The merger is set to create the world's fourth-largest carmaker and give the new entity the scale to meet technological and regulatory challenges that are troubling automakers globally.
FCA has already said the lawsuit brought against Fiat by General Motors Co on Wednesday was "meritless".
The source, who spoke on condition of anonymity, said Peugeot-manufacturer PSA remained focussed on the merger talks, and intended to sign a memorandum of understanding on the deal this December, as scheduled.
Fiat also expressed confidence in reaching a binding merger deal with PSA by the end of this year.
GM filed its lawsuit in the United States, alleging FCA had bribed United Auto Workers (UAW) union officials over years to corrupt the bargaining process and gain advantages, costing GM billions of dollars.
FCA said the suit, seeking substantial damages, appeared intended to disrupt the Italian-American firm's merger plan with PSA.
(Writing by Sudip Kar-Gupta and Christian Lowe; Editing by Elaine Hardcastle)
By Gilles Guillaume