General Motors Files Racketeering Lawsuit Against Fiat Chrysler--2nd Update
November 20 2019 - 1:05PM
Dow Jones News
By Nora Naughton
General Motors Co. filed a federal racketeering lawsuit
Wednesday against Fiat Chrysler Automobiles NV, accusing it of
corrupting union negotiations in an unusual legal dispute between
crosstown rivals.
According to court documents filed in Michigan, GM's suit is
related to the ongoing federal investigation into corruption
between leaders at the United Auto Workers and Fiat Chrysler's
labor-relations executives. GM accuses Fiat of corrupting the
collective bargaining process in 2011 and 2015, as well as
implementation of a 2009 agreement, to solidify a labor cost
advantage for the Italian-American auto maker in its contracts.
Fiat Chrysler said it plans to defend against what it calls a
"meritless lawsuit."
"We are astonished by this filing, both its content and its
timing," the company said Wednesday. "We can only assume this was
intended to disrupt our proposed merger with PSA as well as our
negotiations with the UAW."
Fiat Chrysler recently revealed a proposed merger with Peugeot
maker PSA Group of France.
GM will ask for "significant damages" from Fiat Chrysler after
the discovery phase of the lawsuit is complete, GM chief legal
counsel Craig Glidden said Wednesday.
Detroit-based GM, in the lawsuit, alleges that Fiat Chrysler
orchestrated the alleged corruption through then-Chief Executive
Sergio Marchionne, who died last year. Fiat Chrysler currently has
an $8 hourly labor cost advantage over GM, largely because a bigger
portion of its workforce isn't at the top wage scale.
The Justice Department's yearslong probe first became public in
July 2017 and initially focused on a conspiracy by Fiat Chrysler
executives to keep UAW officials "fat, dumb and happy," as
prosecutors have said.
The three executives named in GM's lawsuit, including the former
top labor-relations executive at Fiat Chrysler, have all pleaded
guilty to charges related to the federal investigation. Fiat
Chrysler has said the misconduct was perpetrated by a small group
of individuals acting in their own interest.
The federal corruption probe has since widened, ensnaring
several current and former UAW officials and implicating UAW
President Gary Jones, who is currently on a leave of absence.
The UAW said Wednesday that it has taken steps to prevent
financial misconduct from occurring again. It also said it is
confident that labor contracts negotiated over the last decade
weren't compromised and that each pact was ratified by the
membership.
Shares of Fiat Chrysler fell 3% in midday trading Wednesday, and
GM"s stock dropped 2.4%.
(END) Dow Jones Newswires
November 20, 2019 13:50 ET (18:50 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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