Judge Tosses Out GM Racketeering Lawsuit Against FCA

GM vows further legal action


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A federal judge in Detroit has abruptly tossed out a General Motors lawsuit that accuses Fiat Chrysler Automobiles of racketeering.

The June 8 ruling comes only two days after an appellate court in Cincinnati ordered the judge to come up with a way to resolve the case other than ordering the CEOs of both companies to settle the dispute in person.

Whipsaw Rulings

GM’s complaint is that it suffered significant economic damage when FCA bribed United Auto Workers union officials to win more favorable labor rates and work rules. GM’s November filing was assigned to Circuit Court Judge Paul Borman.

Image: GM

Two weeks ago, Borman derided the complaint as a “waste of time and resources” and ordered GM CEO Mary Barra and FCA CEO Mike Manley to meet face-to-face meeting a few days later and settle the complaint.

GM objected. The 6th Circuit Court of Appeals in Cincinnati agreed that Borman had overstepped but refused to reassign the case to another judge. Instead, it ordered Borman to come up with another solution, such as arbitration.

Borman’s decision to dismiss the case argues that GM’s lawsuit fails to establish damage. He asserts that GM failed to prove it would have won a better labor contract if FCA hadn’t bribed senior union leaders. The judge notes that showing a direct cause and effect is required by the RICO (Racketeer Influenced and Corrupt Organizations Act) which GM invoked in its lawsuit.

Now What?

GM insists it has “more than enough” evidence of racketeering. It argues that Borman’s assessment is contrary to “well-settled RICO case law.”

The company vows the pursuit of unspecified legal remedies, meaning this saga isn’t over yet. FCA reiterates that it believes the complaint has no merit.