Fiat Chrysler rejects union bribery allegations in GM lawsuit

Fiat Chrysler Automobiles FCA

Fiat Chrysler is moving to reject a racketeering lawsuit filed by competing automaker General Motors, rejecting allegations that it bribed union officials to impose higher labor costs on GM.

In papers submitted Friday with the federal court in Detroit, FCA argued that GM’s lawsuit is far from facts.

It also said that even if the illegal acts GM alleges were correct, a four-year statute of limitations on them has expired.

GM alleges in the lawsuit filed in November that Fiat Chrysler bribed officials of the United Auto Workers Union to disrupt GM with higher costs in an attempt to force GM to merge with the smaller FCA.

GM’s unprecedented lawsuit alleges that FCA was involved in racketeering by paying millions in bribes to get concessions and take benefits in three labor agreements with the union, a charge Fiat Chrysler rejects.

“FCA denies that it either directed or approved any alleged prohibited payments,” the company stated in its motion.

GM has accused of Fiat Chrysler corrupting the bargaining process with the UAW in the 2009, 2011 and 2015 union contracts to take benefits over General Motors. The allegations emerge from a long-running federal investigation into Fiat Chrysler bribing UAW officials through a union-company training center that has implicated leading union officials.

Ten people with connections to the UAW have been charged in the investigation; eight have pleaded guilty, consisting of the widow of a union vice president. Three people who were employed at Fiat Chrysler have been convicted.

“FCA was the clear sponsor of pervasive wrongdoing, paying millions of dollars in bribes to gain concessions” from the union, GM General Counsel Craig Glidden stated when the lawsuit was filed.

But Fiat Chrysler stated in its motion to reject that in order to prove racketeering, GM has to prove that FCA somehow took over the union and made it do illegal acts, something it has not done.

Furthermore, Fiat Chrysler contends that GM failed to prove that FCA’s activities caused GM to be harmed, a requirement of the racketeering law.

GM’s claim that FCA sought to force a merger by making concessions to the union in the 2015 contract talks, then sticking GM with those terms in pattern bargaining, are incorrect because the concessions hurt Fiat Chrysler, the motion included. “This theory defies economic logic and concededly did not depend upon the alleged prohibited payments,” the Fiat Chrysler motion stated.

GM also alleged Fiat Chrysler CEO Sergio Marchionne, who died last year, of approving bribes worth over $1.5 million to union officials in the scheme. The higher labor costs were crafted to force GM to merge with FCA, which had declined Marchionne’s offer to combine the companies, the lawsuit stated.

But GM, according to FCA, did not have a theory about why they have had to bribe the union to gain a favorable contract, or why Marchionne would want to stick both companies with higher labor expenses “if his ultimate goal was to run the merged company (presumably on a profitable basis),” the motion included.

In a statement GM called the motion a predictable tactic, and stated the company will respond in court. “We are confident in the legal and factual underpinnings of our case,“ the statement included.

Legal motions in the case will carry on for several months before a judge rules on the motion to dismiss.

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