Ex-Chrysler dealer's suit is dismissed

Bias claims came amid business fight

BY SARAH A. WEBSTER • FREE PRESS BUSINESS WRITER

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."

Tires Stolen Off Trucks At Fulton Dealership

Video: Thieves Steal Tires From Car Lots 2/20/08 Tires were stolen off these trucks at Longley Brothers Dodge in Fulton Sunday. (WSYR-TV) Fulton, New York (WSYR-TV) - The wheels off of some brand new rides are missing. Someone's jacking up cars on dealer lots of and stealing the tires from the vehicles. Now state police are hoping surveillance tape will bust this case wide open. At Longley Brothers Dodge in Fulton, the thieves targeted Dodge Ram 2500 trucks on Sunday afternoon. They jacked them up, then took off the tires and the rims and left the trucks on blocks. Those tires and rims are worth $2,800. Surveillance video shows two men loading the tires into a Jeep Cherokee. They were at the dealership at least 30 minutes, during the day. Police have determined it was a dark blue or black Jeep Cherokee with a rear passengers side brake light out. One man was wearing a camouflage sweatshirt and the other in a dark colored coat with a white strip. Police say this could be connected to thefts at two other area dealerships in the past five months. They do plan to check websites like eBay and Craig’s List to see if they turn up. The Longley Brothers dealership says they're offering a $500 reward for information that leads to the arrest and conviction of the suspects. If you know anything, call State Police in Fulton at 593-1304.

Watching and waiting

Chrysler dealers unsure of consolidation plan’s effect

By Lorraine Halsted
The Winchester Star

Winchester — Local Chrysler dealers say they have not been contacted by the corporate office about getting on board with a plan to consolidate the car manufacturer’s franchises.

Chrysler LLC has recently unleashed Project Genesis, an initiative that would eliminate duplicate models and mainstream dealerships, so that its brands —Dodge, Jeep, and Chrysler — would be sold under one roof.

The consolidation would be more cost-effective for dealers, who would eventually have fewer models to sell under a single brand, said Chrysler President and Vice Chairman Jim Press in his remarks to the J.D. Power and Associates Automotive Roundtable in San Francisco earlier this month.

"We do know that if the consolidation doesn’t occur before the products begin to go away, it’s going to be a whole lot more difficult for the dealers who don’t get involved early, to get what they want out of it," Press said, according to transcribed remarks provided by Chrysler Canada’s corporate office.

"In theory, it makes good sense," said Glenn Kochel, president and general manager of Clarke Motors, a Dodge dealership in Winchester.

A variety of Jeep models, manufactured by Chrysler LLC, sit on the lot in front of Kern Motor Company on Valley Avenue in Winchester on Wednesday afternoon. Local dealers say they have not been contacted by Chrysler’s corporate office about a plan to consolidate the car manufacturer’s franchises. (Rick Foster)

For example, Kochel said the current setup puts him in direct competition with Parsons Chrysler-Kia in Winchester, which sells the Town & Country — an identical version of the Dodge Caravan.

"It doesn’t make sense to sell against each other," he said.

Right now, Chrysler manufactures several duplicate models sold under more than one brand, including the Jeep Compass and Dodge Caliber; the Dodge Nitro and Jeep Liberty; and the Dodge Durango and Chrysler Aspen.

Kochel said he has not been contacted by Chrysler and doesn’t expect a phone call from the corporate office anytime soon, since Project Genesis seems to be focusing on franchises in major cities with larger sales volumes.

"We are a secondary market, and it’s more of a metropolitan issue right now," he said.

Beverly Thacker, manager of sales, service, and dealer communications at Chrysler, said corporate officials probably have not contacted Winchester dealerships yet because they are concentrating on one market at a time.

Dick Kern, founder of Kern Motor Co., which sells Chrysler Jeep, said he has only heard about Project Genesis through recent media reports.

"I would be open to it," he said of the consolidation plan. "But the other franchises might not like it."

At issue is how Chrysler will go about consolidating its franchised dealerships.

In Virginia, companies cannot force its franchises to close, since they are independently owned, said Michael Allen, spokesperson for the Virginia Automobile Dealers Association in Richmond.

"Virginia’s laws make that pretty difficult to do without compensating dealers fairly, especially in Winchester, where most dealerships are family-run and a lot of them have been in the family three and four generations and have a lot of investments tied up in them, " he said.

Kochel said the consolidation would have to be voluntary for Virginia’s Chrysler dealerships, and that corporate officials would also have to bring money to the table.

"We are not going to force anyone to close their franchises," Thacker said, regardless of the franchise laws, which differ from one state to the next.

Chrysler has already consolidated 250 franchises in the past four years under Project Alpha, according to a recent report in the Detroit Free Press.

Thacker said corporate officials have not determined how many franchises or which of the 30 models under all three brands will be eliminated.

"Right now, it’s somewhat in a thought process of planning," she said. "The goal is to go into the market and see what’s needed."

Thacker said that current economic conditions have warranted the franchise and model reductions that will be brought about by Project Genesis.

The Detroit Press reported that sales of Chrysler vehicles were down 3.1 percent in 2007.

Chrysler Sale May Accelerate Dealership Closings

Business

by Wendy Kaufman

Morning Edition, May 21, 2007 · Detroit's Big Three automakers have too many dealers for the number of cars they sell. Many of those dealers are hurting financially, and struggling dealers aren't in Detroit's best interest.

Automakers are now trying to thin their dealer ranks. Chrysler, for example, has cut the number of dealers by about 10 percent in the last four years, to about 3,700, and says it will eliminate hundreds more.

The news that the private equity firm Cerberus Capital Management is slated to acquire Chrysler has prompted some industry watchers to predict that many more dealers will be put on the chopping block.

On a recent afternoon, Bill Tapscott, the impeccably dressed general manager of Lithia Chrysler in Renton, Wash., showed off his new vehicles, including the Aspen, a seven- passenger luxury SUV. He has been selling Chrysler cars and trucks for nearly three decades.

His dealership is what Chrysler calls an alpha dealer. It sells the full line of the company's products: Chrysler, Dodge and Jeep all under one roof . This spacious, modern dealership is the wave of the future for Chrysler dealers. The automaker wants its dealers to have larger geographic territories, a broader customer base, and less competition with others selling the same brand. The aim: More sales and higher profits.

"Chrysler wants its dealers to be profitable," says David Cole of the independent Center for Automotive Research. Profitable dealers spend more on advertising, they invest in new facilities, and they provide the kind of atmosphere people are looking for as they shop for new cars, he says.

In short, says Cole, "dealers are the public face of an automaker." Those that make hefty profits project the image of a vibrant car company, selling autos you want to buy. Since dealers actually purchase their inventory from Chrysler, the faster dealers reorder, the better it is for Chrysler's bottom line. But right now there are too many cars sitting unsold on dealer lots.

Earlier this year the company announced plans to eliminate about 10 to 15 percent of its dealers over the next year or two. Chrysler spokesman Jason Vines says that plan has been endorsed by Cerberus and by the Chrysler dealers. But he acknowledges that dealer support is tempered.

"Everyone is favor of this. But like the old saying, 'Everyone wants to go to heaven but no one wants to die.' "

In other words, the dealers are interested in having fewer dealers so long as they aren't the one getting axed.

Vines adds that, for now, there are no plans to go beyond the previously announced cuts. But he concedes that could change.

"If other opportunities come about and it makes sense, sure we will do that," Vines says.

Indeed, some industry watchers, including Cole, suggest that Chrysler needs to eliminate 1,000 more dealers as part of its long-term strategy. Cole says the buyouts will be expensive. "It's probably going to cost hundreds of millions, maybe even a billion dollars to get the kind of dealer body they have to have."

Dealers have franchise agreements with Chrysler – and if Chrysler wants to terminate those arrangements, it will have to buy the dealers out. That's what General Motors did when it eliminated the Oldsmobile nameplate. GM won't say what that buyout cost, but some estimates put that figure at more than $800,000 per dealer.