Court Affirms Dismissal of GM Lawsuit Finding that GM Had Not Adequately Alleged RICO Violations Were Proximately Caused by Fiat Chrysler and UAW Bribery Schemes

General Motors LLC v. FCA US LLC, 44 F. 4th 548 (6th Cir. 2022)

For almost a decade, executives at FCA US, LLC and its parent company, Fiat Chrysler Automobiles N.V., engaged in a pattern of racketeering, involving bribery and corrupt labor relations with the United Auto Workers (UAW). General Motors (GM) believes that it was the intended victim of the scheme and says it has suffered billions of dollars in damages because of it. GM accordingly sued FCA, Fiat, and various executives under the Racketeer Influenced and Corrupt Organizations Act (RICO). The district court granted defendants’ motions to dismiss, concluding that GM had failed to establish that the alleged RICO violations proximately caused its injuries and the Court of Appeals affirmed.

On November 20, 2019, GM sued FCA, Fiat, Iacobelli, Durden, and Brown, asserting three RICO claims against all defendants, one claim each under 18 U.S.C. § 1962(b)(c), and (d) asserting injury by virtue of the bribery scheme involving Fiat and the UAW. The district court granted the motions to dismiss stating that even assuming that FCA had committed the alleged RICO violations, the district court held that FCA’s alleged RICO violations were either indirect or too remote to have proximately caused GM’s alleged injuries.

Jurisdiction

Regarding jurisdiction in the Court, the question was whether, by naming a labor law as a RICO predicate, Congress “expressly carved out an exception to” the NLRB’s jurisdiction and the court found it did. Like the court in Butchers’ Union, the Court found it “hard to imagine that Congress would have made § 186 a RICO predicate act without the intention of making violations of § 186, which necessarily arise in the labor context, the basis of a RICO action brought in the district court.” Id. at 558. Whether, by expressly designating § 186 as a RICO predicate, Congress “has expressly carved out an exception to the” NLRB’s jurisdiction.  Thus, GM’s claims were properly before the district court.

Injury

GM’s allegations can be grouped into three distinct categories of injuries. First, GM alleges that from 2009–2015, FCA bribed the UAW to secure “unique competitive advantages.” Second, GM alleges that, during the same period, FCA directed the UAW to withhold those same benefits from GM. Finally, GM alleges that, through its bribes, FCA weaponized the 2015 pattern-bargaining process to harm GM. We begin with the competitive-advantage injuries.

  • In Hemi Group, the plurality found proximate cause lacking because the City’s harm did not flow directly from the RICO predicate act (the failure to file Jenkins Act reports) but rather from “the customers’ failure to pay their taxes.” Id. at 11, 130 S.Ct. 983. And there was a more immediate victim (the State). Id. at 12, 130 S.Ct. 983. GM’s competitive-advantage theory of proximate cause fails under Hemi Group for the same reasons that it fails under Anza.

GM argues that this case is different because FCA intended to harm GM. Whatever purchase that formulation of proximate cause had at common law, see Restatement (Second) of Torts § 435AHemi Grp., 559 U.S. at 23–25, 130 S.Ct. 983 (Breyer, J., dissenting), the Supreme Court has squarely rejected it in this context. “A RICO plaintiff cannot circumvent the proximate-cause requirement simply by claiming that the defendant’s aim was to increase market share at a competitor’s expense.” Anza, 547 U.S. at 460, 126 S.Ct. 1991Hemi Grp., 559 U.S. at 13, 130 S.Ct. 983.  

The court discussed that many of the schemes, like many at the heart of RICO conspiracies, use a middleman to accomplish their goals. See 18 U.S.C. § 1961(1) (bribery, extortion, money laundering, murder-for-hire). But the presence of an intermediate victim forecloses injury sought

The court concluded that GM’s inability to recover for the alleged denial of benefits follows from a straightforward application of elementary causation principles. And its inability to recover for FCA’s illicit competitive advantage follows from binding Supreme Court precedent.   In conclusion, the chain of causation between FCA’s bribes and GM’s injury is still too attenuated.

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