A class action brought by automobile dealers challenged a manufacturer’s 2009 wind‑down agreements issued during the global financial crisis, alleging breaches of the statutory duty of fair dealing, disclosure obligations, and the right of association under franchise legislation.
The court held the manufacturer did not breach its contractual or statutory obligations in implementing the dealer reduction plan or issuing the agreements under urgent restructuring circumstances.
However, the law firm advising the dealer group was found to have breached fiduciary duties, contractual duties, and the standard of care by acting despite conflicts of interest and failing to properly advise the dealers during the restructuring process.
The court concluded that the lawyers’ misconduct deprived the dealers of a real opportunity to negotiate improved termination compensation.
Aggregate damages were therefore awarded for loss of that negotiation opportunity.
