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Judge Rejects GM’s Attempt to Revive FCA Lawsuit

It’s back to appellate court as GM tries to establish damages
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General Motors is getting nowhere in its charges of racketeering against Fiat Chrysler Automobiles.

Today, GM’s new claims of corporate espionage against FCA were deemed “too speculative” by U.S. District Court Judge Paul Borman. GM vows to appeal.

Recap

GM says its smaller rival has benefited for years from U.S. labor contracts won by bribing United Auto Workers union officials with funds diverted from an FCA-UAW worker training center outside Detroit.

GM headquarters in Detroit (Image: GM)

GM points to federal convictions against former FCA and UAW executives for tax evasion, wire fraud and conspiring to corrupt the labor negotiation process.

The expanding federal investigation into union corruption continues.

Tennis Match

The back-and-forthing on GM’s complaint began in June. First, a frustrated Borman ordered the CEOs of both carmakers to immediately attempt to settle the dispute face-to-face. He opined that the “nuclear option” of a court battle would be a “waste of time and resources” for the companies.

GM argued that the judge had overstepped his bounds and asked an appellate court to reassign the case. Instead, the court bounced the complaint back to Borman. He dismissed the lawsuit two days later, ruling that GM failed to demonstrate that it was damaged by the wrongdoing.

But GM was back in Borman’s court earlier this month with new charges. The company said it uncovered evidence that FCA used multiple offshore bank accounts to pay former UAW and FCA executives to act as “paid moles.”

GM’s ire is directed mainly at Joe Ashton, a former head of the UAW’s GM department who joined the carmaker’s board in 2014, and former FCA labor executive Alphons Iacobelli, who later joined GM’s labor relations department.

Ashton pleaded guilty in December of money laundering and wire fraud regarding the UAW-FCA training center. He hasn’t been sentenced but could face 30 years in prison. Iacobelli currently is serving a 66-month prison term after pleading guilty to conspiracy and tax evasion, in part for buying himself a Ferrari with funds intended for the training facility.

Still No Case?

In refusing to reinstate GM’s lawsuit today, Borman ruled that the company’s new charges lack enough substance to reopen the case. GM reiterates that corruption convictions in the continuing federal probe prove it has cause for moving ahead.

We’ll know soon whether the Sixth Circuit Court of Appeals in Cincinnati, which rebuffed GM’s first appeal, agrees.

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