Group considers discrimination suit

A coalition of social and religious groups is exploring the possibility of a class action lawsuit against the state's car lots after examining a study that ranked Wisconsin's dealerships as the most racially discriminatory.

The coalition is using a 2004 study prepared by Vanderbilt professor Mark Cohen as the basis for possible legal action.

The study found that blacks "pay a higher subjective markup than similarly situated white customers" when trying to obtain a lease from the American Honda Finance Corporation, an auto-finance network for Honda dealerships.

The study also found that of the 15 states surveyed, blacks were charged the most — $568 — more than whites in Wisconsin.

In Louisiana, the state where blacks paid the second-most more than whites, the markup amounted to $554.

The study's finding that blacks paid a higher markup, a "just because" charge dealers can add at their own discretion, than did whites with similar credit spurred the six-member coalition into action.

"What they were finding is that when African-Americans went in to get a lease, there was a subjective markup on the part of the dealer," said Laura Weber, office manager for Lutheran Home Relations, one of the six member organizations of the coalition.

The average markup blacks had to pay was $557, while for whites it was $227, according to the Vanderbilt study.

The coalition has been in talks with the Justice Department about the issue, according to Weber.

"What we found is that while Wisconsin does have consumer protection laws, when it comes to racial discrimination there is no specific law, and that's probably pretty common" among other states, she said.

The coalition has been in discussions with a law firm about bringing a class action lawsuit against all of Wisconsin's car dealerships and not just the American Honda Financing Corporation because they had to expand the pool of defendants in order to make the lawsuit a class action, Weber said.

The study also hints that analysis conducted on other auto lenders, including Ford Motor Credit Corporation and the General Motors Acceptance Corporation, will provide "strong evidence that the industry-wide practice of subjective credit pricing results in a disparate impact on minorities."

It's essential for the coalition to bring this suit as a class action if they want closure, according to assistant law professor and class action expert Michael O'Hear, who is not affiliated with this specific case.

"The individual claims of each person who has been affected are very small — a few hundred dollars or so," O'Hear said. "No lawyer would want to litigate the case over a few hundred dollars. It's a big money-losing proposition unless you have a class action lawsuit with hundreds of plaintiffs joined together.

"Now (with a class action) you're talking real money, maybe hundreds of thousands of dollars. If the court doesn't certify this as a class action, it's not going to go anywhere because it's not going to be worth any lawyer's time."

O'Hear said the coalition could name hundreds of defendants if it wanted to, but that would make the case "unwieldy."

This article appeared in The Marquette Tribune on Mar. 15 2005.