By Mike Colias 

An unusual legal standoff between rival auto makers General Motors Co. and Fiat Chrysler Automobiles NV took a new turn Friday, when GM resisted a judge's order to have the companies' CEOs meet in person to resolve a continuing lawsuit out of court.

GM's lawyers, in a petition filed with a federal appeals court, asked that it toss out an order issued earlier this week by a lower court judge requiring the CEOs to get together in person no later than July 1 to find a resolution to their dispute. The company also has asked that the case be moved to a different judge, arguing the order was outside the judge's authority, according to documents filed in federal court.

"That unprecedented order is a profound abuse of the power and the critically important, but essentially limited, office of the federal judiciary," GM said in its petition to the appeals court.

The judge, Paul Borman, who issued the order, declined to comment through a spokesman.

The move is the latest in a nearly six-month legal battle that has pitted the two crosstown rivals against each other. GM last fall filed a federal racketeering lawsuit, accusing Fiat Chrysler of bribing union officials to lower its labor costs, gaining an advantage over its larger competitor.

In the lawsuit, GM cites a long-running federal investigation into union corruption that has led to the convictions of Fiat Chrysler's former top bargainer and several United Auto Workers officials. Fiat Chrysler has said GM's lawsuit is without merit and will fight it.

In a statement Friday, Fiat Chrysler said it stands ready to comply with the judge's order.

On Tuesday, Mr. Borman, a federal court judge in Detroit, heard arguments from each side via videoconference on Fiat Chrysler's motion to dismiss the lawsuit. Afterward, he directed GM CEO Mary Barra and Fiat Chrysler CEO Mike Manley to meet in person, while maintaining social distancing, to resolve their difference, saying a protracted legal battle would not only be costly but a distraction for both companies.

"What a waste of time and resources," the judge said in his sharply worded order. He referenced the Covid-19 pandemic and the strife over racial and social injustice in the wake of the police killing of George Floyd, saying GM's lawsuit would prevent executives at both companies "from fully providing their vision and leadership on this country's most pressing social justice and health issues."

GM sued Fiat Chrysler in November, accusing former Chief Executive Sergio Marchionne, who died two years ago, and other officials of intentionally harming GM by corrupting the collective bargaining process in 2011 and 2015.

GM said Fiat Chrysler officials paid off union leaders with money and gifts to secure more favorable contract terms, leaving it with a labor-cost advantage. The companies compete directly in the U.S. market, especially in the lucrative category of big pickup trucks. JPMorgan Chase estimated GM could seek damages of at least $6 billion.

"We reject the notion that seeking justice for the direct harm caused to GM is a 'waste of time,' a 'distraction' or a 'diversion,'" the company said in a statement. "Justice is worth pursuing in all its facets and any forums."

Peter Henning, a law professor at Wayne State University in Detroit, said it isn't unusual for a judge to ask two sides to meet outside of court to hash things out. But he doubts that Fiat Chrysler would agree to a settlement and believes GM wants the case to go to discovery so it can uncover evidence.

"I don't think either side is going to blink," he said.

--Nora Naughton contributed to this article.

Write to Mike Colias at Mike.Colias@wsj.com

 

(END) Dow Jones Newswires

June 26, 2020 19:23 ET (23:23 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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