Suits & Settlements: The Car Pro Legal Roundup

• Dallas-Based Grubbs dealership is suing Stellantis
• Judge Tosses Wiretap Claims Against AutoNation
• State Farm Settlement Advances in Diminished Value Case
• GM Fights Certification of Transmission Defect Classes

Dallas-Based Grubbs dealership is suing Stellantis. A Texas dealership group is fighting Stellantis on two legal fronts, alleging the automaker unfairly restricted vehicle allocations at one dealership and improperly blocked its attempt to acquire another store, according to Automotive News. Grubbs Family of Dealerships claims Stellantis refused to provide adequate inventory and internet sales leads after it acquired what is now Grubbs Chrysler-Dodge-Jeep-Ram of Wichita Falls in March 2025, leaving the store with aging inventory while competing dealers received more desirable vehicles. The dealership group also alleges Stellantis pushed it to accept additional electric and plug-in hybrid models with promises of more gasoline-powered inventory that never materialized. In a separate lawsuit, Grubbs accuses Stellantis of wrongfully rejecting its proposed $4.2 million acquisition of Forest Lane Chrysler-Dodge-Jeep-Ram in Dallas, claiming the automaker relied on unreasonable performance metrics from the Wichita Falls store during the dealership’s first few months of ownership. Grubbs contends Stellantis’ actions cost it a valuable expansion opportunity and damaged its reputation with lenders and business partners. Stellantis has denied the allegations and said it will vigorously defend itself. The disputes highlight the growing tension between automakers and retailers over inventory allocation, dealership performance standards and franchise transfer approvals, issues that have become increasingly contentious as manufacturers exert greater control over product distribution and dealership operations.

Judge Tosses Wiretap Claims Against AutoNation. AutoNation has won dismissal of a proposed class-action lawsuit accusing the dealership giant of illegally recording and transcribing customer service calls using third-party artificial intelligence software, according to Law360. The lawsuit alleged AutoNation violated California's wiretapping laws by allowing outside technology providers to record and transcribe customer telephone conversations without proper consent. However, a California federal judge dismissed the case after concluding the court lacked personal jurisdiction over AutoNation, finding the retailer's conduct was not specifically directed at California customers or tailored to the California market. Because of that jurisdictional finding, the judge dismissed the proposed class action with prejudice, preventing the plaintiffs from refiling the same claims in that court. The ruling did not determine whether AutoNation's call-recording practices were lawful under California's wiretap statute, focusing instead on whether the case belonged in a California federal court. As dealerships increasingly rely on artificial intelligence to handle customer inquiries, schedule service appointments and assist with sales, the decision highlights the growing legal scrutiny surrounding AI-powered communications and consumer privacy. While AutoNation prevailed on procedural grounds, the broader question of how AI call-recording technology intersects with state privacy laws is likely to remain an active area of litigation as more businesses adopt automated customer service platforms.

State Farm Settlement Advances in Diminished Value Case

A Washington federal judge has granted preliminary approval to an $8.8 million class-action settlement resolving claims that State Farm failed to adequately compensate policyholders for the diminished value of repaired vehicles under its underinsured motorist coverage, according to Law360. The lawsuit alleged that vehicles often suffer a permanent loss in market value after an accident, even when properly repaired, and claimed State Farm underpaid those losses under certain insurance policies. While State Farm denied any wrongdoing or liability, the insurer agreed to the settlement to resolve the litigation. Preliminary approval allows the case to move to the next stage, during which class members will be notified of the agreement and given an opportunity to object or opt out before the court considers final approval. Diminished value claims have long been a point of contention between insurers and vehicle owners because determining how much resale value is lost after a crash often requires subjective appraisals and market analysis. Legal experts say the settlement could encourage greater scrutiny of how insurers evaluate diminished value claims and may prompt policyholders to more closely examine whether they are entitled to additional compensation following an accident.

GM Fights Certification of Transmission Defect Classes. General Motors and owners of vehicles equipped with the automaker’s eight-speed automatic transmission are battling over the future of a long-running class-action lawsuit alleging the transmissions are defective, according to Law360. GM has asked a Michigan federal judge to dismiss the remaining claims, while plaintiffs are seeking certification of four statewide classes covering affected drivers. The lawsuit alleges certain GM vehicles equipped with eight-speed automatic transmissions can experience hard shifting, hesitation, shaking and shuddering during normal operation, reducing vehicle performance and value. Plaintiffs contend GM knew of the alleged defects through testing, warranty claims and customer complaints but failed to adequately disclose or correct the problem. GM denies the allegations and argues the remaining claims should be dismissed before the case proceeds any further. The competing motions represent a significant stage in the litigation because the court must decide not only whether the lawsuit survives, but also whether groups of owners can pursue their claims together as class actions. The outcome could determine whether the case moves toward trial on behalf of thousands of vehicle owners or is substantially narrowed before any merits are decided.

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