GM filed a racketeering lawsuit against FCA last week, alleging that it offered bribes to top UAW officials during the 2011 and 2015 collective bargaining processes in order to get a favorable labor agreement with the union. GM claims FCA carried out the bribes with the end goal of ensuring GM got a poor deal with the union, which would put it on the back foot financially and increase the likelihood of it entering a merger with FCA.
GM also says this practice caused it to suffer “massive monetary damages,” and “corrupted the negotiation, implementation, and administration of the UAW negotiating processes.”
These claims will be hard to prove in court, experts say. Jeff Grell, an attorney at Minneapolis law firm Grell Feist PLC and a former RICO law professor at the University of Minnesota, told The Detroit News that GM may have trouble proving that it would have otherwise been more profitable if FCA did not carry out the UAW bribes. Because this is a RICO suit (which means it falls under the Racketeer Influenced and Corrupt Organizations Act), GM will also have to prove that FCA engaged in a patterned behavior of corruption as well.
“How can GM prove it would be more profitable in the absence of these bribes?” Grell said. “From a litigation standpoint, I think it’s a very difficult claim. It will be interesting to see if it survives a motion to dismiss.”
Helping GM out is the fact that several UAW employees have been found guilty of receiving bribes from FCA to receive preferential treatment as part of the ongoing UAW corruption investigation. The investigation has so far resulted in 13 people being charged, 10 of whom were convicted, which includes both FCA and UAW employees. So while GM may have trouble proving the corruption resulted in it incurring “massive monetary damages,” there is no denying that the corruption existed.
Last week, FCA chairman John Elkann said he was not worried about the RICO case, saying GM’s claims are “absolutely groundless.” The suit comes at an inopportune time for the automaker, as it is expected to sign a memorandum of understanding with Groupe PSA before the end of the year, forming a 50/50 merger with the French automaker. Elkann indicated the merger will go forward as planned despite the case against it.