This week a federal judge rejected Sterling Truck's attempt to force 42 dealers to arbitrate identical cases separately. In 1999, when Sterling Truck informed dealers that the new Acterra would not be part of the Sterling product line, the 42 dealers located in 21 states challenged the manufacturer. Since the Sterling franchise agreement forces dealers to resolve any dispute by binding arbitration, the dealers could not rely on protections in their state franchise laws. Instead, they had to resort to arbitration to determine whether Sterling was required to offer the Acterra products to Sterling dealers. All 42 dealer agreements and the issues in dispute were identical, so the dealers sought a single arbitration proceeding. Sterling filed a Federal lawsuit seeking to compel each dealer to proceed in a separate proceeding.

On Tuesday, the federal judge dismissed Sterling's case. The end result, while still subject to mandatory binding arbitration, is that dealers will be able to press for a single arbitration proceeding, enabling them to present a stronger, more cost-effective case. In his opinion, the judge stated, "Sterling Truck greatly overstates the practical challenges of resolving this dispute in a single arbitration proceeding." The judge also noted the irony of Sterling's desire to conduct as many as 42 different arbitrations, when the procedure itself is noted for its speed and efficiency.

"The manufacturers often try to justify forced arbitration as a faster, less expensive system for resolving disputes," said Tom Greene, chief operating officer, NADA Legislative Affairs. "But this case demonstrates that manufacturers using mandatory binding arbitration are not interested in efficiency; they want to exert more leverage and control over individual dealers and circumvent the protections provided them under state law." NADA-backed S.1020 and H.R. 534 would protect dealers from the coercive application of mandatory binding arbitration and enable dealers to chose between state remedies and arbitration after a dispute arises.

Estate Tax Measure Sent to the Floor

The House Ways and Means Committee yesterday approved, by a vote of 24-11, H.R. 8, which would phase out and repeal federal estate and gift taxes. The bipartisan bill would end "death" taxes, which currently have rates ranging as high as 60 percent, by 2010. The House is expected to approve the estate tax measure by early June.

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