DaimlerChrysler Financial Forces Army Reservist to Fight Car Rip-Off From Iraq

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


On Monday, I posted a story about one of the new hazards of buying a used car, namely the now-common practice by car dealers of forcing customers to waive their rights to access the legal system as a condition of buying a car. The idea is that if the dealership rips you off, you have to submit to private, binding arbitration, conducted by an arbitration firm hired by the dealership instead of filing a lawsuit. The rules in arbitration are a lot different than the regular courts, in ways that create hardships for consumers. Those hardships are a lot worse if you happen to be deployed to Iraq.

Today I heard a story from a Rhode Island consumer attorney named John Longo, who told me about a client of his who had a small dispute with a Jeep dealer over the title of a car he bought with a friend. The Jeep was financed through Daimler Chrysler Financial Services, and the sales contract and financing agreements included a mandatory arbitration clause forcing the car buyer to waive his constitutional right to go to court. So, after having to run up some legal bills fighting the car dealer over $220, Longo’s client filed a claim against both the dealer and the financing company with their pre-selected arbitrator from the American Arbitration Association.

Long story short, the customer got deployed to Iraq while the case was moving forward. Longo filed a request for a stay, to postpone the case until his client came back to the States. If the case had been in a regular court, Longo says a judge would have granted the stay automatically under the federal Service Members Civil Relief Act. Instead, though, Daimler Chrysler and the dealership objected and want to proceed without Longo’s client present, which they can do because in arbitration, a plaintiff is not even guaranteed a live hearing. It’s also unclear whether the federal relief act applies to arbitration.

Daimler Chrysler could cut the soldier some slack, but Longo says the company has refused. “It’s Daimler Chrysler’s policy,” he says, which isn’t surprising. The automaker/finance company (which sold its Chrysler half earlier this year) has been a major player in the American tort reform movement, which has spent millions to block individual Americans’ ability to sue big companies in court for fraud and other wrongdoing. Mandatory arbitration clauses have been a major component of that effort.

Daimler Chrysler’s former general counsel Steven Hantler has been one of the most vocal critics of the civil justice system, writing in the Wall Street Journal last year that, “The unfair civil-justice system at the state level has made the legal system in the United States the world’s most expensive and imposes huge costs on consumers and businesses alike…The ‘cost’ of a litigious society is borne by every resident in every state.”

Of course, the public also bears the cost of sleazy car dealers and finance companies, too, in a far more direct way, as Longo’s client discovered. While Hantler is on the public speaking circuit selling tort reform to business groups, Longo’s client, who might tell the other side of that story, has been instructed by the military to stay out of the press. Longo asked that we not publish his client’s name, but he says the case is a classic example of why most consumers are much better off in the traditional legal system rather than in private arbitration.

Update: Longo reports today that after we posted this item, he got an email from the arbitrator with a decision granting his request for a stay in the case. (We can’t claim credit for the decision, which was drafted, apparently, the day before.) It may be a while before Longo’s client gets the good news, as he recently informed Longo that he will be “outside the wire” for a month and out of email contact.

Despite the decision in his favor, the arbitration experience has prompted Longo to petition the Rhode Island Motor Vehicles Dealers License and Hearing Board to adopt rules that would prohibit car dealers from making customers submit to mandatory arbitration with any company that doesn’t abide by the federal Service Members Civil Relief Act.

Congress has already taken some steps in this direction by outlawing arbitration clauses in lending agreements made to military members and their dependents, but the new law didn’t come in time to help Longo’s client. Longo’s proposed rule would extend those provisions to military personnel who buy their cars with cash.

WE'LL BE BLUNT

It is astonishingly hard keeping a newsroom afloat these days, and we need to raise $253,000 in online donations quickly, by October 7.

The short of it: Last year, we had to cut $1 million from our budget so we could have any chance of breaking even by the time our fiscal year ended in June. And despite a huge rally from so many of you leading up to the deadline, we still came up a bit short on the whole. We can’t let that happen again. We have no wiggle room to begin with, and now we have a hole to dig out of.

Readers also told us to just give it to you straight when we need to ask for your support, and seeing how matter-of-factly explaining our inner workings, our challenges and finances, can bring more of you in has been a real silver lining. So our online membership lead, Brian, lays it all out for you in his personal, insider account (that literally puts his skin in the game!) of how urgent things are right now.

The upshot: Being able to rally $253,000 in donations over these next few weeks is vitally important simply because it is the number that keeps us right on track, helping make sure we don't end up with a bigger gap than can be filled again, helping us avoid any significant (and knowable) cash-flow crunches for now. We used to be more nonchalant about coming up short this time of year, thinking we can make it by the time June rolls around. Not anymore.

Because the in-depth journalism on underreported beats and unique perspectives on the daily news you turn to Mother Jones for is only possible because readers fund us. Corporations and powerful people with deep pockets will never sustain the type of journalism we exist to do. The only investors who won’t let independent, investigative journalism down are the people who actually care about its future—you.

And we need readers to show up for us big time—again.

Getting just 10 percent of the people who care enough about our work to be reading this blurb to part with a few bucks would be utterly transformative for us, and that's very much what we need to keep charging hard in this financially uncertain, high-stakes year.

If you can right now, please support the journalism you get from Mother Jones with a donation at whatever amount works for you. And please do it now, before you move on to whatever you're about to do next and think maybe you'll get to it later, because every gift matters and we really need to see a strong response if we're going to raise the $253,000 we need in less than three weeks.

payment methods

WE'LL BE BLUNT

It is astonishingly hard keeping a newsroom afloat these days, and we need to raise $253,000 in online donations quickly, by October 7.

The short of it: Last year, we had to cut $1 million from our budget so we could have any chance of breaking even by the time our fiscal year ended in June. And despite a huge rally from so many of you leading up to the deadline, we still came up a bit short on the whole. We can’t let that happen again. We have no wiggle room to begin with, and now we have a hole to dig out of.

Readers also told us to just give it to you straight when we need to ask for your support, and seeing how matter-of-factly explaining our inner workings, our challenges and finances, can bring more of you in has been a real silver lining. So our online membership lead, Brian, lays it all out for you in his personal, insider account (that literally puts his skin in the game!) of how urgent things are right now.

The upshot: Being able to rally $253,000 in donations over these next few weeks is vitally important simply because it is the number that keeps us right on track, helping make sure we don't end up with a bigger gap than can be filled again, helping us avoid any significant (and knowable) cash-flow crunches for now. We used to be more nonchalant about coming up short this time of year, thinking we can make it by the time June rolls around. Not anymore.

Because the in-depth journalism on underreported beats and unique perspectives on the daily news you turn to Mother Jones for is only possible because readers fund us. Corporations and powerful people with deep pockets will never sustain the type of journalism we exist to do. The only investors who won’t let independent, investigative journalism down are the people who actually care about its future—you.

And we need readers to show up for us big time—again.

Getting just 10 percent of the people who care enough about our work to be reading this blurb to part with a few bucks would be utterly transformative for us, and that's very much what we need to keep charging hard in this financially uncertain, high-stakes year.

If you can right now, please support the journalism you get from Mother Jones with a donation at whatever amount works for you. And please do it now, before you move on to whatever you're about to do next and think maybe you'll get to it later, because every gift matters and we really need to see a strong response if we're going to raise the $253,000 we need in less than three weeks.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate