Domestic auto drama: UAW head resigns, GM sues Fiat-Chrysler

General Motors headquarters, Detroit | Susan J. Demas

Michigan’s global automotive industry had a bumpy ride on Wednesday as an embattled union boss stepped down and one of the major car companies sued a top rival. 

Gary Jones, who took a leave of absence as president of the United Auto Workers (UAW) earlier this month amid a corruption probe by federal authorities, reportedly resigned on Wednesday after the union filed charges against him and Vance Pearson, another top union official.

The charges, signed by the UAW’s International Board, say that the two officials “directed the submission of false, misleading and inaccurate expense records to the UAW Accounting Department and further concealed the true information concerning those expenses,” violating federal labor laws and the union’s rules.

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“This is a somber day, but our UAW Constitution has provided the necessary tools to deal with these charges,” UAW Acting President Rory Gamble said in a statement. “We are committed at the UAW to take all necessary steps including continuing to implement ethics reforms and greater financial controls to prevent these type of charges from ever happening again.”

Meanwhile, the union also finds itself discussed in a lawsuit filed on Wednesday by General Motors (GM) against rival automaker Fiat-Chrysler Automotive (FCA). 

The federal lawsuit alleges that former FCA executives, including the late-CEO Sergio Marchionne, corrupted multiple rounds of collective bargaining negotiations dating back to 2009 and “resulted in unfair labor costs and operational advantages, causing harm to GM,” the company alleges. 

“This lawsuit is intended to hold FCA accountable for the harm its actions have caused our company and to ensure a level playing field going forward,” Craig Glidden, GM executive vice president and general counsel, said in a statement.

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In a statement, FCA said the lawsuit from GM is “without merit.” 

“FCA will deal with this extraordinary attempt at distraction through the appropriate channels and will stay focused on continuing to deliver record results while realizing an exciting vision for the future of the industry,” the company said. “FCA is confident that it will prevail in defending itself against these claims in court and will also pursue all available remedies in response to this groundless lawsuit.”

The lawsuit cites a plea agreement from former FCA executive Alfons Iacobelli, who’s now serving more than five years in prison. 

“As has been repeatedly admitted, starting no later than July 2009, FCA paid millions of dollars in ‘prohibited payments and things of value to UAW officers and UAW employees,’” the lawsuit alleges. “Primarily through the UAW-FCA joint training center … and, in return, received ‘benefits, concessions, and advantages for FCA in the negotiation, implementation, and administration of the collective bargaining agreements between FCA and the UAW.’”

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The UAW is not a party to the lawsuit, filed in the U.S. District Court for the Eastern District of Michigan’s Southern Division. GM seeks a jury trial in the case. 

In a statement, the union said it continues to work on reforms as investigations continue, adding that the contracts GM alleges have been corrupted went through several layers of checks and balances. 

“That said, the fact that these issues can cause doubt about the contracts is regrettable,” the union said. “The UAW leadership is absolutely committed to making whatever changes are necessary to ensure on our end the misconduct that has been uncovered will never happen again.”

Nick Manes
Nick Manes covers West Michigan, business and labor, health care and the safety net. He previously spent six years as a reporter at MiBiz covering commercial real estate, economic development and all manner of public policy at the local and state levels. His byline also has appeared in Route Fifty and The Daily Beast. When not reporting around the state or furiously tweeting, he enjoys spending time with his girlfriend, Krista, biking around his hometown of Grand Rapids and torturing himself rooting for the Detroit Lions.