A federal judge has dismissed General Motors’ lawsuit against Fiat Chrysler Automobiles (FCA), as outlined in a report from Automotive News. The lawsuit, which was filed last November, accuses former FCA CEO Sergio Marchionne of conducting a bribery scheme with United Auto Workers (UAW) labor union leaders to gain unfair contract advantages, with the ultimate goal of pressuring General Motors into a merger with FCA.
U.S. District Judge Paul Borman said that FCA had not violated federal racketeering laws, and that the parties most harmed by the bribery scheme were in fact FCA workers.
General Motors said that it strongly disagreed with the ruling and that it would seek other legal remedies.
“There is more than enough evidence from the guilty pleas of former FCA executives to conclude that the company engaged in racketeering, our complaint was timely and showed in detail how their multi-million dollar bribes caused direct harm to GM,” said GM spokesman Jim Cain in a statement. “The district court’s opinion is contrary to well-established RICO case law and would let wrong-doers off the hook for the massive harm caused by their criminal conspiracy.”
FCA also responded to the ruling, saying in a statement, “We have said from the very outset that this was a meritless lawsuit. The dismissal of GM’s complaint with prejudice earlier today vindicates our position.”
Although Borman conceded that GM’s first causation theory that FCA participated in a pay-to-harm scheme had “some appeal,” it eventually “fails on closer look,” as General Motors can’t argue that it would negotiate a more favorable labor contract with the UAW without the FCA bribes.
Borman went on to say that the second theory of causation is through “even-more-remote” injury, wherein General Motors alleges FCA bribed the UAW to designate it as the lead company for the 2015 labor negotiations, enabling FCA to maneuver into a contract that was less favorable for GM.
Last month, Borman ordered General Motors CEO Mary Barra and FCA CEO Mike Manly to meet in person in order to find a mutual agreement and avoid drawn-out court proceedings he labeled as “a waste of time and resources.”
General Motors responded by asking an appeals court to overturn the decision and to remove Borman from the case.
In response, the 6th U.S. Circuit Court of Appeal rejected GM’s request for a new judge, but did agree that Borman had overstepped when ordering the two CEOs to meet.