Navistar Sues Unions, Seeking Reductions of|Billions of Dollars for Retirees’ Health Care

DAYTON, Ohio (CN) – Navistar, a truck engine-maker, sued 18 union locals in Federal Court, claiming a 1993 class-action settlement limits its health-care benefits for retirees to $1 billion, far less than the $2.6 billion to which the cost of benefits had “ballooned” 10 years later.




     Navistar claims that the 1993 settlement, Shy et al. v. Navistar et al., was meant to “provide Navistar with a ‘reduction’ in the cost of retiree benefits that was ‘definite, swift and permanent.'”
     Navistar claims that limiting its benefit obligations to $1 billion helped keep the company from bankruptcy, for the benefit of workers, retirees and the company. But Navistar says that the cost of its retiree benefits “increased dramatically since 1993, [and] grew from $1 billion to $2 billion by 2000 and ballooned to over $2.6 billion in 2003.”
     Navistar claims the burden places it at a competitive disadvantage, as many of its competitors have “‘gotten out of the retiree health care business altogether’ by transferring all of their retiree health obligations to a voluntary employee beneficiary association trust.”
     Navistar claims that “the defendants (and the UAW in particular) have actively worked to further violate the deal by seeking to block adjustments that promote ‘definiteness and permanence,'” Navistar says. (Parentheses in complaint.)
“Navistar can no longer continue to perform its side of a deal that has failed to deliver the explicitly articulated benefits recited in the Settlement Agreement,” the complaint states. “As a result, Navistar seeks a declaration that it is not required to fund or provide benefits that would cause its APBO to exceed the maximum of approximately $1 billion (and decreasing) stated in the Settlement Agreement and this Court’s Order/Opinion approving the same.” (Parentheses in complaint.)
Its request for declaratory relief mentions “mutual mistake,” “impossibility,” and “commercial frustration.”
Defendants include locals of the United Automobile, Aerospace and Agricultural Implement Workers of America (11 locals), the United Plant Guard Workers of America (3 locals), the International Machinists District Lodge 28 and three locals, the Society of Engineering Employees, and the United Steelworkers of America.
Navistar’s lead counsel is David Pierce of Dayton.

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