U.S. Supreme Court Rejects GM Appeal Against FCA

In a one-line order, the U.S. Supreme Court denied General Motors’ appeal in a case involving the racketeering claims the company leveled in 2019 at rival Fiat Chrysler Automobiles, which is now part of Stellantis.

The Supreme Court’s decision came in an order denying GM’s petition, asking for review of an earlier decision by the U.S. Sixth Circuit Court of Appeals in Cincinnati, Ohio. That court refused to overturn a decision by a federal judge in Eastern District of Michigan, who dismissed GM’s original claim. 

The order effectively ended the four-year old federal case filed by GM, though GM remains free to pursue the court in state court in Michigan.

Target of GM lawsuit hails ruling

Unsurprisingly, Stellantis, which has called the suit baseless from the get-go, hailed the ruling.

“We are pleased that the U.S. Supreme Court has denied GM’s latest attempt to resuscitate the baseless claims that GM has sought to bring in various forms in multiple jurisdictions,” Stellantis said in a statement issued immediately after the Supreme Court announced its decision. 

“Today’s decision upholding the district court’s dismissal of GM’s lawsuit is another reaffirmation that its claims are meritless. We will continue to defend ourselves vigorously against these allegations and we will not be distracted from our focus on competing and winning in the marketplace.”

GM kicked off its lawsuit against FCA in November 2019 with a press conference designed to emphasize its rival’s links to the corruption scandal unfolding inside the United Auto Workers union. A dozen UAW officials and officers, including two past presidents, as well as three FCA employees were given prison sentences in connection with the scandal.

FCA/Stellantis also paid a $30 million fine, the largest in U.S. history, for violating federal labor law by doling out gifts to key union officials.

Decision cuts against GM’s final petition

The fines and corruption scandal, along with an argument advanced by GM’s lawyers that FCA executives orchestrated the scheme in a bid to force a merger between the two companies, kept the lawsuit and its racketeering claims alive through the legal proceedings.

“For nearly a decade, executives, and employees of FCA US, LLC, and its parent company Fiat Chrysler Automobiles N.V. (collectively, “FCA”) engaged in a classic racketeering scheme to corrupt labor relations and pattern bargaining in the automotive industry. That is not an allegation, but a matter of public record,” GM noted in its petition to the U.S. Supreme Court.

“Both FCA and the individual defendants in this case admitted in federal criminal plea agreements to having illegally funneled millions of dollars in bribes to officers of the United Automobile, Aerospace, and Agricultural Implement Workers of America (“UAW”), the union FCA shares with petitioners (“GM”). FCA’s racketeering was textbook and pervasive. Much like a classic organized-crime scheme to corrupt a seemingly legitimate business to defraud third-party creditors, FCA’s goal was to corrupt the shared union to injure GM,” GM petition noted.

“The scheme was not designed simply to reduce FCA’s own labor costs illegally and to obtain favorable work rules for FCA. FCA also used its bought-and-paid-for relationship with union officials to intentionally injure its rival GM, including by deliberately increasing GM’s labor costs, in service of FCA’s goal of forcing GM into a merger, which GM had resisted,” the petition added.

GM, ultimately lost in court because the district court judge ruled neither the corruption in the union’s ranks or the union’s conduct during negotiations was not specifically aimed at damaging FCA’s rival manufacturers.

Meanwhile, the nine justices on the Supreme Court appeared to have no interest in wading into what was basically a business dispute about the competitive boundaries separating rival companies.