By on November 20, 2019

General Motors Renaissance Center

As members of the media swarm over new vehicles in Los Angeles, a legal drama is playing out in Detroit. General Motors has filed a federal racketeering lawsuit against cross-town rival Fiat Chrysler, alleging FCA conspired to undermine the collective bargaining process and create unfair advantages by bribing UAW officials.

This cost GM lots of money, the automaker claims, and now it wants to collect.

“This lawsuit is intended to hold FCA accountable for the harm its actions have caused our company and to ensure a level playing field going forward,” said Craig Glidden, GM Executive Vice President and General Counsel, in a statement.

GM’s RICO suit targets FCA and executives who pled guilty in the lengthy federal investigation into corruption among the upper ranks of the United Auto Workers. That probe ensnared, among others, former FCA labor relations chief Alphons Iacobelli and Norwood Jewell, former vice president of the union’s FCA department.

From GM:

FCA was the clear sponsor of pervasive wrongdoing, paying millions of dollars in bribes to obtain benefits, concessions, and advantages in the negotiation, implementation, and administration of labor agreements over time.

FCA corrupted the implementation of the 2009 collective bargaining agreement. It also corrupted the negotiation, implementation, and administration of the 2011 and 2015 agreements.

FCA’s manipulation of the collective bargaining process resulted in unfair labor costs and operational advantages, causing harm to GM.

As reported by Reuters, the suit alleges that late FCA CEO Sergio Marchionne was well aware of the bribery. “Marchionne was a central figure in the conceiving, executing and sponsoring of the fraudulent activity,” Glidden said in the suit.

Marchionne, who died in July 2018, conspired to negotiate a new labor deal “designed, through the power of pattern bargaining, to cost GM billions,” he claimed.

Just how much GM hopes to collect is unknown, though the automaker claims, “All damages recovered will be invested in the U.S. to benefit GM’s employees and grow jobs.”

The suit comes a month after GM weathered a 40-day strike by UAW-affiliated workers; eventually, the automaker forged a new labor agreement that kept existing healthcare benefits and brought temporary workers a pathway to full-time employment. Wage increases and boosted bonuses were also part of the deal. Currently, FCA finds itself facing the UAW bargaining team.

FCA is well aware of the timing.

“We are astonished by this filing, both its content and its timing,” the company said in a statement. “We can only assume this was intended to disrupt our proposed merger with PSA as well as our ongoing negotiations with the UAW. We intend to vigorously defend against this meritless lawsuit and pursue all legal remedies in response to it.”

Glidden told media Wednesday afternoon that the lawsuit has nothing to do with the proposed FCA-PSA merger. Nor will it involve the UAW, he added.

“Our sole focus is FCA,” Glidden  said.

[Image: General Motors]

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42 Comments on “Bombshell: General Motors Sues Fiat Chrysler, Names Marchionne in Union Bribery Scheme...”


  • avatar
    Matt51

    FCA will countersue and win. GM has no proof. If the government has no proof, GM has no proof. GM is desperate. Hearsay will not win in court.

    • 0 avatar
      bullnuke

      Matt51 – Recent events reveal that certain members of our federal government consider hearsay to be more accurate than a first-person accounting of facts in an investigation. Similar to GM, these certain members have no proof and also appear to be somewhat desperate to prove their case using hearsay evidence. Stay tuned…

    • 0 avatar
      Peter Gazis

      Would be funny if GM end up owning Dodge, Chrysler, Jeep & RAM.

  • avatar
    dal20402

    Recommendation to all non-lawyers: Don’t talk about hearsay. The concept is pretty much totally misunderstood, and the rules are very complicated. If you try to use the term without some professional background, you are nearly guaranteed to look like an idiot.

    • 0 avatar
      danio3834

      That’s never bothered anyone here. Whether we’re talking legal terms or the auto industry.

      • 0 avatar
        Lorenzo

        It doesn’t bother lawyers either – or some judges. Appellate courts have a history of making lawyers and lower court judges look like idiots, and not just on hearsay issues. Our legal system is founded on obfuscation and making simple legal principles as complicated as possible. Even higher courts engage in it, or haven’t you heard of “emanations of a penumbra”?

    • 0 avatar
      Matt51

      Tell us oh great one, who professes to not be an idiot, the proper term to use? If the government can’t prosecute the case, how will GM win a lawsuit? I will use the word, all GM could have is hearsay, they won’t have, at least legally, obtained a cancelled check from Marchionne.

      • 0 avatar
        dal20402

        Neither you nor I knows what they’ve got. How they got it may or may not be relevant to whether it will be admissible in a proceeding. And even if all they’ve got is secondhand evidence, that’s not necessarily hearsay. The lawyers wouldn’t have brought a case like this if they didn’t think they could back it up at least well enough to make fighting more expensive than a settlement.

        • 0 avatar
          Matt51

          No, GM executives brought their suit because they sit isolated in an ivory tower, convincing themselves that there was an evil conspiracy. The lawyers brought the case because they were ordered to do so. If GM had evidence of what they are accusing FCA, they should have taken such evidence to the government for criminal prosecution. Really, only the government would legally have such evidence. Conveniently for GM, Marchionne is dead and can’t defend himself. GM will try to force FCA to prove their innocence, but this GM strategy will fail. All they have is hearsay, or if you prefer, gossip and speculation. GM believes in their heart they are right, but they have no case.

        • 0 avatar
          Matt51

          “The lawyers wouldn’t have brought a case like this if they didn’t think they could back it up at least well enough to make fighting more expensive than a settlement.”

          So you expect FCA to settle? Laughable.
          There are many lawsuits that are a)frivolous or b)evil. Just because someone has the deep pockets to sue, does not make them right, or mean they have the evidence required to win.

          • 0 avatar
            28-Cars-Later

            He’s right, they billed the time to see if there was a case already so money wasn’t an issue. If they bring a joke case into court their firm looks foolish to the court and the legal industry.

        • 0 avatar
          Art Vandelay

          @Matt, My non-lawyer mind with counter with the simple fact that the government was unable to prove in a criminal case that O.J. Simpson killed Nicole Brown and Ronald Goldman, yet a civil court still said he did it and ordered him to pay the families.

          • 0 avatar
            Matt51

            Art, if there had not been a criminal trial first, OJ would never have been found responsible in the civil trial. All the evidence was collected by the government in the criminal trial. By the way, OJ found ways to weasel out of paying, even though he lost the case.

          • 0 avatar
            28-Cars-Later

            He spent all his money looking for the real killers.

          • 0 avatar
            Art Vandelay

            Doubt it @Matt. As I recall the civil case introduced evidenc (something about shoes IIRC) that members of the criminal jury stated they would have been more likely to convict had they seen it in the criminal trial.

            And yes, while he never paid off the entire amount (he eventually went to Prison for one thing), as I recall the Goldman family got some money and possesions, to include his Heisman Trophy.

          • 0 avatar
            Matt51

            Art,
            The shoes were the result of a National Enquirer exclusive. If all the Goldman’s had were the shoes, and realize the shoes were first brought up in the criminal trial, the Goldman’s never would have won. There would have been no shoe issue if there had not been a criminal trial first. OJ lied about the shoes in the criminal trial.

    • 0 avatar
      RHD

      Absolutely true.

      Monday-morning quarterbacking should be kept to the sports world. Anyone who thinks they understand the law because they watched CSI and reruns of Perry Mason is gravely mistaken. Off-the-cuff opinions are cheap and easy though.

  • avatar
    ravenuer

    People that live in glass houses……..

  • avatar
    ToddAtlasF1

    Wouldn’t the people harmed by Fiat bribing UAW officials be the UAW dues-paying members? If anything, one might think that GM would benefit from alleged bribery, since favorable terms for one manufacturer tend to be reflected in the contracts signed by the other manufacturers.

    • 0 avatar
      Art Vandelay

      Agreed. I am not sure I would want to continue paying dues to said organization in light of the fact they were being paid to sell those workers out versus represent them.

      • 0 avatar
        tomLU86

        Paying dues.

        In a right to work state where it is not compulsory, a worker would have to ask:

        Am I better off WITH the union bargaining on my behalf, or could I get a better deal without them?

        Specifically:

        Am I better off with corrupt people bargaining on my behalf, or do I trust the company will give me a better deal.

        I’m sure many, perhaps most, UAW workers are upset and wondering, “What did they give up?”

        Probably very little. And the corrupt leadership got a better deal than for the workers the automakers would give, left to their own devices.

        Most people, when they have to choose for real, choose the lesser of the evils, and not the ideal, but unattainable.

  • avatar
    Steve Biro

    GM can’t seem to make money building cars and trucks. So they resort to this. They have lost their way so badly.

  • avatar
    ajla

    Hard to believe there could be financial shenanigans between a large union and rich Italians.

    • 0 avatar
      Lorenzo

      That’s the problem. The actions taken by FCA executives are standard operating procedure, not just in Italy, but most of the world. We can blame our Founding Fathers for insisting on fair and open dealing. They knew the world isn’t like that: even John Adams once defined a diplomat as,”A patriot, sent abroad to lie for his country”.

  • avatar
    Steve203

    I figure FCA’s take is right.

    Not only have PSA and FCA principles agreed to the merger, the French government and union are on board. A merged PSA/FCA will have more scale, which might make FCA an even tougher competitor in North America than it already is.

    So, GM sues for Billions. That potential liability will make it impossible to price FCA for the merger, thus ending the merger, until the suit is settled. GM probably doesn’t care about how the suit comes out. It will be years from now, and PSA will have moved on.

    • 0 avatar

      Barra created this mess by giving PSA to Opel. The reason PSA is so much larger is because Barra gave away Opel. Now they are a threat to GM

      • 0 avatar
        Steve203

        >>Barra created this mess by giving PSA to Opel. The reason PSA is so much larger is because Barra gave away Opel. Now they are a threat to GM<<

        Quite right. As long as Opel and PSA were restricted to Europe, they were no threat to GM, no matter how big PSA got.

        FCA gives PSA a strong entry into North America, and the scale from Opel helps make FCA a stronger competitor in N America. The Opel sale bites GM in the a$$, so they go crying to their lawyers.

  • avatar
    Manta9527

    Craig Glidden: “Our lawsuit has nothing to do with the proposed FCA-PSA merger, nor will it involve the UAW. Our sole focus is FCA.”

    Speaking for myself, Glidden’s statement is hardly reassuring. What makes him so sure that this lawsuit won’t have any effect on the merger, assuming that GM had no intention of disrupting it?

  • avatar

    Let FCA to die natural way. All GM need to do is to wait a little bit while PSA finds out in what kind of mess it got itself into.

  • avatar

    GM is just sore that FCA has surpassed them in truck sales and reliability.

  • avatar
    Michael S6

    Very interesting story that should be televised like the Trump hearings. Pass the popcorn.

  • avatar
    DeadWeight

    Guangzhou-Guadalajara Motors (GM) needs all the cash it can raise in a hurry, no matter what the method or source.

    I saw a Hecho En Mexico Chevrolet Blazer (made of 70% foreign parts content) on the expressway home tonight – what an utter POS with the most awful looking a$$ on any crossover out there at anywhere near its ridiculous $40,000 price tag (there are WAY better vehicles in the segment for $27,000-$32,000).

    GM gonna GM.

  • avatar

    The press has been saying it will make PSA/FCA the fourth largest car company in the world. This mean GM will drop to fifth place in international sales. For the first time ever GM is a minnow among giants.

  • avatar
    Lou_BC

    Claiming that “pattern bargaining” hurt Chevy is stupid since FCA workers are paid significantly less than GM workers. If the “pattern” were to hold GM would have benefited from FCA’s lower wage/benefit packages. Conversely, GM’s higher wage and benefit contract with the UAW means that the “pattern” is set and FCA will get saddled with a larger wage/benefit contract.

  • avatar

    I think GM is worried about PSA’s EV technology and its place in the North American market. PSA got a lot of this modern EV technology from Opel, which GM sold to PSA several years ago. GM probably would not be in this situation if they did not sell off Opel.

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