Hagens Berman Announces Suit Against Chrysler for Redlining, Discriminatory Lending Practices Against Minorities Expands to Include Hispanics,

Suit Alleges Hispanic Purchasers' Credit Applications "tossed into a 'Reject' Bin"

CHICAGO, March 25 -- Attorneys representing a group of African-Americans who claim they were denied loans by DaimlerChrysler based on their race and where they live say they have expanded the proposed class-action lawsuit to include Hispanic car purchasers living near Chicago, after other minorities came forward with similar experiences.

The original suit claims Chrysler management systematically and intentionally denies low-interest vehicle financing to creditworthy blacks in two Chicago neighborhoods. The amended complaint, filed today in United States District Court in Chicago, now includes allegations that Chrysler's management is using similar redlining practices in Berwyn, Illinois, near Chicago.

More than a third of Berwyn's population is Hispanic.

"Since we filed the original complaint against Chrysler earlier this month, we've learned of other areas in which we believe that Chrysler has thrown the switch on what Chrysler claims is a color-blind credit-rating system," said Steve Berman, managing partner of Hagens Berman, the firm leading the case against Chrysler. "As we learn more about the case, it is becoming clear that Chrysler's actions in Chicago are not limited to one area, or one minority group."

Berman says the firm is expanding its investigation due to reports of redlining by Chrysler from across the country.

According to internal Chrysler documents, operators of the Automated Credit Evaluation (ACE) system override the purportedly color-blind system, rerouting credit applications from specific dealers for a subjective manual review.

The complaint argues that the ACE system also allows zone managers to flag every application from an individual dealership for increased scrutiny by Chrysler employees. The complaint cites internal documents that note "the Zone Manager can use any criteria to decide whether or not to place a dealer on Watch."

"We believe Chrysler selectively chooses high minority areas and rigs the system to have minority applications tossed into a 'reject' bin," Berman added.

The suit names DaimlerChrysler Services North America, LLC, d/b/a Chrysler Financial Company, LLC, a wholly owned subsidiary and captive financing arm of DaimlerChrysler, as the defendant.

The complaint argues that customers from the Berwyn dealership began to be systematically denied Chrysler financing after a visit from Chrysler zone manager Ben Boggs. During his visit, the complaint states that Boggs viewed the dealership's new Spanish language television commercial targeted towards Hispanics, and immediately commented, "That's a very 'colorful' commercial you have there. I just hope all those accounts will be collectible."

Attorneys believe that after viewing the commercial, Boggs ordered all applications from the Berwyn dealership pulled from the ACE system for increased scrutiny.

The suit cites Boggs as making racially derogatory comments about African Americans and credit risks associated with financing auto purchases for minorities, including asking, "Well guys, what did we decide to do with Gerry's nigger deals? Ha-ha," at a meeting attended by a top-level Chrysler executive. According to the complaint, the Chrysler vice president was unsurprised by Boggs' use of racist language. (par. 126)

Berman noted that evidence of redlining from another minority area dealership severely weakens Chrysler's claims that the first complaint was simply a business dispute between a dealership and Chrysler.

Jamie Maldonado and Juely Rivera, two named plaintiffs added to the suit, applied for financing from Chrysler at the Suburban Dodge of Berwyn dealership, located in the Chicago suburb of Berwyn. Despite having above-average credit ratings, the complaint states that Chrysler denied the couple financing.

However, the suit states that Chrysler then suggested that Rivera apply individually. Even after this reapplication, Chrysler initially rejected her credit application, and subsequently only offered financing options at an extraordinarily high 15 percent over a period of 60 months, according to the complaint. The couple eventually received much better financing from another financial institution, but still at interest rates higher than they should have received from Chrysler, the suit argues.

According to attorney Berman, Rivera purchased another vehicle through Chrysler in July 2002 -- prior to Boggs's comments -- and received a competitive interest rate.

In response to the allegations in the suit, clergymen from across the United States organized a nationwide boycott of DaimlerChrysler on March 15. U.S. Congressman Bobby Rush, Illinois State Senator Donne Trotter and more than 300 African American clergymen have appealed for the resignation of several executives named in the suit and asked African American investors to sell their Chrysler stock immediately.

The suit describes meetings between Chrysler and its dealerships in which Chrysler executives disclosed -- using racist slurs and derogatory comments -- that Chrysler did not want to finance car purchases by blacks, claiming they are inherently higher credit risks.

The class-action suit seeks damages related to civil rights violations and the paying of higher interest rates by plaintiffs, as well as punitive damages to deter the company from discriminatory conduct.

For more information or to view the complaint and other information on the suit, visit www.hagens-berman.com.

About Hagens Berman

Steve Berman is managing partner of Hagens Berman, a law firm with offices in Seattle, Boston, Los Angeles and Phoenix. Recently named co-lead counsel in litigation to recover losses from Enron employees' retirement funds, Berman is a nationally recognized expert in class action litigation. Berman represented Illinois and 12 other states in lawsuits against the tobacco industry that resulted in the largest settlement in the history of litigation. Berman also served as counsel in several other high-profile cases including the Washington Public Power Supply litigation, which resulted in a settlement of more than $850 million, and the proposed $92.5 million settlement of The Boeing Company litigation. Other notable cases include litigation involving the Exxon Valdez oil spill; Louisiana Pacific Siding; Morrison Knudsen; Piper Jaffrey; Nordstrom; Boston Chicken; and Noah's Bagels.

Berman is joined in the litigation by attorneys Edward Vrdolyak, Eugene Pincham and William Hooks.