September 21, 2009

Utah drops idea of auto dealership law

Utah lawmakers are giving up an attempt to pass a law to back up Chrysler dealerships that were dropped in the automaker's bankruptcy.

Chrysler terminated its contracts with hundreds of dealerships this summer in its bankruptcy proceeding. Eleven of those were in Utah, provoking an effort to help the local franchises in the state through legislation, The Salt Lake Tribune reported Monday.

But a recent ruling in Chrysler's federal bankruptcy process said dealerships that tried to circumvent the standard bankruptcy appeals process could be subject to a $10,000-a-day fine.

The ruling ended the attempt to pass a state law, but not the bitterness.

We would just end up having a law that's invalid on its face and if we tried to enforce it, it's likely that (the bankruptcy order) would be upheld in federal court, said Republican state Sen. Dan Liljenquist said.

A company spokeswoman, Kathy Graham, said Chrysler was trying to avoid having to face litigation in 50 courtrooms in 50 different states.

But Liljenquist said, there's going to be a long-run penalty that Chrysler is going to pay anyway.

People don't want to deal with people who are dishonest and take advantage of people who they know and have come to trust, he said.