Friday, February 22, 2008

Ex-Chrysler dealer's suit is dismissed

Bias claims came amid business fight


The U.S. 7th Circuit Court of Appeals in Chicago has upheld a lower court recommendation to dismiss a lawsuit filed against DaimlerChrysler AG by a former auto dealer who alleged racial discrimination when he and the automaker became embroiled in a business dispute.

The allegations by Chicago-area dealer Gerald Gorman resulted in a high-profile boycott of Chrysler, Dodge and Jeep products in 2004, and the clash was regarded as one of the most politically and racially charged fights ever between a dealer and automaker.

There were political demonstrations on the floor of the Chicago auto show as a result.

In harsh language, Chief Judge Frank Hoover Easterbrook agreed Wednesday with a lower court conclusion that Gorman lied under oath and otherwise engaged in "chicanery" in the case.

DaimlerChrysler, now called Chrysler, had maintained throughout the case that it does not tolerate discrimination and that the Chicago lawsuits were a smokescreen to cover up financial and legal improprieties by Gorman's dealership, including falsifying information on credit applications.

Bill Porter, director of corporate communications for Chrysler Financial, said that the opinion "has been a long time in coming and we are extremely pleased."

Attempts to reach Gorman were unsuccessful.

The heated dispute started in 2003, when Gorman, a white dealer who owned dealerships in minority neighborhoods, alleged in a lawsuit that Chrysler's financial arm used its computerized lending program to discriminate against dealerships that served a high proportion of minorities. He also alleged that Chrysler's lending executives used racist language in conducting business.

One lawsuit was filed on Gorman's behalf, saying the practice ruined his business. Another suit was filed on behalf of his customers who alleged they were harmed.

Gorman's accusations also led to a similar set of dealer and customer lawsuits in Texas.

In depositions, Chrysler employees testified that the company's longtime zone manager in Chicago regularly used racist language in the office and asked the race of a loan applicant at least once.

By mid-2005, the automaker had settled all of the discrimination cases stemming from Gorman's allegations without admitting fault.

Chrysler's financial arm agreed to spend $1.7 million to settle with the black and Hispanic customer plaintiffs in Chicago.

The automaker also agreed to train its employees on diversity issues and the Equal Credit Opportunity Act. Chrysler also settled with the dealer and customer plaintiffs in Texas; the terms of that agreement were not disclosed.

However, the automaker continued its fight against Gorman.

In June 2005, a federal magistrate in Chicago recommended that Gorman's case against Chrysler be dismissed, after he concluded that Gorman lied under oath.

Gorman appealed, but the higher court agreed with the magistrate's findings.

Easterbrook concluded in the opinion that Gorman and his associates "have behaved like a pack of weasels and can't expect any part of their tale to be believed. Anyway, discrimination against would-be purchasers of cars is actionable by the persons discriminated against. A suit by persons claiming to be the victims of discriminatory failure to make loans has been filed and settled."

Porter, the Chrysler spokesman, said the lawsuits were resolved "in the best possible way for the parties that were involved."

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