Federal judge upholds lawsuit by U.S. auto dealers in fraud and conspiracy lawsuit against Indian truck manufacturer, Mahindra.
ATLANTA, GA (March 7) – A federal judge has upheld a lawsuit by U.S. automobile dealers accusing Indian truck manufacturer Mahindra & Mahindra, Ltd. and its U.S. counterpart of fraud, misrepresentation, and conspiracy. The lawsuit alleges that Mahindra duped hundreds of U.S. auto dealers and walked away with more than $60 million in cash and trade secrets, according to attorney Michael Diaz, Jr., global managing partner of Miami-based Diaz Reus & Targ, the law firm that represented the U. S. automobile dealers.
“We look forward to the next phase of this litigation and bringing justice to hundreds of U.S. auto dealers across the country who were victimized by Mahindra’s fraudulent business practices,” said Diaz, who leads the plaintiffs’ legal team of Gary Davidson, Brant Hadaway, and Ahmand Johnson.
In his ruling yesterday, U.S. District Judge Thomas W. Thrash in Atlanta ruled against Mahindra’s motion to dismiss the plaintiff’s lawsuit, allowing the dealers’ case to move forward. No date has been set for further court action.
“In a commercial fraud and conspiracy case, the plaintiff has to allege very specific conduct by the defendant,” said Hadaway. “In finding that our clients’ allegations against Mahindra are legally sufficient to continue the lawsuit, Judge Thrash has vindicated our clients’ decision to seek compensation for their losses.”
The mass tort lawsuit was filed in June, 2012 (#KH199170-3) against Mahindra & Mahindra, Ltd, and Mahindra USA, Inc. by dealerships in New Hampshire, Florida, California, New Jersey, and Washington. Dealers across the country paid initial dealership fees, undertook marketing on Mahindra’s behalf, built Mahindra showrooms, display platforms and showcases, and hired additional personnel – all at Mahindra’s urging according to the lawsuit. Mahindra then began laying the groundwork to enter the U.S. market and build a nationwide dealer network in 2004.
In a high-profile move to court the U.S. dealers, Arun Jaura, a senior Mahindra executive, attended an Atlanta automotive show in 2007 where he repeatedly proclaimed, “I love America!” At that show, which was attended by about 400 U.S. dealers, Mahindra executives presented promotional videos that showcased its vehicles’ durability, purportedly showing them being driven on different terrains. Jaura also provided a set time-line for introducing Mahindra’s four-door truck to the U.S. market at the end of 2008, and Mahindra’s two-door truck and SUV in the third quarter of 2009.
Mahindra’s pitch was highly successful. Ultimately, it obtained $8.5 million in fees from the dealers, according to the lawsuit. Through a barrage of press releases, sales pitches, advertisements, and news articles orchestrated by Mahindra, Jaura’s comments were subsequently used to entice more U.S. dealers to agree to carry Mahindra’s vehicles. Over the next two years, Mahindra continued to reassure the U.S. dealers that its certification process was on target, while in fact it was delaying submitting its documentation to regulators as a pretext for terminating its agreements. “Mahindra repeatedly failed to live up to its obligations,” Diaz added. “Now, we will continue to aggressively seek justice for our clients.”