Global Vehicles vs. Mahindra & Mahindra | A case of fraud, misrepresentation and conspiracy

by admin on June 12, 2012

A bag of false promises.

When someone makes a promise then doesn’t deliver on that promise, the normal reaction for the duped is disappointment. But, when a major international truck manufacturer signs a contract with a franchisee dealer that requires significant advance costs, then manipulates the details in such a way that they take the money and run, well, there’s no normal. It’s fraud and the only way to right a wrong this big is to file a lawsuit, and they did.

So far, five automobile dealers from the USA filed a lawsuit accusing India’s largest manufacturer of utility vehicles, Mahindra & Mahindra, of fraud, misrepresentation and conspiracy. The lawsuit alleges that Mahindra duped hundreds of US auto dealers and walked away with more than $60 million in cash and trade secrets. More dealers are expected to join the lawsuit.

You can read more background here… here… and, here.

The new lawsuit.

When confronted with the lawsuit, Mahindra executives would not respond to the media on the matter that is now in the courts, but issued a statement on its website that an earlier suit with similar claims was dismissed by the US District Court in Missouri.

Unfortunately for readers, Mahindra’s comment is both inaccurate and misleading. The facts are that (1) the Missouri case was dismissed strictly on procedural grounds because the Court chose not to exercise jurisdiction over Mahindra, a foreign corporation, and (2) the Plaintiffs there had every right to re-file the case if they so desired. The Missouri dismissal, purely procedural, did not address Mahindra’s wrongdoing.

The new lawsuit, however, is based on the fraud perpetrated by Mahindra. At issue, the plaintiffs had no control over Mahindra’s decision to delay homologation (the approval process a vehicle must go through for sale to the public), nor had they any control over whether Mahindra truly intended to make good on its promises to the dealers. This new lawsuit is not connected with the arbitration of any other claims that the plaintiff has or had. Clearly, Mahindra’s comments, issued on their website, obfuscate reality.

Combating fraud.

Damages are being claimed on three counts. One count for the actual dollar amount that was paid by the dealers in order to get a franchise; money that can be traced directly to Mahindra’s pockets.  The second count is for the value of public relations and brand building program that dealers undertook to create awareness of Mahindra, including expenses related to painting show room facilities in red and white, the colors of Mahindra’s corporate logo. The third is for trade secrets that the plaintiffs believe were misappropriated.

The Diaz Reus legal team, representing the plaintiffs, are aware of several other avenues that Mahindra pursued that were designed to leave the dealers out in the cold while using the dealers’ money, operational infrastructure, and trade secrets to assist its entrance into the U.S. market. Further comments on this particular aspect of Mahindra’s wrongful conduct will be made should Mahindra decide to respond in court to this lawsuit. Stay tuned.

Members of the Diaz Reus legal team for the plaintiff, Global Vehicles, include Michael Diaz, Jr., Carlos F. Gonzalez, Gary E. Davidson, and Sumeet Chugani. Contact Michael Diaz, Jr. at 305-375-9220 for more information.

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