Game Over: Judge Tosses GM Lawsuit Against Fiat Chrysler

Steph Willems
by Steph Willems

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]

Steph Willems
Steph Willems

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  • Matt51 Matt51 on Jul 11, 2020

    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.

  • Jeff S Jeff S on Jul 11, 2020

    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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