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Appeals court dismisses GM's 2019 suit against FCA

Kalea Hall, The Detroit News on

Published in Automotive News

The U.S. 6th Circuit Court of Appeals has affirmed a federal judge's earlier decision to throw out a racketeering lawsuit by General Motors Co. against Fiat Chrysler Automobiles, now known as Stellantis NV.

GM sued its crosstown rival in 2019 alleging FCA's late CEO Sergio Marchionne orchestrated a multimillion-dollar racketeering conspiracy that used bribes to corrupt three rounds of bargaining with the United Auto Workers in order to harm GM. The Detroit automaker said it lost "billions" as a result of the bribery conspiracy to make GM's labor costs high.

"GM's lawsuits are meritless as we have said all along," Stellantis spokesperson Shawn Morgan said in a statement. "We welcome today's unanimous decision by the Federal Court of Appeals upholding the district court's dismissal of this baseless claim. We will continue to defend ourselves vigorously against these frivolous allegations and we will not be distracted from our focus on competing and winning in the marketplace."

GM disagreed with the ruling, which "merely holds that GM may not utilize the federal RICO statute to recover the damages caused by Stellantis through the admitted bribery and fraud of FCA," GM spokesperson Maria Raynal said in a statement. "Our claims, however, are much broader than RICO and are based on theories, including unfair competition, that the Sixth Circuit identified as appropriate means of redress. We will continue to pursue our case against FCA and the other defendants in the Michigan state court to recover the damages caused to GM as a result of FCA's admitted corruption."

In 2020, U.S. District Court Judge Paul Borman dismissed the case. At the time, he said it could be concluded that the intent of FCA executives "was to lower FCA's labor costs by inducing UAW officials to act against the interests of workers," but it cannot be inferred they "wanted to increase GM's labor costs by asking the UAW to deny GM concessions that it otherwise would have given."

 

In its ruling Thursday, the 6th Circuit said: "Even accepting GM's theory as true, the chain of causation between FCA's bribes and GM's injury is still too attenuated."

The court points out all the events that had to occur for the bargaining bribery conspiracy to be directed at harming GM, stating: "The chain leading from FCA's bribe to GM's increased labor costs had to pass through the independent actions of at least two independent parties — the FCA and GM workforces."

GM, the court found, "failed to show that the predicate acts directly caused its 2015 pattern-bargaining injuries. The district court did not err by dismissing GM's complaint on causation grounds."

Thursday's decision comes after a Wayne County circuit judge in October 2021 also dismissed GM's suit against FCA alleging it was harmed by its competitor through the bribery conspiracy. Judge David Allen said GM failed to show it was harmed by FCA officials bribing UAW officials. But the court in December granted a motion by GM for the case to be reconsidered.

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