Section 747 · Reference · TFR-2026-07

What an arbitration win was actually worth: Chrysler Group LLC v. Fox Hills Motor Sales

First published 2026-08-05 · Last substantively revised 2026-08-05 · Corrected 2026-08-05

Fifty-five dealerships won a Section 747 arbitration. The statute forbade the arbitrator to award any of them a dollar and fixed the remedy as a letter of intent, which is a promise of a contract rather than a contract to sell cars. Five years later the Sixth Circuit had to decide what that letter was required to contain — and, separately, whether the dealers next door could use their state’s protest law to keep a winner out. The answers came in January 2015, in a consolidated appeal named for a Plymouth, Michigan dealership. Litigation traceable to the seven-month arbitration programme was still producing appellate decisions in September 2024.

§1 Why the winners went back to court

¶The American Arbitration Association, which administered the programme and reported to Congress on it in November 2010, counted 2,789 eligible dealerships, 1,575 filings, and 166 cases that ran all the way to a written arbitral determination. Of those 166, the manufacturer won 111 and the dealership won 55.3 The question this article answers is what those 55 received.

¶The statute answered it in a single sentence and then took most of it back. Section 747(e) of the Consolidated Appropriations Act, 2010 (P.L. 111-117, 123 Stat. 3219) provides that “the arbitrator shall not award compensatory, punitive, or exemplary damages to any party,” and that if the arbitrator finds for the dealership the manufacturer “shall as soon as practicable, but not later than 7 business days after receipt of the arbitrator’s determination, provide the dealer a customary and usual letter of intent to enter into a sales and service agreement.” A dealership that then signed the agreement and completed its “operational prerequisites” had to return whatever termination compensation it had already been paid.2

¶Chrysler issued letters of intent to the dealers who had prevailed against it. The Sixth Circuit’s own account of what happened next is the shortest statement of the problem: “Many of the dealers who received these letters feared that they would be unable to meet the conditions imposed by Chrysler or that their reentry would be prevented by existing dealers’ protests brought under state dealer laws.”1 The opinion also records that during the arbitrations Chrysler allegedly installed “like-line” dealers near dealerships that were still seeking reinstatement, and quotes the arbitrator in one of them, Village Automotive Center of Royal Oak, Michigan, noting that Chrysler had extended its consolidation plan to a dealer “at the Troy Motor Mall within a very close sales radius of Village.”1

¶Three lawsuits followed and were consolidated before Judge Sean F. Cox in the Eastern District of Michigan. Chrysler asked for declarations that Section 747 did not preempt state dealer acts, that the letters it had issued were customary and usual, and that a letter of intent was the sole and exclusive remedy. Prevailing dealers counterclaimed for reinstatement and for money. Existing dealers near the winners — including Fred Martin Motor Company of Ohio — cross-claimed that Section 747 was unconstitutional, or at least did not displace their right to protest a new competitor. The United States intervened to defend the statute.1 By the time the case reached the bench trial in July 2013, most of the rejected dealers had settled, and the letters of intent of only four remained in dispute: Fox Hills Chrysler Jeep of Plymouth, Michigan; Village, of Royal Oak; Jim Marsh Chrysler-Jeep of Las Vegas; and Livonia Chrysler Jeep of Livonia, Michigan.1

§2 The holding: a letter, and it is a contract

¶Writing for the panel, Judge John M. Rogers stated the core of the decision in the opinion’s second sentence of analysis:

“The district court properly concluded that § 747 does not entitle prevailing dealers to unconditional ‘reinstatement,’ but requires only that Chrysler issue the typical letter of intent, legally enforceable as a contract entered into in good faith.”

Chrysler Grp. LLC v. Fox Hills Motor Sales, Inc., 776 F.3d 411 (6th Cir. 2015), slip op. at 13

¶The court did not treat that as a hollow result. A letter of intent, it held, “is a binding contract to enter into a sales and service agreement, that is, a contract to be added to the dealer network, or ‘reinstated,’” and prevailing dealers therefore “obtain something substantial that they otherwise would lack — contractual entitlement — to the extent that they meet the operational prerequisites of a customary and usual letter of intent.”1 Only one of the four dealers, Livonia, had argued for unconditional reinstatement at all; the opinion records in a footnote that the others conceded the letter was the only available remedy.1 No circuit had held otherwise: the Second Circuit in Eagle Auto Mall Corp. v. Chrysler Group, LLC, 550 F. App’x 69 (2d Cir. 2014), and the Ninth Circuit in Los Feliz Ford, Inc. v. Chrysler Group, LLC, 571 F. App’x 546 (9th Cir. 2014), had read the remedy the same way.1

§3 The limit on the limit

¶If the remedy is a letter, the letter’s terms are the remedy, and a manufacturer that writes hard enough terms can hand a winner nothing. The Sixth Circuit closed that route, and this is the part of the case most worth carrying forward:

“the letters of intent must constitute a meaningful intention to enter into a full sales and service agreement, rather than a merely illusory promise that may not materialize for arbitrary reasons. To this end, a genuine letter of intent may not contain provisions that are unreasonably onerous or that grant Chrysler broad discretion to back out.”

776 F.3d 411, slip op. at 26

¶That was consistent, the court said, with the Eastern District of New York’s holding in Eagle Auto Mall that “Chrysler cannot frustrate the purpose of Section 747 by offering dealers who prevailed in arbitration ‘unusual and onerous’ terms,” affirmed by the Second Circuit in 2014.1

¶The district court had measured “customary and usual” by comparison: it assembled 122 letters of intent Chrysler had issued to dealer candidates between June 9, 2009 and July 31, 2010, and asked whether each disputed term appeared in a majority of them. The Sixth Circuit rejected part of that method, holding that letters issued because of a Section 747 arbitration do not belong in the comparison set, “because there is very little that is ‘usual’ about the letters of intent issued by Chrysler in accordance with a § 747 arbitration.” Its reasoning was blunt: “Chrysler would not usually or customarily issue a letter of intent to a dealership that it did not want to enter its dealer network.”1

¶Winning that standard did not win the case for most of the appellants. Fox Hills, Village and Jim Marsh had asked for a new trial on the definition of the comparison set alone, and the court affirmed against them because they had “failed to identify — before the district court or on appeal — a single burdensome provision” whose treatment a different comparison set would have changed.1 The rule they obtained was general; the relief they obtained was none.

¶One provision in one letter was reversed. Livonia’s letter required it to submit a site proposal for Chrysler’s approval, and provided that the letter was nullified if Chrysler rejected the site. Livonia had operated profitably at 30777 Plymouth Road before the termination, the arbitrator had considered that address, and the letter of intent had been mailed to it. On those facts, the court held, “[t]o grant Chrysler a veto could render the promise of a dealership merely illusory and undermine Congress’s intent to provide prevailing dealers with meaningful relief,” and the judgment as to that provision was vacated and remanded for reconsideration.1 Two other provisions Livonia challenged — a site-control option running to Chrysler Group Realty Company LLC, and a requirement that the facility be exclusive to Chrysler and Jeep — were upheld as customary for a suburban market, the court noting that 85 percent of letters issued to metropolitan and suburban dealerships carried the site-control option.1

¶A footnote records something the parties’ briefs would not have volunteered. Chrysler’s original post-arbitration letters gave Chrysler the right to terminate the letter of intent whenever a protest was filed against it — that is, a right to walk away the moment a neighbouring dealer objected. Chrysler removed that clause on its own, saying that “the spirit of the statute was if they prevailed in arbitration they had the opportunity of coming back into the network.”1

§4 State franchise law preempted, this time on the dealers’ side

¶The second half of the appeal is the reason the case matters beyond its parties. Michigan and Nevada, like most states, let an established dealership protest the arrival of a competing dealership of the same brand nearby, and require a state decision-maker to find “good cause” before the new store may open. In Michigan the protest goes to a circuit court within 30 days and the radius is nine or fifteen miles depending on county population; in Nevada it goes to the Director of the Department of Motor Vehicles within 15 days and the radius is ten.1 A prevailing Section 747 dealer who received a letter of intent could therefore be stopped at the state line by a competitor.

“Michigan’s and Nevada’s state dealer protest laws, in particular, frustrate Congress’s purpose in enacting § 747 because they permit state officials to delay and possibly nullify the effect of federal arbitration.”

776 F.3d 411, slip op. at 15

¶The doctrine is ordinary conflict preemption — a state law that “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress” must yield — applied through a line of cases about parallel state review of federal determinations, chiefly Leslie Miller, Inc. v. Arkansas, 352 U.S. 187 (1956), and Sperry v. Florida, 373 U.S. 379 (1963), for the proposition that a state may not give its own board “a virtual power of review over the federal determination.”1 The court then laid the Michigan good-cause factors beside the seven statutory factors in Section 747(d) and found the two inquiries substantially the same question asked twice.

¶The symmetry with 2009 is exact, and it is the through-line of this whole subject. In June 2009 the bankruptcy court held that state dealer statutes were preempted by 11 U.S.C. § 365 so that 789 franchise agreements could be rejected over those statutes’ objection.8 In January 2015 a federal court of appeals held that state dealer statutes were preempted by Section 747 so that dealers who had won arbitrations could get back in over their competitors’ objection. The same body of state law lost twice, six years apart, to opposite effect. It is covered in more detail in this site’s article on the two 2009 routes.

§5 What the Supreme Court did

¶Nothing. Chrysler — by then FCA US LLC — petitioned for certiorari, and the petition was denied on June 22, 2015, as No. 14-1190, FCA US LLC v. Fox Hills Motor Sales, et al.4 Fred Martin Motor Company, the existing Ohio dealer that had attacked the statute’s constitutionality, filed its own petition, denied on October 5, 2015, as No. 14-1455.5 A denial of certiorari decides nothing about the merits; it leaves the Sixth Circuit’s judgment standing in the Sixth Circuit and settles no conflict anywhere else.

¶Fred Martin’s constitutional argument had been rejected on its own terms. The court held that Fred Martin had standing — the prospect of a reinstated competitor is a cognisable economic injury — and then that Section 747 does not violate the separation of powers, because it “neither nullifies nor reopens a prior court order; rather, it simply reverses the effects of a court order through prospective relief.”1

§6 Holding and dicta, marked

¶This is the case most often over-read on this subject, in both directions. What it decides, in the Sixth Circuit:

Fox Hills: what was decided, and what was left open

Question	Disposition
Is the remedy unconditional reinstatement?	No. The sole remedy is a customary and usual letter of intent, enforceable as a contract entered into in good faith.
May that letter carry any terms the manufacturer likes?	No. It may not contain provisions that are unreasonably onerous or that grant broad discretion to back out.
Do Michigan’s and Nevada’s protest laws apply to a winner?	No. Preempted, as applied, by Section 747.
Is Section 747 an unconstitutional reversal of a judgment?	No. Prospective relief, not the reopening of a final judgment.
Does Ohio’s protest law survive?	Not decided. Footnote 7 records that the Ohio dealer in the case, Spitzer Autoworld Akron, did not challenge Ohio’s law, “a point conceded by its attorney at oral argument.”
Would preemption follow without the federal ownership and TARP support?	Not decided. The court said its conclusion was “bolstered” by Chrysler’s status as a covered manufacturer on those grounds, and that “[w]e need not address today what our holding would be if this were not the case.”
Was Livonia’s site-approval provision in fact impermissible?	Not decided. Vacated and remanded for reconsideration.
Does any of it reach General Motors dealers?	No. Every party here came out of Chrysler’s bankruptcy rejection, not a GM wind-down agreement.

¶And one thing the case could not decide, because Congress had already decided it: no dealer got money. The district court had rejected the damages claims outright, and no part of the appeal disturbed that. The bar is in the statute’s own text.2

§7 Considerations

¶Whether the remedy was meaningful is a question the record supports arguing both ways, and this publication does not pick. On one side, the court was explicit that a letter of intent is a binding contract, that preemption existed precisely to stop the letter becoming “an effective nullity,” and that a manufacturer may not load the letter with terms that make it illusory. On the other, the operative facts of this very appeal are that three of the four remaining dealers won the standard and lost the case, that the fourth received a remand rather than a store, and that Section 747 barred any compensation for the years in between. Both halves are in the same opinion.

§8 Still open

¶The Ohio strand of the case outlived the case. Spitzer Autoworld Akron had won its arbitration and was a party in the consolidated action, but did not join the preemption appeal. When, after Fox Hills, it tried to raise preemption before the Ohio Motor Vehicle Dealers Board, Chrysler sued to stop it, and in FCA US, LLC v. Spitzer Autoworld Akron, LLC, 887 F.3d 278 (6th Cir. April 4, 2018), the Sixth Circuit affirmed an injunction barring it from relitigating the issue, holding that collateral estoppel applied because Spitzer had given the argument up in the earlier litigation.6 The practical result is that the same federal statute displaced Michigan’s and Nevada’s protest laws and not Ohio’s, on the strength of what one dealer’s counsel had conceded at an oral argument in 2014.

¶The money, when it finally moved, moved under state contract law rather than under Section 747. In 2007, before any of this, Spitzer and a nearby dealer, Fred Martin Motor Company, had signed a two-page agreement in which each waived its statutory right to protest the other’s relocation; Spitzer paid Fred Martin $200,000. After Chrysler issued Spitzer its post-arbitration letter of intent in October 2010, Fred Martin protested. Spitzer sued for breach of that 2007 agreement. A Summit County jury found the agreement breached and awarded $5,750,000 in compensatory damages, and on September 4, 2024 the Ohio Ninth District Court of Appeals affirmed, while also affirming the denial of prejudgment interest.7 No later appellate decision in this line was located as of 2026-08-05.

▪ Decided · Chrysler Grp. LLC v. Fox Hills Motor Sales, Inc., 776 F.3d 411 · 6th Cir. · 2015-01-16
▪ Decided · FCA US, LLC v. Spitzer Autoworld Akron, LLC, 887 F.3d 278 · 6th Cir. · 2018-04-04
▪ Decided · Spitzer Autoworld Akron, L.L.C. v. Fred Martin Motor Co., 2024-Ohio-3394 · Ohio 9th Dist. · 2024-09-04

¶The arbitration programme itself ran, on the AAA’s account, in just over seven months of 2010.3 Cases traceable to it were still generating published appellate opinions fourteen years later. That is worth stating without an adjective attached: a remedy Congress described in four sentences took five years to define and nine more to finish arguing about.

¶For a reader arriving with a live question, the honest answer is that there is nothing here to elect. The window to demand a Section 747 arbitration closed 40 days after the statute was signed, on January 25, 2010.2 Fox Hills establishes what a win was worth. It does not create anything a terminated dealership can claim now, and this page is reference rather than advice about any particular dealership’s position.

§9 Endnotes

1. Chrysler Group LLC v. Fox Hills Motor Sales, Inc., 776 F.3d 411 (6th Cir. Jan. 16, 2015), Nos. 13-2117/2118/2119, appeal from the U.S. District Court for the Eastern District of Michigan at Detroit, Nos. 2:10-cv-12984, 2:10-cv-13290, 2:10-cv-13908 (Cox, J.); before Rogers and Griffin, Circuit Judges, and Van Tatenhove, District Judge; opinion by Judge Rogers. Page references are to the court’s published opinion, file name 15a0008p.06. opn.ca6.uscourts.gov
2. Consolidated Appropriations Act, 2010, Pub. L. No. 111-117, § 747, 123 Stat. 3219–3222 (Dec. 16, 2009), as enrolled. The damages bar, the letter-of-intent remedy and the requirement to return termination compensation are all in subsection (e); the 40-day election deadline is in subsection (d), which also carries the 180-day submission deadline and the seven factors. Subsection (c) is the separate 30-day duty on the manufacturer to state the criteria on which it had cut each dealership. govinfo.gov
3. American Arbitration Association, A Report to Congress on the Automobile Industry Special Binding Arbitration Program, November 2010. icdr.org
4. Supreme Court of the United States, Order List of June 22, 2015, certiorari denied, No. 14-1190, FCA US LLC v. Fox Hills Motor Sales, et al. (reported at 135 S. Ct. 2860). supremecourt.gov
5. Supreme Court of the United States, Order List of October 5, 2015, certiorari denied, No. 14-1455, Fred Martin Motor Company v. Spitzer Autoworld, et al. (reported at 136 S. Ct. 111). supremecourt.gov
6. FCA US, LLC v. Spitzer Autoworld Akron, LLC, 887 F.3d 278 (6th Cir. Apr. 4, 2018), No. 17-1161, file name 18a0066p.06. opn.ca6.uscourts.gov
7. Spitzer Autoworld Akron, L.L.C. v. Fred Martin Motor Co., 2024-Ohio-3394 (Ohio Ct. App., 9th Dist., Summit County, Sept. 4, 2024), C.A. Nos. 30624 and 30643, on appeal from Summit County Court of Common Pleas No. CV-2020-09-2564. supremecourt.ohio.gov
8. In re Old Carco LLC, 406 B.R. 180 (Bankr. S.D.N.Y. June 19, 2009), Case No. 09-50002 (AJG), Doc. 4145 — the opinion authorising rejection of the dealer agreements and holding the state dealer statutes preempted by 11 U.S.C. § 365. govinfo.gov
9. Chrysler Group LLC v. South Holland Dodge, Inc., 862 F. Supp. 2d 661 (E.D. Mich. Mar. 27, 2012) — the district court’s construction of § 747, quoted in Fox Hills for the count of Chrysler arbitrations. courtlistener.com

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