GM’s Legal Battle With Fiat Chrysler Is Turning Toward The Absurd

GM’s Legal Battle With Fiat Chrysler Is Turning Toward The Absurd

GM sued Fiat Chrysler in November over alleged corrupt union bargaining, a lawsuit that was later dismissed though one that so far has refused to die. Things got spicier last week when GM said that FCA had a “mole” inside GM. Today, FCA said GM’s allegations “would make John Le Carré cringe.”

The documents were filed in response to GM asking U.S. District Judge Paul Borman to reinstate the suit last week, while also speaking of the “mole” and various offshore bank accounts GM said it had discovered since filing the original complaint. That complaint alleged that FCA sabotaged contract negotiations for GM with the UAW, which in turn gave FCA a competitive advantage in the form of lower labour costs.

FCA has denied GM’s version of events all along, but the new “mole” allegations drew open ridicule. The spiciest part of the legal documents filed today:

GM’s proposed Amended Complaint reads like a script from a third-rate spy movie, full of preposterous allegations that FCA paid not one, but two, “mole[s]” to “infiltrate[] GM” and “funnel[] inside information to [FCA]” using money “stashed” in a “broad network” of “secret overseas [bank] accounts.” (Motion 2, 5, 7-8, 20- 21.) None of that is true. That GM has extended its attacks to individual FCA officers and employees, making wild allegations against them without a shred of factual support, is despicable.


In addition to concocting an unfounded tale of “corporate espionage” that would make John Le Carré cringe (Motion 21), GM (i) improperly seeks to reargue the standard for “direct causation” under RICO, (ii) misrepresents the legal standard governing leave to amend after judgment has been entered, and (iii) accuses the Court of committing “manifest error” by dismissing the Complaint without granting GM leave to amend, even though GM spent two years drafting its original complaint and did not previously request leave to amend. GM is wrong in every respect.

This motion is the latest example of the lengths to which GM is prepared to go in attacking FCA, accusing the Court of misconduct along the way. GM’s fictional account of “corporate espionage” is based entirely on two unremarkable allegations:

1. FCA — a Dutch corporation headquartered in the United Kingdom, with subsidiaries that operate facilities in Italy and more than 40 other countries, and sales to customers in more than 130 countries — maintains “foreign bank accounts” in “countries such as Switzerland, Luxembourg, Liechtenstein, Italy, Singapore, the Cayman Islands, and others.” (Motion 5.) That is unremarkable, and certainly not illegal.

2. Certain individuals — such as Alphons Iacobelli (who GM hired without asking FCA for a reference after his employment was summarily terminated by FCA) and Joseph Ashton (a former UAW official who served on GM’s Board of Directors and has no connection to FCA) — also held or controlled bank accounts in some of those same countries. (AC ¶¶ 35, 43.) Even if true, there is nothing illegal about that either.

Based solely on the “existence of [these] foreign bank accounts” (Karis Decl. ¶ 10), GM leaps to the bold conclusion, which it pleads solely on “information and belief,” that Iacobelli and Ashton were “mole[s]” paid by FCA through “secret overseas [bank] accounts” to “infiltrate[] GM,” “funnel[] inside information to [FCA],” and ensure that benefits and concessions provided to FCA by the UAW were not also provided to GM. (Motion 2, 5, 7-8, 20-21.) No facts alleged in the proposed Amended Complaint — not a single one — support this outrageously speculative accusation.

GM gave the following statement Monday in response to FCA’s response, via Automotive News:

“FCA’s corruption of the collective bargaining process remains undeniable — a federal investigation is ongoing and there have already been multiple guilty pleas,” GM said in a statement. “New facts uncovered through GM’s investigation which FCA tries to discount — including offshore accounts in multiple countries — implicate numerous individuals and make GM’s RICO case even stronger. GM seeks to uncover in court the full extent of harm the FCA bribery scheme caused GM.”

GM said nothing in FCA’s replies “counters the significance of these allegations and the direct harm the defendants’ corruption caused GM, and the Court should amend its prior judgment and reinstate our case.”

This is all getting a bit convoluted, but this what it looks like when both sides have seemingly unlimited amounts of money to spend on lawyers, in addition to all the time in the world. Borman, who was already very tired of this case, is likely to make a quick ruling on GM’s reinstatement request, but who can say where this case goes from there.

You can read FCA’s entire response below.