After the U.S. Supreme Court refuses to hear General Motors’ appeal, the company insists it will pursue its claim for damages from rival automaker Fiat Chrysler/Stellantis in state court in Michigan.
The high court declined to take up GM’s racketeering case against Fiat Chrysler originally filed in 2019, two years before Fiat Chrysler (FCA) merged with French automaker PSA to form Stellantis. Federal district judges in Detroit and the Sixth Circuit Court of Appeals in Cincinnati had previously struck down GM’s claims.
“We are continuing to press our case against Stellantis and the other defendants in Michigan state court, where GM’s claims are different and much broader than those brought under the federal racketeering statute,” GM says in a statement released after the Supreme Court rejected the automaker’s bid to argue its case before the nation’s highest court.
“Today’s decision has no impact on that case and our efforts to hold defendants accountable for the harm they inflicted on GM as a result of their admitted corruption,” GM says.
In a statement issued immediately after the Supreme Court announced its decision, Stellantis says: “We are pleased that the U.S. Supreme Court has denied GM’s latest attempt to resuscitate the baseless claims that GM has sought to bring in various forms in multiple jurisdictions. Today’s decision upholding the district court’s dismissal of GM’s lawsuit is another reaffirmation that its claims are meritless.
“We will continue to defend ourselves vigorously against these allegations and we will not be distracted from our focus on competing and winning in the marketplace.”
More than 30 lawyers from both sides have signed on to the case, which is now pending in Wayne County Circuit Court in Detroit.
David Allen, the Wayne County Circuit Court judge assigned to the case, initially dismissed GM’s claims in October 2021. But he reinstated them after GM amended its original complaint seeking damages from FCA for alleged illicit conduct, which included bribing UAW officials to gain a competitive advantage over GM.
Allen has not yet set a trial date, but GM is moving ahead with discovery in the case, according to GM spokeswoman Maria Raynal.
The Supreme Court offered no reason for declining to hear the GM case, but it is likely the nine justices did not want to wade into what amounts to a complex commercial dispute in which GM accuses FCA and its top executives of corrupting contract negotiations with the UAW to gain a competitive advantage.
GM is basing its claims on the corruption scandal uncovered by the FBI and U.S. Labor Department in which at least 15 UAW officials and FCA executives were sentenced to prison terms. Those imprisoned included two past UAW presidents, Dennis Williams and Gary Jones.
The UAW also settled a racketeering lawsuit brought by the U.S. Justice Department; Stellantis, while not a defendant, agreed to pay a $30 million fine for FCA’s violations of federal labor law.
FCA pleaded guilty in March 2021 to one count of conspiring to violate the Labor Management Relations Act. Prosecutors argued FCA sought to win UAW leaders’ favor – particularly in labor relations – by lavishing millions of dollars in gifts and cash upon them, thus undermining the collective bargaining process.
The heart of the case against FCA involved payments of more than $3.5 million to UAW officials between 2009 and 2016, before and after Chrysler Group’s takeover by Italian automaker Fiat.
GM, despite the best efforts of its lawyers over the past four years, was never able to convince the federal or state court judges assigned to the case the corruption was designed specifically to undermine GM’s commercial position or to force a merger of the two companies.
“The scheme (to bribe UAW officials) was not designed simply to reduce FCA’s own labor costs illegally and to obtain favorable work rules for FCA,” GM said in its petition to the Supreme Court. “FCA also used its bought-and-paid-for relationship with union officials to intentionally injure its rival GM, including by deliberately increasing GM’s labor costs, in service of FCA’s goal of forcing GM into a merger, which GM had resisted.”
However, a tentative labor contract between FCA and the UAW, pivotal to GM’s case, was substantially revised after the union rank-and-file voted it down in 2015. The subsequent fines and corruption scandal kept GM’s lawsuit alive.