Mercedes 2002 Annual Report Download - page 136

130 |Other Notes
Other Notes
30. Litigation and Claims
Three lawsuits have recently been brought against Daimler-
Chrysler AG or some of its affiliates raising claims arising out
of the practice of apartheid in South Africa before 1994. In
particular, on September 27, 2002, a putative class action
covering claims arising between 1952 and 1994, captioned
Digwamaje v. Bank of America, No. 02-CV-6218 (RCC)
(S.D.N.Y.), was filed in the United States District Court for the
Southern District of New York naming 84 U.S., European and
Japanese companies, including DaimlerChrysler AG, as defen-
dants. On November 11, 2002, 91 individuals filed a lawsuit
captioned Khulumani v. Barclays National Bank Ltd., Civ. A.
No. 02-5952 (E.D.N.Y.) in the United States District Court for
the Eastern District of New York against 22 U.S., European
and Japanese corporate defendants, including DaimlerChrysler
AG and Daimler-Benz Industrie. This lawsuit covers the period
from 1960 to 1993. On November 19, 2002, another putative
class action lawsuit, Ntsebeza v. Holcim Ltd., No. 02-74604
(RWS) (E.D. Mich.), was filed in the United States District
Court for the Eastern District of Michigan naming as defendants
four U.S. and European companies, including Daimler-
Chrysler Corporation, and asserting claims arising from 1948
to 1993. All three lawsuits allege, in essence, that the corpo-
rate defendants knew about or participated in human rights
violations and other abuses of the South African apartheid
regime, cooperated with the apartheid government during that
period, and benefitted financially from such cooperation. The
plaintiffs assert various claims, including conspiracy, aiding and
abetting the apartheid regime, violations of the Racketeering
Influence and Corrupt Organizations Act, violations of interna-
tional law and the Alien Tort Claims Act, unjust enrichment
and unfair and discriminatory labor practices. The plaintiffs
seek compensatory and punitive damages, disgorgement of
purported illicit profits, an accounting, restitution of the value
of defendants’ purported unjust enrichment, and other forms
of relief, including in the Digwamaje case the establishment of
a “historic commission.” Plaintiffs in the Digwamaje case
purport to seek compensatory damages in excess of $200
billion and punitive damages in excess of $200 billion. The
complaints in the other two lawsuits do not specify damages.
DaimlerChrysler intends to defend against these claims
vigorously.
Like other companies in the automotive industry, Daimler-
Chrysler (primarily DaimlerChrysler Corporation) have experi-
enced 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
lawsuits 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 19,000 at the end of January
2003. In the majority of these cases, the plaintiffs do not
specify their alleged illness and provide little detail about their
alleged exposure to components in DaimlerChrysler vehicles.
Some plaintiffs do not exhibit current illness, but seek recovery
based on potential future illness. In 2001, DaimlerChrysler
and other automobile manufacturers asked the federal bank-
ruptcy court in Delaware overseeing the bankruptcy proceed-
ings of an automotive supplier, Federal-Mogul Corporation, to
consolidate all of the asbestos brake cases pending in state
courts throughout the U.S. with the asbestos brake litigation
involving Federal Mogul supervised by the bankruptcy court.
DaimlerChrysler 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 U.S. Court of
Appeals upheld that decision. The U.S. Supreme Court in Janu-
ary 2003 denied DaimlerChrysler’s request and that of other
manufacturers to review the decision. The Group believes that
many of these lawsuits involve unsubstantiated illnesses or
assert only tenuous connections with components in Daimler-
Chrysler vehicles, and that there is credible scientific evidence
to support the dismissal of many of these claims. Although
DaimlerChrysler’s expenditures to date in connection with
such claims have not been material to its financial condition,
it is possible that the number of these lawsuits will continue
to grow, especially those alleging life-threatening illness, and
that the Group could incur significant costs in the future in
resolving these lawsuits.
In the fourth quarter of 2000, Tracinda Corporation filed
a lawsuit in the United States District Court for the District of
Delaware against DaimlerChrysler AG and some of the
members of its Supervisory Board and Board of Management
(Messrs. Kopper, Schrempp and Gentz). Shortly thereafter,
other plaintiffs filed a number of actions against the same
defendants, making similar claims to those in the Tracinda
complaint. Two individual lawsuits and one consolidated class
action lawsuit are pending. The plaintiffs, current or former
DaimlerChrysler shareholders, allege that the defendants
violated U.S. securities law and committed fraud in obtaining