{
  "id": "R40736",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "R40736",
  "active": false,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 351079,
      "date": "2009-07-27",
      "retrieved": "2016-04-07T02:22:10.947821",
      "title": "Mandating Dealership Agreements for Automakers Receiving Federal Funds: Constitutional Analysis",
      "summary": "Auto dealers, which act as intermediaries between automakers and final consumers, are independent businesses with contracts with the automakers. As General Motors Corporation (Old GM) and Chrysler LLC (Old Chrysler) have moved through bankruptcy restructuring, the presence of these dealer contracts has been an important issue. In order to allow the automakers to downsize and seek a more competitive business model, the bankruptcy courts allowed both Old Chrysler and Old GM to cut their dealership networks. This allowed the new entities that bought the assets of the bankrupt companies, Chrysler Group LLC (New Chrysler) and General Motors Company (New GM), to operate without the contractual and statutory obligations associated with those dealership agreements. \nDealers objected to the cuts, first in the bankruptcy proceedings, and later in the media and to the Congress. Several congressional hearings have been held that addressed the reduction of the automakers\u2019 dealership networks. Additionally, several bills have been introduced that appear to be intended to restore the dealership agreements with the automakers in bankruptcy or assign those agreements to the newly created automakers that purchased assets from those automakers that are currently in bankruptcy proceedings. \nThis report discusses the constitutionality of legislation to require that auto manufacturers receiving federal aid be subject to the contractual and statutory obligations owed to such dealers before bankruptcy. The report will address two forms of these proposals, one that addresses GM and Chrysler dealers specifically (H.R. 2743 and S. 1304), and one that addresses the issue of dealership assignment more generally (H.R. 2796 and H.R. 3170 \u00a7 744(b)). The report will address three questions: (1) whether these proposals violate the uniformity requirement of Article I, Section 8, clause 4 of the Constitution (the Bankruptcy Clause); (2) whether mandatory assignment of the dealers\u2019 contracts to the New GM and the New Chrysler would violate either substantive due process or the Fifth Amendment\u2019s Takings Clause; and (3) whether such mandatory assignments could make the United States liable for damages under a theory of breach of implied contract.\nThe report concludes that, of the proposals at issue, those that arguably are not limited to the GM and Chrysler bankruptcies may be less likely to be found to violate the uniformity requirement of the Bankruptcy Clause. The report also concludes that, while it is difficult to establish the long-term economic impact of these legislative proposals, the application of these bills to the New GM and the New Chrysler are not likely to be found to violate substantive due process, or to constitute a taking in violation of the Fifth Amendment of the Constitution if analyzed under current case law. However, these proposals are beyond anything the U.S. Supreme Court has previously addressed in its substantive due process decisions, which makes it impossible to dismiss the possibility that the Court might find that substantive due process was offended by forcing the new automakers to be parties to dealership contracts formed between the dealers and the bankrupt automakers. Additionally, the report concludes that it is not clear to what extent the United States might be liable under a breach of implied contract theory for the application of these bills to those two new corporate entities.",
      "type": "CRS Report",
      "typeId": "REPORTS",
      "active": false,
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      "topics": []
    }
  ],
  "topics": [
    "Constitutional Questions",
    "Economic Policy"
  ]
}