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US auto dealers lawsuit against Mahindra upheld

Posted: March 8, 2013 - 5:45PM
Author: Don Bain
The motion by Mahindra & Mahindra, Ltd. to dismiss the lawsuit alleging fraud, misrepresentation and conspiracy by US auto dealers last June has survived the first challenge, as presiding US District Judge Thomas W. Thrash ruled to allow the case to move forward.


However, the hearing on the motion held in Atlanta yesterday did not set a date for further court action.

The lawsuit accuses Mahindra of duping US auto dealers and walking away with over $60 million in cash and proprietary secrets, according to attorney Michael Diaz, Jr., global managing partner of Miami-based Diaz Reus & Targ, legal representation for the plaintiffs.

"We look forward to the next phase of this litigation and bringing justice to hundreds of U.S. auto dealers across the country who were victimized by Mahindra's fraudulent business practices," said Diaz, leader for the legal team also including Gary Davidson, Brant Hadaway, Carlos Gonzalez and Ahmand Johnson.

The mass tort action was filed last June, against Mahindra & Mahindra, Ltd, and Mahindra USA, Inc. by dealers in New Hampshire, Florida, California, New Jersey, and Washington who all paid initial dealership fees, undertook marketing on Mahindra's behalf, built Mahindra showrooms, display platforms and showcases, and even hired personnel as a result of Mahindra's urging, according to the lawsuit.

The action was taken after Arun Jaura, a top Mahindra executive, attended an Atlanta automotive show in 2007 in a move to court US dealers. He picked the right place as roughly 400 American auto dealers were in attendance.

Mahindra executives proceeded to present videos showcasing the durability of its vehicles, over varied terrain. A time-line was delineated for the introduction of Mahindra's four-door truck to the US by the end of 2008, to be followed by a two-door truck and SUV in the third quarter of 2009.

The pitch managed to elicit $8.5 million in investment funds from the dealers, according to the lawsuit. The firm followed up with press releases, sales pitches, advertisements and news articles, manipulated by Mahindra to entice more dealers to carry the firm's vehicles.

"In a commercial fraud and conspiracy case, the plaintiff has to allege very specific conduct by the defendant," added Hadaway. "In finding that our clients' allegations against Mahindra are legally sufficient to continue the lawsuit, Judge Thrash has vindicated our clients' decision to seek compensation for their losses."

For the next two years, despite reassurance the certification process was on schedule, Mahindra allegedly delayed the submission of documents to US regulators as a premise for negating the agreements.

"Mahindra repeatedly failed to live up to its obligations," Diaz added. "Now, we will continue to aggressively seek justice for our clients."