BUSINESS WEEK ONLINE NEWS FLASH!
October 17, 1996

Edited by Thane Peterson

GM WINS ONE IN THE LOPEZ CASE

General Motors Corp. won the first round in its legal battle against its former purchasing chief, J. Ignacio Lopez de Arriortua, in U.S. District Court in Detroit. Ruling from the bench during an Oct. 16 hearing, Judge Nancy Edmunds denied a motion by German auto maker Volkswagen to dismiss the lawsuit GM filed in March against Lopez and VW, where Lopez now works.

GM is charging that Lopez, Volkswagen, and a dozen other VW managers conspired to steal GM trade secrets. GM says Lopez and his associates, in collusion with senior VW execs, spirited away boxes full of confidential GM papers when they defected to VW in March, 1993.

VW had argued that GM's U.S. case is nearly identical to a civil action under way in Germany and that Germany is the proper forum to hear the case, since most of the witnesses and documents are there. The judge drily noted that because all those documents are in Germany seems to be exactly why GM is suing. In the end, the judge said she would keep the case because many of the alleged activities occurred in Michigan and because U.S. law offers GM different legal remedies and opportunities than do the German courts.

The ruling to keep the case in the U.S. will allow General Motors to continue pursuing racketeering charges against Lopez and VW under the Racketeer Influenced & Corrupt Organizations (RICO) Act, as well as trademark and copyright claims under U.S. statutes. "This case belongs in this country," said GM General Counsel Thomas Gottschalk after the hearing. "We think that our laws provide for much more comprehensive redress." And he added, "We are anxious that this case proceed."

Said VW attorney James Denvir: "Obviously, we're very disappointed. But the outcome was not unexpected." He added, "It's very unusual to be able to get rid of a case at this stage."

In a separate ruling that increases the chances that Lopez will be forced to testify in Detroit, Edmunds also denied motions to dismiss the charges against Lopez and seven of the associates who followed him from GM to VW. The judge found that the U.S. court can require the Europeans to defend the matter here, since they lived and worked in the Detroit area at the time of the alleged theft. Attorneys for the octet had tried to argue that as foreign residents whose first language isn't English, they should be held accountable in Germany. (Never mind that German isn't the primary tongue of these Spaniards, either.)

The judge took under advisement similar motions to exclude VW Chairman Ferdinand Piech, Jens Neumann, another senior VW official, and the parent company from the action. Arguments centered on whether GM had brought sufficient evidence to show that the two executives had conspired with Lopez to steal the documents. "There are a lot of facts set forth in this pleading from which one might infer a conspiracy," Edmunds pointed out to Denvir. "This is not your usual bare-bones complaint. It names names. It cites dates of conversations and lunch meetings."

Denvir responded that GM brought no evidence that these conversations involved conspiracy. "Those calls could have been to wish him Happy Birthday," he said. Denvir also noted that VW officials were in the process of recruiting Lopez then: "They were trying to hire the guy. You can't hire him without talking to him."

Judge Edmunds promised to make a ruling and to issue written opinions detailing her bench rulings on the other motions before the next hearing on Oct. 28. At that time, she will hear arguments on VW motions relating to the validity of GM's charges. Stay tuned.

By Katie Kerwin in Detroit

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