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$750-million class action against GM, law firm goes forward

A $750-million class action lawsuit against General Motors of Canada Ltd. and Cassels Brock & Blackwell LLP was certified by the Ontario Superior Court last week.

Former GM dealer Trillium Motor World Inc. of Toronto, designated to represent a large number of former GM dealers in Ontario, claims the car company breached provincial franchise laws in eliminating dealerships as part of the 2009 auto bailout by the governments of Canada and Ontario.

One of the conditions for GM to access billions of dollars of government funding was the elimination of a large number of GM dealers.

Cassels Brock is also named in the lawsuit. The firm acted for the Canadian GM dealers in anticipation of a GM restructuring, and the dealers allege Cassels Brock was in a conflict of interest by simultaneously acting for the government of Canada in connection with the auto bailout.

The two Cassels Brock lawyers named in the lawsuit are Peter Harris, who allegedly consulted the dealers in a last-minute conference call two days before the deadline for their decision on the GM compensation offer; and Michael Weinczok, who later published his role in the GM bailout on his firm’s web site.

“I have concluded that the issues other than damages are capable of being resolved on a common basis,” Justice George R. Strathy notes in his decision (http://www.sotosllp.com/wp-content/uploads/2011/03/reasons-for-decision-certification.pdf) to certify the class action.

Strathy also notes a class action is better than individual litigation in this case, because “it is not realistic to think that an individual franchisee, who has experienced the loss of their business, is financially or psychologically equipped to engage in protracted, complicated and very expensive litigation with one of the largest corporations in North America and a major Canadian law firm.”

The Canadian federal and Ontario governments gave $4 billion in emergency loans to GM and other Canadian subsidiaries of U.S. automakers in early 2009. Much of it has since been paid back.

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