U.S. judge backs Hyundai on terminating two Napleton dealerships in Fla.

A federal judge in Florida last week ruled that Hyundai Motor America was within its rights to terminate two Napleton Automotive Group dealerships.

Hyundai served the dealerships notices of termination because it alleged that reputational harm was suffered after Napleton executive Edward Napleton Jr. was charged with sexual battery of an employee. Napleton Jr. is the son of company president Ed Napleton.

The wrongful termination suit was brought against Hyundai by North Palm Hyundai and West Palm Beach Hyundai — both owned by Napleton Automotive Group — claiming that Hyundai violated Florida law when it tried to end their franchise agreements.

“The order issued by Judge Aileen Cannon of the U.S. District Court for the Southern District of Florida confirmed the propriety of Hyundai’s decision to terminate these two dealerships,” Mitch Widom, an attorney with Miami law firm Bilzin Sumberg, who represented Hyundai, said in a statement.

Widom said the state’s dealer act under which the cases were litigated “typically favors dealerships,” but the decision to allow termination based on sexual misconduct was “correctly determined.”

Hyundai Chief Legal Officer Jason Erb said in a statement that the company “will not tolerate sexual misconduct by its employees or business partners.”

Though a final judgment was set, the dealerships will remain operational and, in accordance with the Florida dealer act, have 30 days to file an appeal.

A Napleton representative told Automotive News that “the dealerships respectfully disagree with the Court’s decision and will immediately appeal and expect that the decision will be reversed.”

A person familiar with the case who asked not to be identified told Automotive News that once an appeal is filed, it could take up to a year for it to be heard. From there, a court will decide if the decision was right or if it will be reversed. In that case, it would go back to trial.

Under Florida law, the person said, a franchised dealership can continue to sell cars even if a termination is pending, and any termination cannot take effect until all appeals are exhausted.