GM's Bid To Revive Fiat Suit Rejected -- WSJ

Judge denies motion to allow complaint alleging Fiat Chrysler bribed UAW union

By Ben Foldy 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 15, 2020).

A federal-court judge has denied a motion filed by General Motors Co. to revive its civil-racketeering lawsuit against Fiat Chrysler Automobiles NV, once again striking down a legal battle between the two Detroit rivals.

GM earlier this month asked the court to reconsider tossing a lawsuit filed last fall, alleging Fiat Chrysler bribed officials at the United Auto Workers union to gain an advantage in labor-contract negotiations.

GM at the time argued it had uncovered new evidence to support claims that Fiat Chrysler was trying to weaken its larger competitor through an alleged payoff scheme involving top UAW officials.

In a ruling Friday, Judge Paul Borman called GM's motion to amend its earlier complaint "a prohibited attempt to have a second bite at the apple."

Judge Borman also ruled that the new allegations provided by GM, claiming Fiat Chrysler had enlisted two top UAW officials to aid the scheme and paid them off using offshore banking accounts, were too speculative to warrant revisiting his previous decision to dismiss the case.

A spokesman for Fiat Chrysler said the ruling confirms the company's assertion that GM's lawsuit is meritless.

A GM spokesman said the company was disappointed in the decision and would appeal.

The ruling marks yet another setback for GM in its unusual legal offensive against a key rival.

Last November, GM filed the racketeering lawsuit, alleging Fiat Chrysler sought to gain a labor-cost advantage over its competitor by paying off UAW officials and corrupting the bargaining process.

The lawsuit was largely based on revelations surfaced in a yearslong federal investigation into corruption at the UAW. The investigation has so far resulted in 14 convictions, including of top officials at the union and a former labor-relations executive at Fiat Chrysler.

In the original complaint, GM claimed it incurred an extra $1 billion in labor costs as a result of the alleged scheme, which it said was orchestrated by Fiat Chrysler then-Chief Executive Sergio Marchionne. Mr. Marchionne died in 2018.

Judge Borman in July dismissed the case, ruling GM failed to show it was a primary victim of the alleged misconduct.

Earlier this month, GM attempted to resuscitate the legal challenge, claiming private investigators have discovered new evidence that GM says shows Fiat Chrysler allegedly had set up foreign bank accounts to benefit top UAW officials and the former head of labor relations for Fiat Chrysler.

The car company also alleges in its amended complaint that one of those officials, former UAW vice president Joe Ashton, acted as an informant for Fiat Chrysler while sitting on GM's board of directors as a representative of a UAW health-care trust.

Additionally, GM claims in its filing that Fiat Chrysler used bank accounts in Switzerland and Liechtenstein to reward former UAW President Dennis Williams for allegedly scheming to plant Mr. Ashton on GM's board to act as a "paid mole."

Attorneys for Messrs. Ashton and Williams didn't immediately return requests for comment.

The UAW has said it was unaware of the offshore accounts, and that GM's new allegations haven't surfaced in its discussions with federal prosecutors.

A lawyer for Al Iacobelli, the former labor-relations head for Fiat Chrysler and a defendant in the lawsuit, said in a filing that GM's allegations were "a wild and completely unsupported tale."

Fiat Chrysler has also disputed the claims outlined by GM, calling them "an unfounded tale of 'corporate espionage' " that "reads like a script from a third-rate spy movie."

Write to Ben Foldy at [e-mail]

(END) Dow Jones Newswires

August 15, 2020 02:47 ET (06:47 GMT)

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