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Thursday, June 11, 2009

South Dakota GM Dealers Seek Nanny State Protection

I'm still trying to sort out the lawsuit two South Dakota General Motors dealers have filed to fend off GM's effort to shut them down. The dealers, Springs Auto in beautiful (I mean that!) downtown Wessington Springs and Yankton Motor Company (I'd link, but they have a really annoying low-quality autoplay jingle on their website) in Yankton, claim that South Dakota law prevents GM from shutting them down without a hearing. (Feel free to page through South Dakota's vehicle dealers regulations, particularly SDCL 32-6B-45 and 32-6B-46.)

So just checking: is this an example of good Republican businessmen hiding behind the skirts of the nanny state? Do we have capitalists begging the government to prevent their business partners from acting like capitalists and making free-market decisions that are in the best interest of the corporate bottom line?

Sibby says no, this is businessmen hiding behind the skirts of the South Dakota nanny state to protect themselves from the Obama nanny state. Sibby reminds us that Obama (and the rest of us) own GM now, so really, the suing dealers are asking the courts to protect them from... themselves. Ourselves. Aaaagghh! This is as bad as "I'm My Own Grandpa"!

Whichever way the legal cookie crumbles on this one, it is interesting to note the apparently unique role South Dakota government plays in setting the terms of the car sales business in our fair state:

"South Dakota has a statute that says you can't end a franchise with a dealer before having a hearing," said Michael Dady, the attorney representing the two dealers.

"We'd like you to revoke the letters, schedule a hearing and you can tell the hearing examiner why you have the right to do it and we can tell them why you don't," he said of the notice sent to GM.

Dady said he's negotiating with GM's attorney in hopes a hearing can be scheduled.

GM's in-house lawyer handling the issue could not immediately be reached for comment.

Dady said South Dakota is one of a few states -- or maybe the only one -- with such a requirement.

"It's not typical," he said [Carson Walker, "2 South Dakota Auto Dealers Sue GM to Stay Open," AP via Chicago Tribune, 2009.06.09].

South Dakota car dealers must have a lot of pull around here.

According to Walker, the dealers argue that GM is violating South Dakota's unusual dealership franchise laws in four ways:
  1. GM "didn't notify the state." (I didn't know capitalists had to inform the state of their business decisions.)
  2. GM "hasn't given a good reason to close the franchises." (I didn't know capitalists had to give the state a reason for their business decisions.)
  3. GM failed to show that the needs of the communities will be served without them. (Serve the community? Isn't that socialism?)
  4. Dealers have a right to a new contract if they fulfilled their obligations. (Right to a new contract? Boy, if only South Dakota's workers had that sort of legal protection.)
Our car dealers may donate and vote Republican, but this lawsuit and the legal protections they've gotten written into state law show that they are as socialist as anyone else.


  1. I'm not that familiar with the statute, but I do think the idea that the dealers have a "right" to a renewed contract is pretty amazing.

    I suppose unless the contract itself says anything about renewals if the dealers meet their obligations, the dealers are pretty screwed on that one.

  2. Have GM or Chrysler yet demonstrated how getting rid of local dealers reduces their expense?

    Consumers might be a bit suspicious that eliminating dealer competition will simply drive up car prices. The remaining dealers might want to watch their backsides if GM and Chrysler recover, they may decide they don't want any private dealers and just have company stores.

  3. Hey Corey:
    Thanks for the plug for my old home town Wessington Springs

    Tim Higgins

  4. I love Wessington Springs! Nice little town, tucked away in beautiful country. I hope GM doesn't whack their economy.

    But, as Kelsey highlighted, I sure wish I had a right to a contract. Teachers do get that after a few years (it's a thin right, but it's there), but are there other professions where that right to a contract (right to work?) actually benefits workers?

    Douglas, I share your suspicion. Reducing dealers is about reducing competition... and hey, isn't competition supposed to be good for the economy? Did capitalism destroy GM?

  5. Corey;

    Over the years Wess. Springs has suffered from 3 diasterous fires on main street. Almost of the businesses have rebuilt, and remained a fixture in WS.

    Myself I think it kind of ironic that the GM dealership scheduled to be closed, is built on the site of one of the businesses that did not rebuild after the fire.

    This dealership is one of the larger employers in WS, its loss will be felt.

    Tim Higgins


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