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General Motors takes its racketeering case against Stellantis to Supreme Court

Eric D. Lawrence, Detroit Free Press
Sat, January 14, 2023 

General Motors wasn’t content with an appeals court decision dismissing its racketeering case against Fiat Chrysler Automobiles, now known as Stellantis, so it’s asking the U.S. Supreme Court to weigh in.

GM’s case, which dates to a filing in federal court in Detroit in November 2019, is tied to the long-running corruption scandal that sent former top UAW leaders and former auto executives to prison and led to a conviction for FCA US, Stellantis’ U.S. operating arm, and an independent monitor for the union. The UAW was not named as a defendant in the GM case. The scandal involved the embezzlement and misuse of millions of dollars for lavish goodies, including travel, dining and even a Ferrari.

Sergio Marchionne, left, and Dennis Williams, who was then UAW president but later convicted in the corruption scandal, shake hands during a ceremony to mark the opening of contract negotiations between the UAW and Fiat Chrysler Automobiles in Detroit in 2015. General Motors claims that Marchionne, the late, former CEO of FCA, corrupted the bargaining process to hurt GM and has taken its case against FCA US, the U.S. operating arm of Stellantis, to the U.S. Supreme Court.

More:Prosecutor: Corruption case involving FCA might be unmatched in U.S. history

GM claims FCA and its legendary late boss Sergio Marchionne corrupted the contract bargaining process to hurt GM by saddling it with unnecessary extra labor costs in an attempt to force a merger between the automakers. That merger never happened, but GM said the damage was done.

“As the sordid details of the scheme unfolded, it became increasingly clear that FCA’s corruption had not only benefitted FCA but directly harmed GM, both by ensuring that GM would consistently be denied concessions the UAW gave to FCA, and by corrupting the pattern-bargaining process to force GM to shoulder more than $1 billion in labor costs above what it would have expended absent FCA’s racketeering,” according to a GM filing this month with the Supreme Court.

Stellantis has repeatedly pushed back against GM’s claims, as it did again Friday.

"As we have said from the date this lawsuit was filed, it is meritless and we will continue to defend ourselves vigorously and pursue all available remedies in response to this groundless lawsuit," according to a statement from spokeswoman Shawn Morgan.

More:Joe Ashton, ex-GM board member, sentenced to 30 months in UAW scandal

The federal lawsuit, which had been dismissed with prejudice at the District Court level, captured headlines, not just because it pitted two Detroit automakers against each other, but also because U.S. District Judge Paul Borman tried unsuccessfully to have GM CEO Mary Barra and FCA's then-CEO Mike Manley meet to hash out a resolution. Borman indicated the case would be a waste of resources if allowed to proceed, and that the country, in the wake of the COVID-19 pandemic lockdowns and the anger over George Floyd’s death at the hands of police, needed to heal.

GM appealed the lower court's decision, but a three-judge panel of the 6th U.S. Circuit Court of Appeals affirmed the District Court’s dismissal in August.

That set the stage for GM's current actions.

"We are seeking Supreme Court review of the Sixth Circuit’s decision that would allow FCA to escape liability under the federal racketeering statute for the harm it inflicted on GM through its admitted corruption," according to a statement from spokeswoman Maria Raynal.

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GM, in a filing this month referenced earlier by the website law360.com, noted that the appeals court held that GM can’t recover damages for its injuries “even though it was the direct and intended victim of this quintessential racketeering scheme. That conclusion defies statutory text, precedent, and common sense.”

It’s not clear how quickly any new decisions might come in the case. A filing deadline related to the legal process is in March, according to the Supreme Court website.

This article originally appeared on Detroit Free Press: GM takes case against rival Stellantis to Supreme Court