The United Auto Workers union is embroiled in a corruption scandal that has seen 13 people criminally charged. Today, things got even worse for the UAW, as GM filed a federal racketeering lawsuit against Fiat Chrysler alleging bribery and corruption in union bargaining.
Named as defendants in the suit are three current or former FCA executives, all three of whom have been convicted of criminal charges tied to the scandal. They are identified as Al Iacobelli, Jerome Durden and Michael Brown. The lawsuit also alleges that Sergio Marchionne, the former CEO of FCA who died last year, “was a central figure in conceiving, executing and sponsoring the fraudulent activity,” according to Automotive News. (Update, 5:31 p.m.: UAW President Gary Jones resigned Wednesday after the union initiated charges against him that could have led to his explusion from the union.)
FCA pays its workers, on average, $8 an hour less than GM. And according to the suit, that is no accident.
The lawsuit alleges that during contract negotiations in 2011 and 2015, FCA targeted GM in a multiyear pattern of corruption that undermined the integrity of collective bargaining with the UAW. It alleges that FCA interfered with implementation of contracts as soon as 2009.
GM said the corruption cost it “substantial” damages. Specifically, FCA was able to achieve favorable labor costs and operate “differently than their competitors that helped” lower FCA’s costs, said Glidden.
Glidden said FCA hired more temporary workers and “in-progression” workers, both at lower entry level wages, than GM did and “it did so with the knowledge that guidelines we believed would be in place were not in place.”
GM did not put a number on the financial damages it is seeking, but you can expect that it isn’t small. FCA did not immediately return a request for comment. I will update this post if they do.
You can read the full complaint here: