To all GM Dealers which Signed a Wind-Down Agreement in May 2009

A lawsuit against General Motors of Canada Ltd. (“GM”) and the law firm of Cassels Brock & Blackwell LLP (“CBB”) has been brought as a class action in the Ontario Superior Court of Justice. This memorandum will provide answers to some questions that we have received about the lawsuit.

What is the lawsuit about?

The lawsuit centres around the events of May 2009 when GM presented to approximately 240 GM dealers a Wind-Down Agreement (“WDA”), which offered each affected dealer limited compensation in exchange for the premature surrender of its rights under its dealership agreement.

The Statement of Claim contends that GM acted unlawfully and in breach of franchise laws in connection with the WDA.

The Statement of Claim also contends that CBB, which the dealers retained prior to May 20, 2009 to represent them in the event of a GM restructuring or insolvency, was in a conflict of interest in its representation of the dealers and breached duties that it owed to the dealers.

If the lawsuit is successful and the court finds that GM breached franchise laws, each dealer may be entitled to compensation from GM as a result of such breaches. If the court finds that CBB breached its duties and acted negligently in respect of its representation of the dealers, the dealers will also be entitled to damages as a result of such conduct.

Where can I find the Statement of Claim?

The Statement of Claim is available for review at https://www.sotosllp.com/class-actions/gm-dealers-claim/.

What will happen to the payments received under the WDA?

As part of the lawsuit, the plaintiff will ask that the amounts paid under the WDA be credited against each class member’s damages. Accordingly, payments received under the WDA should not be affected.

What is the status of the lawsuit?

The lawsuit was commenced on January 21, 2010. We have not yet received any statement of defence or formal response from the defendants.

The defendants will likely not be required to deliver a statement of defence until after the court has decided whether or not this action can proceed as a class action.

Will my company benefit from the lawsuit?

The lawsuit is being brought under Ontario’s Class Proceedings Act, 1992. If the action is certified by the court as a class action, the case will proceed on behalf of all corporations in Canada which signed the WDA.

Do I have to do anything to “join” the lawsuit?

No. If the lawsuit is certified and you are included in the class as defined, you are automatically included in the lawsuit.

I received the WDA but did not sign it. Am I included in the class?

No. The class is only comprised of dealers who signed the WDA.

Are the Saturn-Saab dealers included in the class?

If they signed the WDA dated May 20, 2009, they will be included if the action is certified as a class action.

What if I do not want to be included in the lawsuit?

Those who do not wish to remain in the class will be given the option to opt-out by sending an opt-out form at the appropriate time to class counsel.

Who brought the lawsuit forward?

The statement of claim was issued on behalf of a former GM dealer in Scarborough, Ontario. This dealer, known as the “class representative”, carried on business as a GM dealer from 1989 to 2009.

The class representative’s role is to work with class counsel to bring the action forward and to represent the class members in court.

What law firms are representing the dealers?

The dealers are being jointly represented by two law firms: Sotos LLP and WeirFoulds LLP.

Sotos LLP is business law firm located in Toronto specializing in franchise law. Both Allan D.J. Dick and David Sterns of Sotos LLP are recognized as leading practitioners in franchise litigation and have argued several leading franchisee class actions.

WeirFoulds LLP is a full-service law firm located in Toronto. Acting for the dealers will be Bryan Finlay, QC and Marie-Andrée Vermette. Both Bryan and Marie-Andrée have appeared before all levels of courts in Canada and specialize in complex litigation matters.

Will I be liable for costs of the action if it is unsuccessful?

No. Only the class representative may be liable for costs of the common issues portion of the action if it is unsuccessful.

How is the lawsuit being funded?

The lawsuit is being brought on a contingency basis. This means that the lawyers will only be paid if the action is successful or results in a settlement in favour of the plaintiffs.

However, disbursements (i.e. out-of-pocket expenses) are being funded by certain dealers who have voluntarily contributed to a disbursements fund. You may be contacted by one of these dealers for a voluntary contribution. Please advise if you do not wish to be contacted for this purpose.

What are the chances that the lawsuit will be certified as a class action?

We believe that this case lends itself to a class action because the question of whether the GM dealers were unlawfully terminated and the legal duties owed to them can be answered on a common basis for all dealers.

What are the benefits of proceeding as a class action?

Certification as a class action will enable us to prove the facts in a single lawsuit rather than in numerous individual lawsuits. This has obvious benefits to the class members and to the courts.

What if I have an additional claim against GM not covered in the class action?

The class action only covers the issues that are raised in the Statement of Claim. If you are aware of any issue where multiple dealers may be affected which is not covered in the class action proceeding (such as, for example, post-termination conduct by GM), you can contact us and we can provide advice or recommend other counsel to assist you.

Where can I send any documents that I have that may be relevant to the class action?

Please contact us if you have any documents that you believe may be relevant to the class action.

If you have any questions, please direct them to:

David Sterns, Sotos LLP dsterns@sotosllp.com (t)  416-977-0007
Allan Dick, Sotos LLP adjdick@sotosllp.com (t)  416-977-0007
Marie-Andrée Vermette, WeirFoulds LLP mavermette@weirfoulds.com (t) 416.947.5049