WASHINGTON – Chrysler Group made the wrong choice in deciding to keep open one New York state dealership and reject another, said an arbitrator who relied on performance data for both stores.

The arbitration for Terry Chrysler-Jeep in Burnt Hills, N.Y., may be the first in which comparative operating data, including sales, was used, said the Terry dealership’s lawyer, John Gentile. The data were unsealed last month by U.S. Bankruptcy Judge Arthur Gonzalez.

However, it won’t be the last such case, as Gentile’s law firm in Mineola, N.Y., plans to introduce performance figures for its clients and their competitors in two other cases, Automotive News reported. It is encouraging lawyers representing other dealers to do the same, Gentile said.

The arbitrator in the Terry case ruled that Chrysler, which moved to cut dealers last year to match sales with demand, had in effect chosen to keep open a nearby Clifton Park dealership rather than Terry, located outside Albany.

“A review of the criteria used by the covered manufacturer to terminate the covered dealership’s franchise agreement shows that the Terry dealership appeared to be a better candidate to remain an active dealer as compared to the Clifton Park dealership,” the arbitrator’s June 8 decision said.

Arbitrator Larry Biblo compared Terry’s performance with that of the other dealer under a number of criteria.

He noted Terry’s superior floorplan status with lenders, its better financial status with Chrysler, its greater working capital and its superior sales performance.

Chrysler had chosen the dealership, eight miles from Terry Chrysler-Jeep, “due to a perceived difference in the demographic and geographic characteristics of the two,” the decision said.

That rival dealership eventually went out of business after Chrysler’s bankruptcy last year, and the location remains vacant, the arbitrator said. Chrysler had hoped to turn the Clifton Park store into a Genesis dealership that sells all of the company’s brands.

“I’m really excited about this,” said Charlie Morris, 40, who owned the Terry dealership along with his mother, Noella. “I look forward to working with Chrysler.”

Chrysler expressed disappointment.

“The decision undermines the federal Bankruptcy Court order that affirmed the rationalization process used to reject the dealership agreements,” the company’s statement said.

Chrysler added: “While difficult, the actions to reduce Chrysler’s dealer network were a necessary part of Chrysler Group’s viability and central to the financing and partnership with Fiat. The only alternative would have been complete liquidation.”

Last month, Gonzalez unsealed data detailing each rejected Chrysler dealer’s performance.

The judge held that each dealer can get copies of the performance charts of rivals that Chrysler considered for termination.

Chrysler said last month it already was producing the data sought by individual dealers, but dealer lawyers said the company was producing only fragments of dealer performance scores in arbitration.

The law firm that secured the Bankruptcy Court order, Bellavia Gentile in Mineola, also represented Terry in arbitration.

“We couldn’t have proved that Chrysler didn’t follow its own business plan in this case without the spreadsheet data,” Gentile said.

Chrysler said it has fewer than 85 arbitration hearings left.

WASHINGTON – Chrysler Group prevailed in arbitration last week against two Texas dealerships, bringing the company’s arbitration record to five victories and one defeat, Automotive News reported.

In Chrysler’s win over Manuel Dodge, of Richardson, Texas, the arbitrator endorsed the company’s Project Genesis strategy of trying to consolidate all brands under a single roof.

“Chrysler’s new business model, and the existence of a high-volume, full-line dealership at this high-volume location, would bring more products to the surrounding community and to customers encountering the store at lower prices than would be available under Manuel Dodge’s business model,” the arbitrator wrote, according to both a Chrysler spokesman and Manuel Dodge’s attorney.

The arbitrator’s May 12 decision continued: “Further, while Chrysler would have the authority to make Manuel Dodge a full-time dealer were it to be offered a letter of intent as a result of this proceeding, there is no indication that the dealership would be willing to change its sales style to more closely align its business model with Chrysler’s preferred model going forward.”

A second Texas dealership, El Dorado Motors, of McKinney, also lost its bid for reinstatement last week, Chrysler said today.

The arbitrator’s pro-Genesis reasoning in the Manuel Dodge case was similar to that used by another arbitrator in ruling against Joe Kidd Dodge of Cincinnati last month. Both dealerships had sold only Dodge vehicles.

Manuel Dodge’s attorney, George Haratsis of Fort Worth, said the arbitrator’s decision disregarded the intent of the December law that set up an arbitration process for rejected Chrysler and General Motors Co. dealerships seeking reinstatement.

“This completely ignores Congress’ intent that a single-line dealer is eligible to be restored to Chrysler’s dealer network,” Haratsis said. “If other arbitrators accept Chrysler’s position, partial-line dealers will have little chance of success in arbitration.”

Neither Chrysler nor Manuel Dodge would release the text of the arbitrator’s decision, citing confidentiality agreements.

WASHINGTON – In one of the first arbitration decisions involving General Motors Co., a Michigan Chevrolet dealer won his bid for reinstatement and has been told he will be receiving a letter of intent from the manufacturer, reported Automotive News.

The arbitrator ruled that Lou LaRiche Chevrolet, of Plymouth, Mich., has the skill and financial resources to be a successful dealership.

“While the undersigned arbitrator gives credence to GM’s overall business plan and in fact acknowledges the urgency of many of its actions, the characteristics of this specific dealership are convincing that it has the financial wherewithal and will to succeed and to make a positive contribution to the overall GM dealer network and the public,” the arbitrator’s May 14 decision said.

Former GM CEO Fritz Henderson had testified at the arbitration hearing last month that overall dealer cuts are essential to the company’s profitability, the dealer’s attorney, Christopher DeVito of Cleveland, said in an interview.

Henderson made no comment that applied specifically to Lou LaRiche Chevrolet’s situation, the lawyer said.

“Fritz Henderson’s testimony was ineffective,” DeVito said. “It didn’t carry the day.”

Henderson was GM’s first witness at the April 27-30 hearing in Southfield, Mich., the lawyer said.

“After a year of getting kicked in the head every single day, this is such a relief,” said Lou LaRiche executive manager Scott LaRiche. “But right from the beginning, we’ve always hoped that somewhere, someone was going to do the right thing.”

GM declined to comment today.

“We respect the confidentiality of our relationships with each of the dealers who are affected,” GM spokeswoman Ryndee Carney said.

Although the LaRiche decision is the first publicly known arbitration judgment involving GM, Carney said it is not the first to be handed down since arbitrations began last month.

WASHINGTON – A rejected Chrysler Group dealership in Florida became the first to win an arbitration case today, while two other stores in the same state lost, Automotive News reported.

The three arbitrations, held simultaneously in Orlando on April 20-23, bring to four the number of decisions that have been handed down. A rejected Chrysler dealer in Ohio lost last week in the first of hundreds of cases due to be heard by mid-July.

Deland Dodge won reinstatement today, while Chrysler prevailed in arbitration against Bob Taylor Jeep in Naples and Venice Dodge, said the attorney for all three dealerships, Mark Orenstein.

“We’re very happy Deland won and very upset the other two lost,” Orenstein, of Orlando, said in an interview. “After reading the arbitrator’s decisions, I still don’t think I have a clear impression of the exact reasons she ruled for Deland and did not rule for Venice and Bob Taylor.”

The arbitrator, retired Florida state judge Amy Dean, wrote three decisions of about 1½ pages each, Orenstein said.

The cases today were the first in which the dealerships were represented by an attorney. Joe Kidd Dodge in Cincinnati represented itself in an April 14 hearing before losing its reinstatement bid last week.

Chrysler expressed disappointment today about losing the arbitration to Deland Dodge.

“This decision undermines the federal Bankruptcy Court order that affirmed the rationalization process used to reject this dealership agreement,” the company said in a statement.

The automaker said it would issue a letter of intent to Deland, as required under the federal law that set up the arbitration process for rejected Chrysler and General Motors Co. dealerships.

At the same time, Chrysler praised the decision upholding its terminations of Bob Taylor Jeep and Venice Dodge.

“The company not only employed sound business judgment but is acting in the greater public interest by protecting the dealer network that was created as a result of the bankruptcy proceedings,” its statement said.

All three Florida dealerships had a single Chrysler brand when they were closed as part of the company’s bankruptcy almost a year ago.

Arbitration will do more than put some rejected Chrysler Group and General Motors Co. dealerships back in business. In some cases it stands to pit two dealers against each other with claims on the same territory, Automotive News reported.

That’s because after bankruptcy the automakers appointed some new dealers to fill in empty markets.

If existing and reinstated dealers occupy the same territory, Chrysler said it expects “protests to be brought against the reinstated dealers” under state franchise laws that protect dealer rights.

Chrysler declined to say how many new dealerships it has appointed since bankruptcy. In some cases, it issued only letters of intent to provide franchises. The company told dealers last fall that it planned to open about 100 new points.

Of Chrysler’s 789 rejected dealerships, 409 filed for arbitration.

The arbitration hearings are expected to start in early March. Under the law signed by President Obama in January, arbitration for rejected Chrysler and General Motors dealerships must be completed by mid-June, though arbitrators have the discretion to extend the process for a month.

The American Arbitration Association, which oversees the process, now is assigning arbitrators for the 1,573 cases.

In some cases, rejected and pro-spective new dealers are already talking to each other to reach a solution.

GM chose to wind down about 1,350 dealerships through October 2010. It has appointed new dealerships “on a very limited basis,” GM spokeswoman Ryndee Carney said. In “select cases,” particularly if a dealer is only losing one franchise from a multibrand store, GM has appointed a new dealer in a market in which a wind-down dealer is still open, Carney said. She declined to give specific numbers.

Arbitrators can decide only whether to reinstate dealerships, but the automakers can move to settle cases with cash outside of arbitration.

Chrysler acknowledged that arbitration will pose a financial burden but expressed confidence in its ability to defend against the claims. The company declined to say whether it intended to settle or drop any cases.

WASHINGTON – Dealerships filed about 1,550 notices of their intent to seek arbitration as of yesterday’s midnight deadline, setting the stage for proceedings to begin with the case-by-case selection of arbitrators, Automotive News reported.

As many as 50 more submissions may be counted by the end of the week, an American Arbitration Association official said today. It’s also possible that some duplicate filings could lower the total a bit, said association Senior Vice President India Johnson.

The tentative tally accounts for well over half the 2,789 rejected General Motors Co. and Chrysler Group dealerships eligible to seek reinstatement through neutral arbitration under legislation signed by President Barack Obama last month.

The filings, which cost dealerships $1,625 apiece, signal the dealers’ intent but do not obligate them to actually pursue arbitration. They can obtain a 50 percent refund if they withdraw their submission in time.

The arbitration association, which is overseeing the process, has started assembling lists of dozens of potential arbitrators in each state. It has started sending the lists to the two parties in particular cases.

The two sides ultimately must agree on a single arbitrator after reviewing arbitrators’ backgrounds, expertise, potential conflicts of interest and availability, Johnson said.

If they can’t agree, the association will try to pick an arbitrator in each case by the end of February, she said. Arbitrators’ reinstatement decisions are due by June.