Court officer advises that it be dismissed

BY SARAH A. WEBSTER
FREE PRESS BUSINESS WRITER



A court officer has recommended that a federal district judge in Chicago dismiss a high-profile lawsuit filed against DaimlerChrysler AG by a former auto dealer who alleged racial discrimination, after he concluded that the dealer lied under oath.


Judge Wayne Andersen has not issued a ruling on the recommendation to dismiss the case, which was made by Magistrate Judge Arlander Keys on Tuesday; he may adopt or reject his assistant's 48-page report.


A dismissal would be a great relief for DaimlerChrysler -- and a victory in one of the nation's most politically and racially charged disputes between a dealer and automaker.


The lawsuit filed in 2003 by former dealer Gerald Gorman against DaimlerChrysler Services North America LLC, the Farmington Hills-based lending arm of the automaker, alleges that Chicago-area DaimlerChrysler executives wouldn't give loans or fair interest rates to customers at Gorman's dealerships because they were located in neighborhoods with many minorities. The executives allegedly explained their reasons with racist language.


Gorman, who is white, sued, saying the practice ruined his business. His minority customers also sued, alleging discrimination and are seeking class-action status for their case.


DaimlerChrysler has insisted that it does not tolerate racism or discrimination.


The lawsuits have generated substantial public relations troubles for DaimlerChrysler in the Chicago area, largely because sworn testimony by DaimlerChrysler employees revealed that more than one company official made discriminatory remarks about African Americans. The cases also resulted in a Chicago-area boycott of the company's Mercedes, Chrysler, Dodge and Jeep products by black leaders, which has hurt the automaker's image and, according to some dealers, car and truck sales.


DaimlerChrysler has maintained that Gorman mismanaged his dealership and only alleged discrimination when his business began suffering. Gorman has denied that.


Keys did not dispute any of the racial allegations in the case but found that Gorman "made false statements" that led "Chrysler to suffer additional losses," as it continued to do business with his dealerships, and that Gorman failed to preserve notes and produce evidence that he was required to turn over by the court.


"The court recommends that the district court dismiss the plaintiff's complaint ... as the dismissal of the complaint is a harsh enough sanction" for the behavior, Keys wrote.


Gorman's attorney, Chris O'Hara, could not be reached for comment about the recommendation.


James Ryan, a DaimlerChrysler spokesman, said "we're certainly encouraged" by Keys' findings.


Meanwhile, the lawsuit seeking class-action status filed by Gorman's customers is proceeding in front of another federal judge.


In April, U.S. District Judge Mark Filip dismissed the claims from one of six plaintiffs in the lawsuit, allowing the case to proceed with five plaintiffs. Ryan said he had no comment on the customers' case or whether the automaker had reached a settlement agreement with the plaintiffs.


Filip said there were facts in the case that were suitable for a jury to hear at trial.


In depositions, DaimlerChrysler Services employees testified that the company's longtime former Chicago zone manager, Erv Sirovy, regularly used racist language in the office and asked the race of a loan applicant at least once. While Sirovy was fired in 2001, several dealers testified that his replacement, Ben Boggs, also made racist remarks related to financing of vehicles for minorities. Boggs is still employed with the company.


DaimlerChrysler has said that even if racist remarks were made by its employees, they had nothing to do with how customers were ultimately treated.


A set of lawsuits, similar to the ones filed by Gorman and his customers, were filed in Texas by former Chrysler dealer Rick Perez and his customers in 2003. DaimlerChrysler settled claims of Perez and his customers out of court last fall, and the terms were not disclosed.