U.S. markets open in 4 hours 29 minutes

GM-Fiat Chrysler CEO Summit on Bribery Lawsuit Put on Hold

Chris Dolmetsch

(Bloomberg) -- A meeting between the chief executives of General Motors Co. and Fiat Chrysler Automobiles NV was put on hold after a federal appeals court blocked a judge’s order requiring them to confer face-to-face to resolve a lawsuit.

U.S. District Judge Paul Borman in Detroit last week told GM’s Mary Barra and Fiat Chrysler’s Mike Manley to talk in person by July 1 to try to resolve the lawsuit over bribes paid to union officials, which he called a “waste of time and resources” during the coronavirus pandemic. He scheduled a videoconference with the two CEOs for that day to get an update on the talks.

GM asked the U.S. Court of Appeals in Cincinnati to overturn Borman’s ruling and reassign the case to another judge. The court on Monday put a temporary hold on his order while it considers GM’s petition. GM said in a statement that it looked forward to the court’s review.

Fiat Chrysler said in a filing after the ruling that courts have the authority to direct parties to engage in settlement talks and regularly do so.

Read More: GM Rejects Judge’s Notion Fiat Lawsuit as a ‘Waste of Time’

In addition, it said, while GM may be unhappy about questions Borman asked during arguments before his ruling, that doesn’t warrant his removal from the case. Fiat Chrysler noted that GM had asked to have the judge assigned in the first place, given his experience with the criminal cases that gave rise to its suit.

“As we have said from the date this lawsuit was filed, it is meritless and FCA will continue to defend itself vigorously and pursue all available remedies,” the company said in a statement.

Nine union and Fiat Chrysler leaders were jailed as a result of a federal corruption probe. In the suit, GM claims its rival got better contracts than competing automakers by bribing union officials. The added labor expenses increased GM’s costs by billions of dollars, the company claims.

GM also alleges that the bribes pushed union officials to go along with a proposed merger between the two automakers that former Fiat Chrysler CEO Sergio Marchionne wanted but GM rejected. Fiat Chrysler Chairman John Elkann has publicly denied the allegations.

(Updates with Fiat Chrysler filing and comment)

For more articles like this, please visit us at bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.