Bombshell: General Motors Sues Fiat Chrysler, Names Marchionne in Union Bribery Scheme

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]