By on March 11, 2020

 

Ren Cen. GM

Fiat Chrysler wants to see General Motors’ racketeering lawsuit dismissed, but the automaker’s crosstown rival isn’t in a charitable mood.

GM contends that bribery of United Auto Workers officials by FCA over years of contract talks left that automaker sitting pretty, with extra labor costs dumped on its Detroit competitors. While FCA claims GM can’t prove it’s a victim, The General says otherwise.

In a filing earlier this week, GM rejected FCA’s motion to dismiss the racketeering lawsuit. That motion came in January, two months after GM filed suit.

As reported by Automotive News, GM’s filing claims FCA’s bribery of UAW officials gave it the upper hand while at the same time heaping “outsized and asymmetrical costs” on GM via its 2015 labor contract. The automaker believes FCA, which was angling for a merger with GM at the time, hoped to weaken its rival and pave the way for the tie-up. Brokering the strategy, GM claims, was former CEO Sergio Marchionne.

An ongoing federal corruption investigation revealed plenty of illegal back-scratching between FCA and the UAW going back to 2009. That probe recently saw charges laid against former UAW president Gary Jones.

“Our brief points out a very large number of factual errors and legal deficiencies in the motions filed by FCA NV, FCA US LLC and Al Iacobelli,” GM said in a statement. “We are very confident in our position on these matters and in our RICO case as a whole, and we look forward to the next steps in the case and ultimately preparing for trial.”

In its motion to dismiss, FCA claims GM’s suit falls outside the four-year statute of limitations, claiming it must have known about its lopsided labor costs back in 2015. GM countered by saying it only learned the real story in 2017, when the federal probe collared FCA labor relations boss Alphons Iacobelli. Tasked with keeping the right UAW officials “fat, dumb and happy,” Iacobelli pleaded guilty and in 2018 received a sentence of five-and-a-half years.

Calling GM’s lawsuit “groundless,” FCA said it will continue to defend itself. This ain’t over by a long shot.

[Image: GM]

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10 Comments on “Oh, No You Don’t: GM Isn’t About to Let Fiat Chrysler Off the Hook...”


  • avatar

    GM wants to find any way possible to derail the merger between FCA and PSA. If this happens it will make FCA larger than GM. GM will also be regulated to being the world’s fifth-place automaker. Of course, if Mary Barra did not sell Opel off to PSA several years ago this whole absurd situation would not exist.

    • 0 avatar
      Art Vandelay

      Or maybe FCA and the UAW’s illegal practices actually increased labor costs for GM and they are seeking to recoup some of that money. Not sure what the rest of your screed has to do with anything in the article.

  • avatar

    Sigh, soon GM will be in fifth place.

  • avatar
    Matt51

    Alphons Iacobelli, landed at General Motors in January 2016. Iacobelli was GM’s executive director for labor relations for more than a year and a half. Curiously, when describing Iacobelli’s role at FCA, GM’s lawyers neglected to mention that he worked for GM after his criminal activity took place.

    The lawsuit — citing evidence obtained through “information and belief” — is very weak.

    So GM hired a crook as an exec – so is GM criminal, stupid, or both? GM liked what Iacobelli did for FCA, so he surely was doing the same for GM – keeping the UAW “fat, dumb and happy”. A countersuit is in order here.

    About the only thing GM is good at anymore is whining. GM does not have the evidence they need to win. GM must prove FCA is guilty. Which won’t happen.
    Next watch the GM electric cars tank.

    • 0 avatar
      Lokki

      GM hired an FCA crook to crook for GM too?

      Not -exactly-. I don’t believe they knew HOW he’d gotten such a good deal with the UAW for FCA; they just knew he’d gotten a better deal than their guys had managed. In their eyes that meant that their guys hadn’t done a very good job, so they canned them and hired the magic man… only to find out later that he was a crook. Whether or not they can win a lawsuit is a different question, and I have no opinion about that.

      I used to do union contract negotiations for Management in a company of 50,000. One thing to be aware of is that you never let the decision makers in the room when you are negotiating so they have no idea how the sausage gets made. They can be too easily lured into promising something while getting nothing in return for the promise, and since they have decision authority negotiators are stuck with whatever the dumbass said. So they have to stay away for their ow good.

      Besides, the most serious issues were worked out not at the table, but outside at smoke breaks where the Union Chief Negotiator and I could talk without having to put on a show for ‘the kids’ (the union members at the table with their negotiator). Hell, I didn’t even smoke but I had five or six a day when doing a big contract. It would be easy to work out a bribery deal at smoke breaks? “Money for a training center will get me a good deal? I can sell that to my boss. It’s up to you to decide how you build, who builds it, and what your building costs are.”

      Note: I never bribed a Union Official…not by offering a reserved parking spot.

      • 0 avatar
        Matt51

        You have a very interesting background. There probably are gray areas in negotiations.

        Mr. Iacobelli says there is no merit to the GM lawsuit, and without his support, it is hard for this outsider to see a GM win here. If GM hired him at the executive level without getting a good story from him on how he negotiated contracts, it points to GM being dumb, not necessarily criminal. Either way, stupid or criminal, it does not look good for GM when they go to trial. It would be a different story if they had never hired him. If in 1931, GM had hired Al Capone as head of sales because of his proven track record in sales of booze, would GM have been stupid, criminal or both? I have to believe GM performed due diligence in their hire, and knew what they were getting. I bet his performance review, he had at least one, was excellent or outstanding.

  • avatar
    Lorenzo

    I’m not a lawyer, nor do I play one on TV (which would, of course make me an expert), so I’m not about to guess at the merits of the lawfare going on.

    I WILL agree with your second statement, that GM is headed for an electric armageddon, placing all its eggs in one proverbial basket. If that happens, anything GM gets from FCA will go to GM’s creditors in bankruptcy court.

  • avatar
    cprescott

    Government Motors has some nerve. It never paid a dime in interest or taxes on the taxpayer bailout of $49.5 billion. When the IPO was announced, the taxpayers lost instantly close to half that money which will never be recovered. All of that money from day one is financed through deficit spending which means we are paying interest on that money; plus GM used over $1 billion of the bailout on European operations which were required to be sold under the terms of the bailout; plus over that amount was diverted to China to expand operations there (because China underwrote the money used for the bailout to increase Chinese employment).

    GM – you should now be forced to pay taxes and interest on the money – then you should have to pay the unrecovered funds or have your company sold off piece by piece until the taxpayers get their money back.

    You have a choice – you can practice what you preach or you can shut up. We will never forget you soaked the American taxpayers for tens of billions without ever offering to pay it back or to pay interest or taxes on it. And then your sweeheart deal claiming all of the DEAD GM loss credits toward future profits – another $10 billion of taxpayer soaking.

  • avatar

    Well, at least the mob is not involved.

  • avatar
    Detroit-X

    GM’s incompetent executives and their culture of fear they created has done far more damage to GM in any one year than this FCA thing. GM will always leap at every chance to point to an outside excuse for their lame performance. Here come the “extraordinary items” against earnings, again.

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