http://online.wsj.com/article/SB10001424052702304811304577366292306078480.html
By EMILY MALTBY And ANGUS LOTEN
U.S. government bailouts of General Motors and Chrysler became a constitutional battleground when they were pushed through bankruptcy court in 2009.
Turns out the battle isn't over just yet.
More than 220 former car dealers are pressing their case that the Obama administration violated the U.S. Constitution when the car makers terminated franchise agreements while in bankruptcy restructuring.
More than 220 car dealers are alleging the Obama administration violated the Constitution when their franchises were terminated during the government-brokered bankruptcies of General Motors and Chrysler. Among those dealers is Herb Adcox of Chattanooga, Tenn., shown here.
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They are seeking compensatory damages ranging from $500,000 to more than $5 million apiece.
Two claims, initially filed in October 2010 and February 2011, cleared the government's motions to dismiss in February and are now heading into the pre-trial discovery phase. The dealers' lawyers are seeking government documents that they hope will show that auto makers had to eliminate some dealerships as a condition of receiving funds from the government's Troubled Asset Relief Program.
The cases are believed to be the first to test the constitutionality of the federal government's $80 billion bailout of the auto industry under the Bush and Obama administrations.
Supporters say the actions saved hundreds of thousands of jobs, while critics say they artificially propped up two failing companies, however large.
Herb Adcox of Chattanooga, Tenn., says he just wants a fair price for his car lot, which he valued at some $3 million in June 2009, including property and an inventory of 150 vehicles and parts worth $250,000 when GM terminated its relationship with him. Without new GM vehicles to sell, Mr. Adcox turned to selling used cars and repairs. His sales dropped to 25 vehicles a month from more than 100 a month earlier in the year.
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