On Wednesday, a racketeering lawsuit was filed by General Motors against Fiat Chrysler Automobiles. GM alleged that its competitor had been bribing United Auto Workers (UAW) for years to gain advantages and corrupt the bargaining process, thereby costing the company billions of dollars. The company also alleged that the chief executive of Fiat Chrysler, the late Sergio Marchionne, had played an important role in this entire scheme. According to the number 1 automaker in the US, it will be seeking ‘substantial damages’ from FCA.
The company said that these damages would be reinvested in the United States for creating jobs, but an exact amount wasn’t specified. This is a rather delicate time for the FCA and the lawsuit only adds to its problems. The company is planning a merger with PSA, the French automaker, and are also in the midst of negotiating a labor contract with the UAW for four years. Late on Wednesday, the FCA said that it would be defending itself against the lawsuit vigorously. Earlier in a statement, the company said that the content as well as the timing of the lawsuit came as a shock for them. The automaker said that they believed it was intended to disrupt their negotiations with the UAW and their merger with PSA.
Last month, the PSA and FCA had announced the planned 50-50 share merger for creating the fourth-largest automaker in the world. This is an attempt to cope up with slowing global demand and costly new technologies. Craig Glidden, the general counsel for GM, said that they weren’t planning on filing a suit against UAW and that it had nothing to do with the FCA and PSA merger. The FCA has been targeted last by the UAW out of the three automakers in Detroit for the purpose of contract talks. A new contract had been ratified the previous week by the UAW workers at Ford Motor Co.
As far as GM workers are concerned, a deal had been approved in late October, which had brought an end to a 40-day strike in the US. As per a statement made by the UAW, they were confident that the actions of the UAW or FCA officials had had no impact on the contracts. They said that it was ‘regrettable’ that such issues could create doubts regarding the contracts. Three former executives of FCA have also been named as defendants in the lawsuit. These executives have already pled guilty in an ongoing federal investigation into the FCA and UAW. GM said that the lawsuit was a result of its own investigation and the ongoing probe.
GM’s lawyer said that the company had ended up paying higher wages than FCA from 2009 to 2015 due to a ‘pattern of racketeering’. This had allowed Fiat Chrysler to make use of more temporary workers and second-tier workers, who are paid lower, as opposed to GM. As per the lawsuit, the collecting bargaining process was corrupted by FCA after it had failed in taking over GM in 2015.
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