Wednesday, November 10, 2004

Stacking the Deck

Companies Sue Union Retirees To Cut Promised Health Benefits []

When a deputy sheriff came to his door with a court summons, George Kneifel, a retiree in Union Mills, Ind., was mystified. His former employer was suing him.

The employer, beverage-can maker Rexam Inc., had agreed in labor contracts to provide retirees with health-care coverage. But now the company was asking a federal judge to rule that it could reduce or eliminate the benefit.

Many companies have already cut back company-paid health-care coverage for retirees from their salaried staffs. But until recently, employers generally were barred from touching unionized retirees' benefits because they are spelled out in labor contracts. Now, some are taking aggressive steps to pare those benefits as well, including going to court.In the past two years, employers have sued union retirees across the country. In the suits, they ask judges to rule that no matter what labor contracts say, they have a right to change the benefits. Some companies also argue that contract references to "lifetime" coverage don't mean the lifetime of the retirees, but the life of the labor contract. Since the contracts expired many years ago, the promises, they say, have expired too.
And yet yet they didn't stop paying when the contracts expired, they suddenly realized 'lifetime' meant until the end of the contract years later. Right.
Employers that want to cut union retirees' health coverage or make retirees pay a larger portion could just impose changes and wait to be sued. But by suing first, they stand a chance of choosing the jurisdiction. This is important, because federal circuits' appellate courts tend to take differing positions in these disputes. Indeed, the unsettled nature of the law on these issues -- with employers' arguments sometimes succeeding and sometimes not -- may be a factor prompting some companies to have a go at gaining the legal right to change benefits.
Choosing the jurisdiction ... hmm ... I wonder how they can tell which judges might be sympathetic to corporations looking to break their contracts with retirees?
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