DaimlerChrysler to settle Black & Hispanic Racial Bias Claims
/- Originally published in the Detroit Free Press October 30, 2004,
By Sarah A. Webster
The financing arm of DaimlerChrysler AG that makes auto loans has agreed to settle two lawsuits in Texas that accuse the company of discriminating against Hispanic and black loan applicants.
James Ryan, a spokesman for DaimlerChrysler Services North America LLC, based in Farmington Hills, Mich., said the terms of the deals are not finalized and would not be disclosed "due to our confidentiality obligations to the plaintiffs."
Robert Wilson, the San Antonio attorney representing Rick Perez, a Hispanic dealer, and his customers, did not return a telephone call for comment.
The lawsuits filed in 2003 against DaimlerChrysler by Perez and his customers accused the company of tampering with a computer program that was supposed to automatically and objectively evaluate car loan applications, making it harder to get loans at Perez' now-defunct dealership in a Galveston, Texas, minority neighborhood.
According to the lawsuits, that caused creditworthy applicants to be denied loans or be offered less favorable financing terms than they should have been.
DaimlerChrysler has said its lending policies are fair and discrimination isn't tolerated. The company has previously accused Perez of trying to recoup losses after his store failed.
"What we are faced with is a dealership which was unsuccessful in its business and financial management," the automaker said in a statement March 3. "He filed for Chapter 11, sold his store and the moment it was sold, tries to manipulate the court with a frivolous lawsuit, which makes unsubstantiated claims of discrimination designed for his own financial gain."
DaimlerChrysler also contended that the Texas lawsuits were copycats of two lawsuits filed earlier in 2003 in Chicago.
Those lawsuits, filed by former dealer Gerald Gorman and his customers, are progressing through the courts. Gorman also alleges that DaimlerChrysler tampered with the computer program that is supposed to automatically, objectively evaluate loan applications. His stores were in minority neighborhoods. Gorman is white.
The lawyer handling the Chicago lawsuits could not be reached for comment.
In previous interviews, Perez, who has been in the auto sales business for 26 years, said that, when he began complaining about the computer problem, which he said hurt his business, DaimlerChrysler worked to put him out of business.
"It would take us hours and hours to get callbacks" on loans, Perez said in an interview this year.
Sales at Rick Perez Autonet, which sold Chrysler, Plymouth, Dodge, Jeep and Mitsubishi vehicles, dropped from about 60 vehicles a month to about 20 because of the way DaimlerChrysler approved loans, Perez alleged.
Perez's lawsuit, like Gorman's, also alleged that DaimlerChrysler representatives used racial slurs when talking about customers.
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(c) 2004, Detroit Free Press.
