By on July 9, 2020

 

Ren Cen. GM

General Motors’ racketeering lawsuit against rival Fiat Chrysler is dead in the water after a federal judge dismissed the case on Wednesday.

The move comes after GM appealed U.S. District Court Judge Paul Borman’s order that the CEOs of the battling automakers should meet in private and hash out a resolution themselves. The General won half of its appeal, and the meeting was scrapped, but Borman, who described the lawsuit as a “nuclear” option that only served to clog up the courts in a time of COVID-19, stayed on the case — against GM’s wishes.

Now, the case has come to an end, though the battle might still rage on.

GM alleged that corrupted bargaining between FCA and the UAW led to favorable labor contracts that benefited FCA’s balance sheet and cost GM billions. The lawsuit claimed FCA planned to use its competitive advantage (lower labor costs) to take over its crosstown rival.

Nuh uh, ruled Borman, dismissing the case.

Per The Detroit News, Borman said FCA’s corruption of the collective bargaining process hurt primarily its own workers, not GM. Proving racketeering would have been a difficult task, legal experts stated, but GM was willing to press its case. FCA denied the allegations against it.

“So, the only credible inference from the facts alleged in GM’s complaint is that defendants’ bribes were intended to secure advantages and concessions for FCA from the UAW that would not otherwise be available to it,” Borman wrote. “Accordingly, the direct victims of defendants’ alleged bribery scheme are FCA’s workers.”

While FCA clearly acted to lower its own labor costs, Borman said it could not be inferred that FCA “wanted to increase GM’s labor costs by asking the UAW to deny GM concessions that it otherwise would have given.”

In the wake of the case-tossing, FCA declared victory, saying Borman’s decision vindicates the automaker. GM wasn’t having any of it.

“We strongly disagree with the District Court’s order and will pursue our legal remedies,” the automaker said in a statement. “There is more than enough evidence from the guilty pleas of former FCA executives to conclude that the company engaged in racketeering, our complaint was timely and showed in detail how their multi-million dollar bribes caused direct harm to GM. The district court’s opinion is contrary to well-settled RICO case law and would let wrong-doers off the hook for the massive harm caused by their criminal conspiracy.”

What, if anything, GM plans to do next is something we’ll just have to wait for.

[Image: General Motors]

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16 Comments on “Game Over: Judge Tosses GM Lawsuit Against Fiat Chrysler...”


  • avatar
    Matt51

    Mary Barra fails again.

  • avatar
    CaddyDaddy

    Imagine a large restaurant chain that serves low quality bland food and has bad service. It’s business model fails and to save itself it cuts its costs to the lowest denominator supplier, charges $1 for everything, runs to the Govt. for PPP loans, lobbies for H1-B visas for cheap immigrant labor subsidized by the welfare state and after the customer consumes the product it makes them regret the decision. Yup, that pretty much sums up the 2020 GM business model.

  • avatar
    Art Vandelay

    Good. The Government has already given GM too many advantages over their competitors and still they are trash.

    • 0 avatar
      ToolGuy

      If I hated GM as deeply as you do, Art, I would lease a Dodge to show my support for Ford.

      :-)

      • 0 avatar
        Art Vandelay

        I lease what I like. Ford ceased making a car I liked. Plus the way they handled the Powershift was slimy. I generally have preferred Ford over the years, but not enough to give them my money in spite of them not building what I like. Not sure why this attitude would be strange.

        Having said that though, I can’t see anything that would make me purchase or lease a GM product ever again. Terrible Company…both Old and New GM. I’d rather drive another theta powered Hyundai. At least I wouldn’t have to go to the Supreme Court to get them to fix the things they know they screwed up.

        Al those taxdollars and we get a good V8 and a nice value for a mid engined sports car. They should just sell those assets to someone else and put the rest out of our misery.

        • 0 avatar
          Art Vandelay

          I really wanted to trust the Explorer too. I liked it, but at the end of the day Ford is at a real low point and I couldn’t do it. I can’t see myself getting any Ford right now that doesn’t start with F and end with a number. And that is a painful thing for a lifelong fan, but I’m not subsidizing crap they build either. I’ll show my support by rewarding them with my business when they build decent cars again. I am a customer, even a fan…but not a shill.

      • 0 avatar

        Forget about Dodge. I started to boycott Ford because they make Police cars. And rest of line are SUVs and pickups.

        • 0 avatar
          ToolGuy

          @ILO, speaking of police vehicles, read the letter from Jim Hackett included here [about 2/3 into the article]:

          https://tinyurl.com/yaskquht

          Now read it again, imagining that you are a Ford employee. Wow.

          • 0 avatar
            Art Vandelay

            That was a lot of words. He should have simply said “Employees not wishing to participate in the construction of the cars we sell are free to head down to the mall and get a job selling jeans at The Gap or start their own car company”.

        • 0 avatar
          Lou_BC

          Boycotting Ford because they make police vehicles is silly. Any vehicle can be used for policing.

  • avatar
    Jeff S

    I expected this case would get tossed out. GM should build better vehicles instead of racing to the bottom with FCA and Nissan.
    Cheaper costs will not make up for lost sales because of poor quality. Ford has now joined that race to the bottom lead by CEO Jim Hackett the credenza man. More made in Mexico vehicles just like FCA, GM, and Nissan with abysmal quality. I got a novel concept how about building a quality vehicle that people will actually buy that is not made of the cheapest material and the cheapest labor.

    • 0 avatar
      Art Vandelay

      Any race to the bottom would be a race to catch GM. Nissan may as well be Rolls Royce compared to their Sheeite. From king of the world to barely holding off Ram for the full-size truck leftovers.

      GM…WHAT A DISGRACE!

      • 0 avatar
        Lorenzo

        Well, their strategy has been to build the minimum number/variety/quality of vehicles in America and make their profits in China. That strategy now looks like a colossal mistake, but it seemed like a winner not long ago.

        GM management seems to be lashing out with the paranoid theory that FCA was trying to damage GM so it could take it over. The judge apparently saw through the argument and after trying to get both companies to take their cat fight elsewhere, decided to throw it out of the court system.

        As they say on TV, “it remains to be seen” whether GM has a plan B to replace their China strategy.

  • avatar
    Matt51

    GM only makes about 10% of their profits from sales in China. GM has a very poor rate of return resulting from their massive investment in China. GM profits largely come from sales of their trucks and SUVs in the US and Canada. Going after FCA in court was delusional. Truly delusional. GM proves again and again that Mary Barra is clueless. The GM death watch needs to start again.

  • avatar
    Jeff S

    I doubt GM will die but it will weaken some more and get another Government bailout and possibly be acquired by a Chinese or Indian manufacturer. Barra and the board are looking for the golden parachute and I doubt they care what happens to GM. Ford is not immune from this as well under the leadership of Jim Hackett but Ford’s only saving grace is the F series trucks.

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