Chrysler, GM sue Allied over ‘hostage’ vehicles

Both General Motors and Chrysler have launched lawsuits against Allied Systems Holding Inc. alleging the vehicle transport company of holding over 2,400 new vehicles “hostage,” Reuters News Agency says.

GM, which filed its suit on Tuesday in U.S. District Court in Detroit, claims Allied breached a contract under which it provides car-hauling services for the U.S. automaker.

“Defendant is holding hostage 1,704 new GM vehicles, with an estimated value of $46.6 million,” the news agency quotes from the lawsuit.

“It simply has no claim to the vehicles; they are GM's property.”

A second suit filed by Chrysler in Ontario Superior Court says Allied has roughly 700 of its vehicles at a facility in Windsor, Ont. This comes after Chrysler announced on Wednesday it would terminate its contract with the Atlanta, Ga.-based vehicle hauler.

Allied has yet to make an official comment on either legal issue.

According to Reuters, both manufacturers are seeking the immediate return of the vehicles and unspecified damages.

This is the latest turn in a developing saga between the automakers and Allied. GM said in legal documents that earlier this month it became aware of Allied’s scarcely-publicized wage reduction for Teamsters union employees. The move prompted a three-day strike notice from the union.

Court papers obtained by Reuters indicate that Allied demanded a 15 per cent price increase from GM plus the inclusion of contract limitations with the auto delivery firm.

Now the Windsor Star is reporting that 160 jobs hang in the balance after the Chrysler contract termination.

“Obviously there’s 160 workers in this community and 600 in Ontario that I’m very concerned about,” Rick Laporte, president of CAW Local 444 told the paper. “Our workers will be out of work. That is very concerning.”
A spokesperson for Chrysler Group quoted by the newspaper says the automaker has re-sourced the business to other suppliers and does not anticipate any “disruptions in production as a result of this change.”

- With files from Reuters News Agency, The Windsor Star