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FCA legal setbacks

by Bill Cawthon on

According to reports from Bloomberg News and Reuters, FCA US will have to fight lawsuits on two fronts: one for racketeering, antitrust and breach of contract related to its sales practices and another claiming that FCA made false claims about recalls.

Law-Profits-Web

Federal judges in Illinois and New York declined to dismiss the suits brought by two dealerships owned by Napleton Automotive Group and by FCA shareholders.

Allpar has followed the Napleton suit since it was first reported in January. This week, U.S. District Judge Virginia Kendall threw out a racketeering claim, because she found that the dealerships hadn’t proven they had been harmed, but allowed antitrust and breach-of-contract claims to move forward.

Scott Kunselman

U.S. District Judge Jesse Furman ruled that a lawsuit brought by FCA shareholders can proceed. The suit claims FCA, CEO Sergio Marchionne, and former safety chief Scott Kunselman mis-lead  investors about exposure to recalls. Though FCA said it was substantially in compliance with all safety regulations, its handling of recalls resulted in substantial fines, new compliance requirements, and a large set-aside to pay claims. Judge Furman dismissed shareholder claims of actual fraud, saying FCA’s “misguided optimism” did not constitute fraud.

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for just-auto.com, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.


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