General Motors sued Fiat Chrysler Automobiles in U.S. District Court in Detroit, claiming FCA gained significant advantages in its collective bargaining agreements with the UAW using an orchestrated scheme of bribing union officials.
The lawsuit doesn’t specify a specific number but does claim the damages are in the “billions of dollars.” The racketeering charges also mean that any damages awarded GM would be tripled. FCA and the UAW are both denying the charges.
“We are astonished by this filing, both its content and its timing,” FCA said in a released 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.”
GM denied both of those allegations, noting that FCA’s been looking for a partner for several years, and General Motors has been a past target of those efforts.
The UAW said in a statement, “We are confident that the terms of those contracts were not affected” by the actions of FCA or UAW officials, adding “the fact that these issues can cause doubt about the contracts is regrettable.”
The suit contends that FCA was able to secure a better deal in its negotiations with the UAW because of the bribery scheme and that it wasn’t just the actions of a few Fiat Chrysler executives, but that the automaker’s CEO at the time, the late Sergio Marchionne played a critical role in the effort.
“We believe Mr. Marchionne was a central figure in the conspiracy,” said Craig Glidden, GM executive vice president and general counsel, during a press conference Wednesday about the lawsuit.
GM was allegedly harmed because the three Detroit-area automakers – GM, Fiat Chrysler and Ford – engage in pattern negotiations which results in similar deals. While there are some differences in the final contracts, they’re typically minor. However, in the deals between 2009 and 2015, FCA was awarded significant advantages that GM and Ford were not. Ford has not commented on the lawsuit.
Specifically, FCA was granted the ability to use more temporary workers as well as Tier 2 employees, giving the automaker a substantial cost advantage over its competition. GM officials haven’t yet been able to determine the specific amount of the damages.
“It’s hard to specify without the full discovery we need to take in the case,” Glidden said. “The amount of time is long.” The time frame starts in 2009 and runs through at least end of 2015, he said during a press conference in Detroit. Take into number of employees involved in the agreements, he said, and the numbers become significant.
In addition to the favorable employee costs, GM asserts in the suit that the advantages were critical to Marchionne’s attempt to force a merger between the two companies in 2015, which General Motors rebuffed.
“We contend it was part of the push to force a merger. We believe an attempt to attain UAW support was under foot. We’ve alleged that in the complaint,” Glidden said.