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Federal judge throws out GM's racketeering lawsuit against Fiat Chrysler

  DETROIT — A federal judge on Wednesday threw out a racketeering lawsuit General Motors had filed against smaller rival Fiat Chrysler Automobiles, saying the No. 1 U.S. automaker's alleged injuries were not caused by FCA's alleged violations. GM officials said in statement they "strongly disagree" with the order by U.S. District Court Judge Paul Borman, whom the automaker had sought to have removed from the case, and would appeal. "There is more than enough evidence from the guilty pleas of former FCA executives to conclude that the company engaged in racketeering, our complaint was timely and showed in detail how their multi-million dollar bribes caused direct harm to GM," GM said in a statement. The Detroit company added that Borman's decision "would let wrongdoers off the hook." GM filed the racketeering lawsuit against FCA last November, alleging its rival bribed United Auto Workers (UAW) union officials over many years to corrupt the bargaining process and gain advantages, costing GM billions of dollars. GM was seeking "substantial damages" that one analyst said could have totaled at least $6 billion. FCA had called the case meritless and asked Borman to dismiss it. On Wednesday, Borman dismissed the lawsuit "with prejudice," meaning GM cannot refile the complaint. "The direct victims of defendants' alleged bribery scheme are FCA's workers," Borman wrote of FCA. "GM's high labor costs were not an injury proximately caused by FCA's bribes, and any competitive injury that GM suffered as a result of FCA's advantage in labor costs is an indirect injury." "The dismissal of GM's complaint with prejudice earlier today vindicates our position," FCA said in a statement. On Monday, the Sixth U.S. Circuit Court of Appeals denied GM's petition to remove Borman from the case, but said the two automakers' chief executives didn't have to meet to try to settle the case as Borman had ordered. In calling for that, Borman had called the lawsuit "a waste of time and resources."   Government/Legal UAW/Unions Chrysler Fiat GM

Detroit 3 and UAW set for showdown over tiered wages

This week, thousands of United Auto Workers will converge on Cobo Center in Detroit for the Special Convention on Collective Bargaining, an every-four-year event that lets members tell UAW leaders what the negotiating priorities should be during contract negotiations. This is where a lot of sand and a lot of lines start coming together in preparation for contract negotiations between the UAW and the Detroit 3 automakers, which will happen later this year. Number one on the UAW agenda is the end of the two-tier wage system created in 2007 to help the automakers get through bankruptcy; veteran workers are paid the Tier 1 rate of around $29.00 per hour, new hires are paid the Tier 2 rate of between $15 and $20 and get about half the benefits of Tier 1. Tier 2 hiring has been an undoubted success for the automakers, allowing them to keep factories in the US and hire more workers. By agreement, it is capped at a certain percentage of each automaker's workforce, and while the union's ultimate position is to get rid of the dual-scale system entirely; one leader said Ford could easily afford the $335 million it would take to convert all its workers to Tier 1 out of its $6.9 billion in 2014 North American profit, and General Motors could do the same out of the $5 billion it is handing to investors through the (admittedly forced) share buyback. Other delegates say that at the very least they'd be happy with enforcement of the current caps in the new contract. The automakers, conversely, would welcome expansion of the Tier 2 ranks. Including benefits, import automakers pay workers "in the high $40 range" per hour, according to an analyst, while Ford and GM pay about $59 in wages and benefits per hour. More Tier 2 workers on the rolls would let those two companies get labor cost parity with the competition. Fiat-Chrysler pays wages closer to the imports because of special exceptions in its UAW contract that allow unlimited Tier 2 hiring; those exceptions will end on September 14 and bring FCA into line with the other domestics, unless the new contract maintains them. FCA CEO Sergio Marchionne is opposed to the two-tier system, having called it "almost offensive." One analyst says the UAW might win a sizable pay raise for Tier 2 and a small increase for Tier 1, but the keystone issue will be how the hiring matrix can help the automakers keep overall wages in line with the imports.

Stellantis and Ferrari boss is pitted against his own mother in Agnelli inheritance drama

  MILAN, Italy — A court in Turin is set to rule in the coming weeks on an inheritance dispute dividing the Agnelli family, the founders of the Fiat car company and arguably the best known of Italy's business dynasties. The case stems from the estate of Gianni Agnelli, the celebrated Fiat boss who was a symbol of Italy's post-war economic boom and who died two decades ago. It pits Agnelli's daughter Margherita, who inherited 1.2 billion euros ($1.3 billion), against three of her eight children including her eldest, John Elkann, the chairman of Ferrari and carmaker Stellantis. In the dispute that has riven one of Italy's elite families, Margherita is fighting to overturn agreements she signed after her father's death in order to eventually benefit her five children from a second marriage, sources close to her say. Should the Turin court decide in her favor, Margherita, who is 67 and Gianni Agnelli's only surviving child, could stake a claim to half of her late mother's estate and a share in the Elkann family business. The center of the dispute The dispute has its origins in an inheritance deal known as the "Geneva pacts" that Margherita, an artist and philanthropist, signed in 2004 after the death of her father the previous year and agreed to when Fiat was on the brink of bankruptcy. Under the first pact, Margherita received property, works of art and other liquid assets from Gianni's estate and renounced any future influence in the Dicembre (December) company, a key part of the ownership structure of Exor, the Agnelli-family holding. The pacts cemented John Elkann's position as Gianni Agnelli's chosen successor and effectively took his mother Margherita out of the equation. John Elkann, 47, now leads Exor, which owns slices of prestigious businesses and brands including national newspapers and the soccer club Juventus. The second pact covered what would happen to the estate of Margherita's mother Marella, who died in 2019 aged 91. Marella passed her Dicembre stake to three of her grandchildren, John, his brother Lapo and sister Ginevra, from Margherita's first marriage to journalist Alain Elkann. Margherita wants the pacts to be rescinded to be able to give her children with second husband Serge De Pahlen, a Franco-Russian former Fiat executive, a share of their grandmother's estate, sources close to her say.