 1% assessments, since the dealers passed the assessments onto consumers by adding the assessments to the retail price of the vehicles. The lawsuit affects all persons who purchased a new vehicle from a franchised Pennsylvania GM dealer manufactured or distributed by the Chevrolet, GMC Truck, Cadillac, Oldsmobile, Buick, Pontiac and Saturn Divisions of General Motors Corporation, and that was covered under a Marketing Initiative. Vehicles purchased under the GMC Employee Purchase Plan, by GM qualified fleet purchasers or by governmental agencies are not included. GM has faced litigation from dealers in several states, including Pennsylvania, because of the 1% mandatory assessments.
