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Jewish World Review March 23, 2001 / 28 Adar, 5761

Andrea Weigl

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Consumer Reports


Chrysler hit with
'lemon' lawsuit

http://www.jewishworldreview.com -- RALEIGH, N.C. -- Seven North Carolinians have filed suit against Chrysler, contending that they weren't told they had bought lemons and seeking class-action status for consumers nationwide.

The lawsuit, filed in Raleigh, says Chrysler and its authorized dealers routinely committed a practice called "lemon laundering," failing to disclose to consumers that their cars had been bought back from the original owners because of persistent problems.

A class-action suit would make it easier for the lawyers battling Chrysler to pool their resources and fight it out with the automaker in one courtroom.

Because the consumers didn't know they were buying lemons, the suit says, they paid more than the cars were worth. The consumers' ignorance also led them to pay for warranties or repair work that the automaker was responsible for under state law, the suit says.

"By failing to disclose to consumers that the vehicles they were about to spend their hard-earned money on were lemons, Chrysler and these dealers were able to overcharge for these vehicles," Raleigh lawyer Doug Abrams said.

North Carolina law allows national class-action lawsuits to be initiated here, Abrams said. A judge will have to decide whether the lawsuit should become a class action, and Abrams said he will file papers within a week seeking the status.

It's unknown exactly how many car owners would qualify to be class members, said Abrams, who estimates tens of thousands of consumers could fall into the class.

As a result of a Raleigh couple's suit, Chrysler was ordered to turn over documents detailing whether the history of more than 45,000 repurchased vehicles was disclosed to consumers, he said.

Internal Chrysler financial records made public in that couple's case, which has been garnering national attention, indicate that Chrysler has spent $1.1 billion to buy back more than 45,000 vehicles since 1996.

Company officials said only a quarter of 1 percent of the 19 million vehicles Chrysler manufactured during the past seven years were repurchased. Chrysler is a unit of German-based DaimlerChrysler AG, which also produces Mercedes-Benz vehicles.

Chrysler's assistant legal counsel Steve Hantler denied that the company or its dealers routinely fail to disclose the vehicle history to defraud consumers. Hantler said that it is company policy to inform dealers that the vehicles were repurchased and that the automaker regularly audits its dealers to verify disclosures were made to consumers.

Besides, Hantler said, selling repurchased vehicles is common practice among all automakers and is sanctioned by state law and heavily regulated. Hantler charged that if the practice is as secretive as Abrams and other lawyers claim, it's "the worst-kept secret ever."

"The consumers are getting an excellent deal on these vehicles that are sold at a discount below other used cars with a better warranty," Hantler said.

Andrea Weigl writes for the Raleigh News & Observer. Comment by clicking here.

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