DETROIT — The owners of two General Motors dealerships in Michigan are suing the automaker and GM Financial, alleging unfair termination of their floorplan agreements and racial discrimination.
The federal lawsuit says two GM executives accused one of the stores, Superior Buick-GMC in Dearborn, of breaching its franchise agreement by letting numerous customers receive discounts by falsely claiming to be related to a GM employee or retiree. The dealership, which has many Arab American customers, lost sales because GM imposed on its buyers an intimidating approval process for the family discounts, the suit says.
GM denied the dealers’ claims and called the discrimination allegations “absolutely false.”
“These particular dealers failed and refused to adhere to the terms of their agreements and violated requirements established to prevent abuse of a GM incentive program,” a GM spokesman said in an email. “GM has an excellent record for diversity and inclusion, and GM possesses the industry’s most comprehensive program for minority dealer development. GM intends to vigorously defend itself against this meritless lawsuit and seek relief.”
The dealers, Tanya and Basam Robin, are seeking damages of $10 million to make up for lost profit, plus legal fees, according to Len Bellavia, one of their lawyers.
The suit, filed last week in U.S. District Court in Detroit, says that in February 2019, GM Financial requested immediate payment for 30 GMC Yukons that had been sold but were delayed by flooding on the way to the dealerships. When the dealerships did not pay the floorplan lender, GM Financial declared them to be out of trust.
The Robins say their requests for GM to help resolve the floorplan dispute led to additional scrutiny of their business that resulted in discriminatory practices. GM executives told them the Dearborn store had violated the terms of the family discount program, the complaint says. The Robins acknowledged potential “prior deficiencies” by some staff members but said they had resolved the issue.
The lawsuit says two GM executives told the Robins that when customers and their supposed relative are of different races, or when one has an Arabic last name and the other does not, it raises red flags about possible misuse of the discounts.
GM then required Superior customers to get approval by providing a birth certificate, a marriage certificate, Social Security numbers and other documentation to prove the relationship. Other GM dealerships didn’t have to follow such stringent approval measures, the complaint says.
Customers felt profiled and worried about identity theft, the complaint says, and Superior Buick-GMC’s sales plummeted from 281 new vehicles in June 2018 to 66 a year later.
Separately, GM Financial terminated the dealerships’ floorplan agreements in August and demanded outstanding payments by October, later extending the deadline to February. Potential floorplan lenders would not finance the dealerships until GM and GM Financial showed that the alleged defaults had been resolved, but GM did not provide that evidence, the complaint says. The dealerships could not buy new vehicles or parts without a floorplan lender.
“There was no classic out-of-trust problem at this dealership,” said Bellavia, founding partner of Bellavia Blatt in Mineola, N.Y. If a check was dishonored, it was remediated promptly, he said.
Because of a hailstorm in June 2019, all inventory on the lot of the Robins’ other store, Superior Buick in Battle Creek, was damaged, and the dealership rapidly lost sales and revenue. The couple agreed to sell the store to GM under duress, the complaint says, but the automaker canceled the deal March 27, days before it was scheduled to close.