US auto dealers sue M&M, allege fraud and conspiracy
Automobile dealers from across the United States have filed a lawsuit against utility vehicle maker Mahindra & Mahindra and its U.S. arm, accusing it of fraud, misrepresentation, and conspiracy.
June 07, 2012 / 09:21 AM IST
Moneycontrol BureauAutomobile dealers from across the United States have filed a lawsuit against utility vehicle maker Mahindra & Mahindra and its US arm, accusing it of fraud, misrepresentation, and conspiracy.The lawsuit alleges that M&M duped hundreds of US auto dealers and walked away with more than USD60 million in cash and trade secrets. Attorney Michael Diaz, the managing partner of Miami-based Diaz Reus & Targ, who leads the plaintiffs' legal team said Mahindra simply reneged on its promises."Mahindra told the dealers that its light trucks and SUVs were ready for delivery to the US market," said Diaz. "However, Mahindra intentionally delayed certification of its vehicles after obtaining the dealership fees and trade secrets, and began pursuing other partners in the US and elsewhere in clear violation of their commitments."In March M&M had said it won a lawsuit filed against it by Atlanta-based Global Vehicles. A London arbitration panel ruled in its favour dismissing claims by Global Vehicles that an exclusive US distribution agreement established in 2006 had been violated, it had said. A US class action lawsuit filed by dealers against Mahindra and Global Vehicles had also been dismissed.
The latest lawsuit was filed in US District Court in Atlanta on June 4 against M&M and Mahindra USA, Inc by dealerships in New Hampshire, Florida, California, New Jersey, and Washington.According to the lawsuit, US dealers paid initial dealership fees, undertook marketing on Mahindra's behalf, built Mahindra showrooms, display platforms and showcases, and hired additional personnel, all at Mahindra's urging. "Through their false representations, the defendants lured the US dealers into making investments and promoting Mahindra's brand name," said Diaz. M&M shares on Wednesday closed up 3% at Rs 674.55 on NSE.