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General Motors sues Fiat Chrysler over alleged corrupt UAW bargaining

GM accuses FCA of numerous counts of wrongdoing to earn preferable labor agreements with the United Auto Workers union.

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Two of the largest automakers in the US are headed to court.

General Motors

Amid a deep-reaching federal corruption probe into the United Auto Workers union that has produced 10 convictions and charged 13 individuals, General Motors has raised the stakes higher.

The largest automaker in the US has filed a federal racketeering lawsuit against Fiat Chrysler Automobiles over alleged corrupt behavior during the collective bargaining process, implementation and administration of the 2011 and 2015 labor negotiations. GM further accuses FCA of dirtying the implementation of the 2009 labor agreements.

GM Executive Vice President and General Counsel Craig Glidden said in a statement, "This lawsuit is intended to hold FCA accountable for the harm its actions have caused our company and to ensure a level playing field going forward." GM also said it believes FCA's practices have caused GM "massive monetary damage."

The "monetary damage" can be attributed to unfair labor costs and other operational advantages for FCA. In basic terms, FCA got a better deal with the UAW because it sweetened things as best it could. What kind of sweetener? GM alleges the automaker paid "millions of dollars" in bribes that resulted in numerous UAW concessions and helped it implement labor agreements.

Digging deeper into the lawsuit, GM specifically points its corporate finger at the late Sergio Marchionne, former CEO of the Italian-American automaker. While it's public knowledge the late CEO was adamant about merging with another automaker, and that Marchionne approached GM about merging, GM accuses FCA and the UAW of conspiring to "force" such a merger.

The late Sergio Marchionne was allegedly aware of and orchestrating a forced GM merger.

FCA

The lawsuit characterizes Marchionne and former UAW President Dennis Willams as two key players in forcing GM's hand into a merger through corrupt bargaining. Following Fiat's total takeover of Chrysler in 2014, which gave us FCA, the lawsuit explains Marchionne turned to Williams, a longtime friend and a "merger 'wingman.'" Williams allegedly agreed to help Marchionne and FCA as the union's finances were out of control. FCA, in turn, supplied funds, the lawsuit says.

For the 2015 labor negotiations, Marchionne allegedly worked with Williams to craft a deal tailored to FCA, while ensuring the UAW's "pattern bargaining" process created intentional monetary harm to GM in the form of high and unexpected labor costs for its US operations. That same year, GM publicly declined a merger with FCA.

The UAW said in a statement it's "focused on continuing to implement ethics reforms and greater financial controls to make sure the misconduct [that] has been uncovered will never happen again." The union added, "Those contracts, which were ultimately ratified by our membership, were negotiated with the involvement of both local and international representatives and the process had multiple layers of checks and balances to ensure their integrity."

FCA did not immediately respond to a request for comment.

GM seeks to recover money it says it's lost from this alleged behavior, though it's not clear how much it wants FCA to pay. If GM wins its case, the automaker said it will invest all recovered damages in the US to benefit GM employees and create more jobs.