DETROIT — When Sergio Marchionne and UAW President Dennis Williams opened contract talks in 2015 with a bear hug instead of a handshake, assembly workers recoiled at the idea that their union and employer were getting too cozy.
The truth was more sinister, General Motors now claims.
Marchionne, stymied by GM's refusal to entertain his merger proposal, had been bribing Williams and other UAW officials for years, GM says in a stunning federal lawsuit filed last week. The suit contends that the Fiat Chrysler Automobiles CEO was "using the UAW as the hammer" to make GM reconsider.
Hours after the hug, GM says, Williams and some of his underlings — including the union's chief FCA negotiator, later sentenced to prison after admitting to taking FCA's bribes — celebrated at Detroit's London Chop House with an $8,000 meal on FCA's dime.
FCA vehemently denied GM's allegations, accusing its domestic rival of trying to thwart this year's UAW negotiations and undermine its planned merger with PSA Group of France.
The suit, arguing that FCA corrupted the bargaining process over the course of a decade to put GM at a labor-cost disadvantage while suppressing wages for thousands of its hourly workers, seeks potentially billions of dollars in damages. FCA went from having the highest labor costs of the Detroit 3 in 2006 to the lowest in 2015 by paying union officials to give it better deals, GM says.
Suing FCA and three of its former executives wasn't "a decision that we made lightly," GM CEO Mary Barra said at an investor conference last week. But without a "level playing field," she said, "we had to take action."
Marchionne, who died in 2018, "was a central figure in the conspiracy," said GM's general counsel, Craig Glidden. The three executives GM is suing — Alphons Iacobelli, Jerome Durden and Michael Brown — have pleaded guilty in a federal corruption probe. GM specifically excluded the UAW as a defendant, though six former union officials also have pleaded guilty, with former Vice President Joe Ashton expected to do so next week.
FCA, in a statement, said it was "astonished" by the lawsuit and its timing, as the company works toward merging with PSA and finalizing a four-year labor contract with the UAW.
Glidden told reporters that GM wanted to file the case within four years of the 2015 labor contracts that it believes were corrupted. Not until January 2018, when Iacobelli's plea agreement with the federal government became public, were details of the scheme and its effect on GM exposed, the complaint says.
FCA funneled "millions of dollars" to certain UAW leaders, starting in July 2009, GM says in its lawsuit. The payments were designed to give FCA an unfair advantage in bargaining, it says, citing Iacobelli's admission of that, and "GM did not and could not have reasonably discovered this information earlier despite due diligence."