Fiat Chrysler Files Motions to Dismiss GM's Racketeering Lawsuit
January 24 2020 - 7:30PM
Dow Jones News
By Nora Naughton
Fiat Chrysler Automobiles NV filed two motions Friday seeking to
dismiss a lawsuit brought by crosstown rival General Motors Co.,
arguing that GM doesn't have grounds to bring a racketeering case
alleging bribery of union officials.
In court documents filed Friday in Michigan, Fiat Chrysler
argues GM's lawsuit doesn't adequately meet the requirements for
proceeding with a civil case under the Racketeer Influenced and
Corrupt Organizations Act, or RICO. That includes lacking an
ability to prove the Italian-American auto maker was operating a
criminal enterprise through its relations with the United Auto
Workers union, the court filings show.
The company also claims GM isn't the primary victim of the
alleged bribery scheme, another requirement for moving forward with
the lawsuit, according to Fiat Chrysler's motion. GM has until
March 9 to respond.
General Motors didn't immediately respond to a request for
comment.
GM filed its lawsuit against Fiat Chrysler in November, in a
95-page complaint that alleged its Detroit competitor paid off
union officials over several years to gain a labor-cost advantage
in contracts negotiated for tens of thousands of blue-collar
workers at U.S. factories.
The legal dispute is a rare public clash between two large car
companies who compete head-on in key vehicle categories in the
U.S., including pickup trucks, where Fiat Chrysler's Ram brand has
been making inroads against GM.
The confrontation comes as Fiat Chrysler's profitability has
improved in the U.S. and it is trying to execute a proposed merger
with France's PSA Group that, if completed, would create an
auto-making giant that would rival GM in total global sales.
General Motors, the U.S.'s largest by sales, claims in the
lawsuit that Fiat Chrysler's then-chief executive, Sergio
Marchionne, directed the bribery scheme, looking to purposely hurt
GM and pressure its rival into merger talks.
Mr. Marchinonne had publicly lobbied for merger talks with GM in
2015 but GM executives declined his advances. The lawsuit alleges
Mr. Marchionne, who died in 2018, then appealed to top United Auto
Workers officials to support his merger effort, including the
union's former president.
GM built its case largely on court documents stemming from a
yearslong federal corruption investigation of top officials at the
UAW and labor-relations executives at Fiat Chrysler. The probe
became public in 2017 and has since widened to the union's GM
department and into the top ranks of the UAW, leading to 11
convictions or guilty pleas so far.
In its lawsuit, GM claims Fiat Chrysler bribed UAW officials
with money and gifts to win better contract terms and lower costs
for its unionized workforce. The two auto makers are direct
competitors in the U.S. market, where all of their factories use
UAW-represented workers.
GM has said Fiat Chrysler's alleged conduct "inflicted massive
direct damage," though it hasn't pegged an amount it is seeking to
recover. GM could seek damages of more than $6 billion, analysts at
JPMorgan Chase have estimated.
Fiat Chrysler is also asking to put a hold on the discovery
process until the motion to dismiss is decided by a federal judge,
according to the court documents filed Friday.
GM has said it filed the suit in November to get ahead of the
four-year statute of limitations on civil RICO cases that was set
to expire. But Fiat Chrysler, in its legal filings, argues GM's
claims are outside the statute of limitations because the damages
laid out in the lawsuit would have begun before GM signed its 2015
contract with the UAW.
Mike Colias contributed to this article.
(END) Dow Jones Newswires
January 24, 2020 19:15 ET (00:15 GMT)
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