Mercedes 2003 Annual Report Download - page 109
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Please find page 109 of the 2003 Mercedes annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Three purported class action lawsuits are pending in various US
courts that allege that the paint applied to 1982-1997 model year
Chrysler, Plymouth, Jeep®and Dodge vehicles delaminates, peels
or chips as the result of defective paint, paint primer, or application
processes. Plaintiffs seek compensatory and punitive damages,
costs of repair or replacement, attorneys’ fees and costs. Seven
other previously reported class action lawsuits regarding paint
delamination have been dismissed.
Like other companies in the automotive industry, we (primarily
DaimlerChrysler Corporation) have experienced a growing number
of lawsuits which seek compensatory and punitive damages for
illnesses alleged to have resulted from direct and indirect exposure
to asbestos used in some vehicle components (principally brake
pads). Typically, these suits name many other corporate
defendants and may also include claims of exposure to a variety of
non-automotive asbestos products. A single lawsuit may include
claims by multiple plaintiffs alleging illness in the form of
asbestosis, mesothelioma or other cancer or illness. The number of
claims in these lawsuits increased from approximately 14,000 at
the end of 2001 to approximately 28,000 at the end of 2003. In the
majority of these cases, plaintiffs do not specify their alleged
illness and provide little detail about their alleged exposure to
components in our vehicles. Some plaintiffs do not exhibit current
illness, but seek recovery based on potential future illness. In
2001, we and other automobile manufacturers asked the federal
bankruptcy court in Delaware overseeing the bankruptcy
proceedings of an automotive supplier, Federal-Mogul Corporation,
to consolidate all of the asbestos brake cases pending in state
courts throughout the US with the asbestos brake litigation
involving Federal Mogul supervised by the bankruptcy court. We
believed that consolidation would reduce the cost and complexity
of defending these individual cases. In 2002, the bankruptcy court
decided that it did not have the authority to consolidate these
cases, and the US Court of Appeals upheld that decision. The US
Supreme Court in January 2003 denied our request and that of
other manufacturers to review the decision. We believe that many
of these lawsuits involve unsubstantiated illnesses or assert only
tenuous connections with components in our vehicles, and that
there is credible scientific evidence to support the dismissal of
many of these claims. Although our expenditures to date in
connection with such claims have not been material to our
financial condition, it is possible that the number of these lawsuits
will continue to grow, especially those alleging life-threatening
illness, and that the company could incur significant costs in the
future in resolving these lawsuits.
As previously reported, the Antitrust Division of the US
Department of Justice, New York Regional Office, opened a
criminal investigation in connection with the allegations made in a
lawsuit filed in 2002 in the United States District Court for the
District of New Jersey against our subsidiary Mercedes-Benz USA,
LLC (MBUSA), and its wholly-owned subsidiary Mercedes-Benz
Manhattan, Inc. The Department of Justice advised those
companies in the third quarter of 2003 that it had closed the
investigation and will take no further action. The lawsuit, certified
as a class action in 2003, alleges that those companies
participated in a price fixing conspiracy among Mercedes-Benz
dealers. MBUSA and Mercedes-Benz Manhattan will continue to
defend themselves vigorously.
As previously reported, we received a “statement of objections”
from the European Commission on April 1, 1999, which alleged
that we violated EC competition rules by impeding cross-border
sales of Mercedes-Benz passenger cars to final customers in the
European Economic Area. In October 2001, the European
Commission found that we infringed EC competition rules and
imposed a fine of approximately €72 million. DaimlerChrysler’s
appeal against this decision is still pending before the European
Court of Justice.
As previously reported, in 2003 approximately 80 purported class
action lawsuits alleging violations of antitrust law were filed against
DaimlerChrysler and several of its US subsidiaries, six other motor
vehicle manufacturers, operating subsidiaries of those companies
in both the United States and Canada, the National Automobile
Dealers Association and the Canadian Automobile Dealers
Association. Some complaints were filed in federal courts in
various states and others were filed in state courts. The complaints
allege that the defendants conspired to prevent the sale to US
consumers of vehicles sold by dealers in Canada in order to
maintain new car prices at artificially high levels in the US. They
seek treble damages on behalf of everyone who bought or leased a
new vehicle in the US since January 1, 2001. DaimlerChrysler
believes the complaints against it are without merit and plans to
defend itself against them vigorously.
As previously reported, DaimlerChrysler’s subsidiary, Daimler-
Chrysler Services North America LLC (DCSNA) is subject to various
legal proceedings in federal and state courts, some of which
allege violations of state and federal laws in connection with
financing motor vehicles. Some of these proceedings seek class
action status, and may ask for compensatory, punitive or treble
damages and attorneys’ fees. In October 2003, the Civil Rights
Division of the Department of Justice and the United States
Attorney’s Office for the Northern District of Illinois advised that
they are initiating an investigation of DCSNA’s credit practices that
focuses on DCSNA’s Chicago Zone Office. The investigation follows
a lawsuit filed in February, 2003, against DCSNA in Chicago with
the United States District Court for the Northern District of Illinois
that alleges that the DCSNA Chicago Zone Office engaged in
racially discriminatory credit and collection practices in violation of
federal and state laws. In that lawsuit, six individuals filed a
purported class action complaint on behalf of African-Americans in
the region alleging that they were denied vehicle financing based
on race. They seek compensatory and punitive damages, and
injunctive relief barring discriminatory practices. The lawsuit was
later amended to include Hispanic-Americans. DCSNA believes
that its practices are fair and not discriminatory. DCSNA intends to
defend itself vigorously against these claims.
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