A federal judge has labeled the lawsuit General Motors filed against Fiat Chrysler Automobiles, claiming the FCA had conspired with corrupt officials from the United Auto Workers to put GM at competitive disadvantage on labor costs, “a waste of time.”
Following a hearing in U.S. District Court, Judge Paul Borman ordered the top executive from both companies to meet during the next week to resolve their differences about the suit filed last November in which GM claimed more than $1 billion in damages because FCA had conspired with UAW officials.
“What a waste of time and resources, now and for the years to come in this mega litigation, if these automotive leaders and their large teams of lawyers, are required to focus significant time-consuming efforts to pursue this “nuclear option” lawsuit, if it goes forward.
“I am ordering that no later than July 1, 2020, just the two CEOs, Mary Barra and Michael Manley, meet in person (social distancing), to reach a sensible resolution of this huge legal distraction,” Borman said in written statement after the hearing concluded.
In a statement, GM said while it had a “very strong” racketeering case but GM’s CEO Mary Barra was looking forward to “constructive dialogue with FCA consistent with the Court’s order.”
FCA lawyers, in the briefs field the U.S. District Court in Detroit, have said that GM’s claims bear no resemblance to what Congress had in mind in enacting the RICO law.
“We agree with Judge Borman’s observation that these are extraordinary times for our country, particularly in light of the COVID-19 pandemic and the tragic death of George Floyd and the spotlight it has focused on racism and social justice,” FCA said in a statement after the hearing.
“We also agree that FCA’s focus should continue to be – as it always has been – on building great vehicles for our customers and expanding opportunities for the thousands of women and men whose livelihood depends on that focus,” the post-hearing statement said.
“Our view of GM’s lawsuit has not changed. As we have said from the date it was filed, the lawsuit is meritless, and it should be withdrawn. We therefore acknowledge Judge Borman’s concerns, and look forward to meeting to discuss them and ideally put this matter behind us.”
In previous court filing, FCA has asked Borman to dismiss the lawsuit. Borman has not granted FCA’s motion nor has he allowed GM’s lawyers to proceed to discovery, which would give them entry into FCA’s corporate records.
However, many of FCA’s corporate records already are in the hands of federal attorneys investigating the wide-ranging corruption case that has led to the criminal convictions of former FCA Vice President of Labor Relations Alphons Iacobelli and two other former executives and 10 UAW officers and officials as well as the wife of the late General Holiefield, who was a close ally of former FCA CEO Sergio Marchionne, who died in 2018.
However, FCA lawyers have said that GM does not plausibly allege that FCA acquired an interest in, or maintained control of, the UAW. GM patched together a case built on documents pulled from an ongoing federal investigation into corruption in the UAW.
FCA lawyers noted, “Rather than plausibly alleging that the UAW is a criminal enterprise controlled by FCA, GM focuses on goods and services obtained by certain former UAW employees with assistance from certain former FCA employees, which allegedly constituted “prohibited payments” under the federal Labor Management Relations Act.
“But no matter how often GM refers to indictments and plea agreements, there is nothing in the Complaint that ties the alleged prohibited payments to negotiation of collective bargaining agreements between GM and the UAW — much less the outcome of such negotiations, which supposedly put GM at some competitive disadvantage vis-à-vis FCA. In other words, GM’s own complaint establishes only that it is at most a mere bystander with regard to the alleged prohibited payments,” FCA lawyers said in a brief.
Borman, in offering a rationale between the GM and FCA CEOs, noted the two companies benefitted from help of U.S. taxpayers and should instead focus on helping the U.S. address its current problems.
In 2008, and going forward, the Federal Government focused on rescuing GM and Chrysler, by providing billions of dollars in aid. That saved GM and Chrysler, now FCA, and tens of thousands of UAW auto workers’ jobs. Today our country needs, and deserves, that these now-healthy great companies pay us back, by also focusing on rescuing this country and its citizens from the plagues of COVID-19, racism, and injustice, while building the best motor vehicles in the world,” Borman said.