General Motors may have trouble winning its RICO case against Fiat Chrysler Automobiles, a law expert told The Detroit News.
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.”
GM CEO Mary Barra and UAW boss Gary Jones
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.
FCA chairman John Elkann
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.
Subscribe to GM Authority for more GM legal news and around-the-clock GM news coverage.
Comments
Absolutely groundless? Seriously, that’s your defense? Both UAW and FCA employees hav admitted it and been found guilty.
In what world is that groundless?
It’s no secret “Dodge” sales strategy is to buy market share by offering the lowest prices. When you get labor $8 per hour less than the competition that allows you to sell your product cheaper while still remaining profitable.
It doesn’t seem like that hard of a case.
Agreed, that was my thought: in what world is this groundless? This article reads as though it was written by the UAW and FCA.
‘Groundless’, ‘baseless’ and ‘without merit’ are lawyer-speak for ‘we didn’t do it without outright lying.
i can’t wait to see how the “barely knew him. he was a coffee boy” defense holds up.
This lawsuit will not make it to trial and GM does not want it to. It would be I.possible for them to prove they could sell more cars had this not happened. Furthermore, nobody forced GM to sign so-called disadvantageous contracts with the UAW. GM may have a better case if they did not hire the criminal mastermind of this scheme Iacobelli. Doing so makes GM look like they did not do adequate background checks on the people they hire. Likely result? Thus will percolate for a year or so and Chrysler will settle for $200 million or so.
The one huge advantage this lawsuit bring to the table is, it will force the UAW to sign an equal package deal with FCA that will be extremely very, very close to GM and Ford package. FCA will not be getting a better deal this time around. I think this is the strategy behind the lawsuit. To put the UAW on notice, FCA better not get any better temp workers deals or 2 tier deals.