By Vin Gurrieri, Law360 | Nov 22, 2019
Although General Motors’ suit accusing rival Fiat Chrysler of violating the Racketeer Influenced and Corrupt Organizations Act by bribing UAW officials isn’t the first time RICO has popped up in civil disputes between competitors, GM still faces an uphill battle to keep the case in court, attorneys say.
GM’s nearly 100-page suit filed Nov. 20 accused Fiat Chrysler Automobiles NV of violating RICO — a law most commonly used by prosecutors to go after organized crime outfits like the Mafia, drug cartels and terrorist organizations — by bribing top United Automobile Workers officials over a decadelong period. GM said this corrupted the collective bargaining process and enabled FCA to obtain favorable collective bargaining terms that gave it a leg up on competitors.
Those millions of dollars in payoffs by FCA resulted in “billions” in damages to GM, which was saddled with higher labor costs and received far fewer concessions from UAW during contract negotiations, the automaker alleged in its complaint.
But lawyers who are RICO experts said civil cases asserting the law pose challenges to plaintiffs like GM that can stymie suits in their early stages.
“Civil RICO cases are always an uphill battle because they are very aggressively litigated [and] there’s a lot of opportunities to defeat a civil RICO complaint on a motion to dismiss,” said Etan Mark of Mark Migdal & Hayden, who has written extensively about the racketeering statute and has represented both plaintiffs and defendants in RICO litigation.
GM’s suit alleged that as far back as 2009, FCA paid off UAW officials with the approval of then-FCA CEO Sergio Marchionne, who died in 2018. After detailing some of the alleged improper payments and various items of value that flowed to UAW officials, GM contended that its “injuries were directly and proximately caused by [FCA’s] racketeering activities,” such that it amounts to a RICO violation.
The suit builds on a yearslong investigation by the U.S. Attorney’s Office for the Eastern District of Michigan into alleged corruption involving UAW officers and FCA executives that has resulted in numerous guilty pleas and prison sentences.