A federal district court judge on Wednesday dismissed the General Motors racketeering lawsuit against Fiat Chrysler Automobiles.
The order followed a decision by the U.S. 6th Circuit Court of Appeals this week not to reassign the case at GM’s request though it vacated Judge Paul Borman’s earlier order that GM CEO Mary Barra and FCA CEO Mike Manley meet in person to hash out a resolution to the high-stakes case.
Borman had pushed for that meeting, calling GM’s lawsuit, which was filed in November, a waste of resources should it move forward. His stunning June 23 order said the country needs healing, and he highlighted the twin crises of COVID-19 and the racial trauma brought to the fore by the killing of George Floyd at the hands of Minneapolis police.
On Wednesday, Borman rejected GM’s claims of racketeering against its rival, which is working toward a megamerger with Peugeot-maker PSA Group. The judge dismissed the case with prejudice, effectively preventing GM from refiling under the same claims.
The suit was tied to the ongoing corruption case involving the UAW, although the UAW was not a defendant. GM claimed FCA cost it billions of dollars by corrupting the bargaining process in an attempt to force a merger with GM. Several former FCA officials have been convicted in the years-long corruption case, and ex-FCA officials, including the late Sergio Marchionne, the legendary former CEO, figured prominently in the GM suit.
The court “finds that GM’s alleged injuries were not proximately caused by defendants’ alleged violations of the RICO Act. … Therefore, GM has not stated a claim for relief that can be granted and its complaint must be dismissed,” Borman wrote.
GM indicated it might take further action.
“We strongly disagree with the district Court’s order and will pursue our legal remedies. There is more than enough evidence from the guilty pleas of former FCA executives to conclude that the company engaged in racketeering, our complaint was timely and showed in detail how their multimillion dollar bribes caused direct harm to GM. The district court’s opinion is contrary to well-settled RICO case law and would let wrong-doers off the hook for the massive harm caused by their criminal conspiracy,” according to a statement provided by GM spokesman Jim Cain.
FCA has repeatedly called the lawsuit meritless, and did so again on Wednesday.
“We have said from the very outset that this was a meritless lawsuit. The dismissal of GM’s complaint with prejudice earlier today vindicates our position,” according to a statement from FCA spokesman Jeff Bennett.
The UAW declined to comment.
“We are not party to this lawsuit and have no comment,” according to a statement from UAW spokesman Brian Rothenberg.
More: GM files racketeering lawsuit against FCA, saying it corrupted labor talks
More: Judge wants Mary Barra, Mike Manley to help heal America, orders meeting on lawsuit
More: No Barra, Manley meeting: Appeals court agrees with GM but won’t reassign case against FCA
Business experts said Wednesday’s ruling is a big win for FCA, but doesn’t necessarily mean the dispute is over.
“It’s a crucial win for FCA. If the judge had said that GM might be able to show racketeering, FCA would have been in real danger,” said Erik Gordon, a professor at the Ross School of Business at the University of Michigan.
But he warned it isn’t necessarily over. GM can still pursue legal remedies that don’t require that the company prove racketeering, Gordon said, “but a case that is just a dispute between two companies is very different from a case that claims a company is a racketeer.”
Business expert Harley Shaiken agreed that FCA got a big win with the ruling.
“It narrows GM’s legal options considerably if not totally eliminating them,” said Shaiken, a professor at the University of California, Berkeley. “A move by top FCA executives to corrupt union officials, however, is bad enough, absent a conspiracy to undermine a leading competitor.”
Contact Eric D. Lawrence: elawrence@freepress.com. Follow him on Twitter: @_ericdlawrence.
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