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Back to the Ramparts for GM, FCA on Racketeering Claim

Appeals court overturns order for CEOs resolve case in person

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So much for a quick, face-to-face fix in General Motors’ racketeering lawsuit against Fiat Chrysler Automobiles.

The case involves GM’s claim that FCA gained years of unfair labor cost advantages by bribing United Auto Workers union officials.

Yesterday, the 6th Circuit Court of Appeals in Cincinnati ordered the two sides back to the courtroom of Paul Borman, the Detroit circuit court judge who has been hearing the case from the beginning.

Blunt Suggestion

Last month, Borman ordered the CEOs of the two companies to meet in person by July 1 and figure out how to resolve the case. Continuing to pursue a formal trial, he opined, would be “a waste of time and resources.” Better, he said, that the leadership of both carmakers focus on more pressing issues, such as COVID-19.

GM promptly appealed, claiming the order represented a “profound” abuse of judicial power. Yesterday, the 6th Circuit Court of Appeals agreed that Borman overstepped and should have considered other options, such as mediation.

But the appeals court rejected GM’s call to reassign the lawsuit to a new judge. Instead, it suggested that Borman might want to set up a settlement conference or order mediation. Either of those options would presumably avoid a trial and result in a speedier resolution.

Marchionne Role?

GM claims that FCA’s alleged wrongdoing was sanctioned by then-CEO Sergio Marchionne, who died unexpectedly two years ago at age 66.

By way of evidence, GM points to federal convictions of corruption involving, among others, the former head of FCA’s labor relations in the U.S. regarding a jointly operated UAW-FCA employee training center in metropolitan Detroit.

GM insists that it has a good case and is duty bound to its shareholders to “hold FCA accountable.” FCA is equally insistent that GM has no case at all.