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21 April, 2008
Continental Tire of North America, a subsidiary of the German-based company, has agreed to settle a lawsuit brought by ICEM affiliate United Steelworkers (USW) over payments into a retiree health insurance fund. The USW announced on 15 April the company has agreed to make US$158 million in payments to the fund, ensuring that 2,300 retirees and about 100 active workers have the necessary medical insurance while retired.
Following closure of three US tyre operations in the US in 2006, Continental set a cap of US$3,000 per worker on its share of retiree health coverage. That meant some retirees would pay as much as US$1,000-per-month to retain coverage.
USW Retirees from Continental NA in Germany in November
The USW brought a lawsuit against the company in April 2007 asserting that Continental’s unilateral modification of the retiree health coverage violated US law. In late July 2007, a US federal court judge ruled in a summary judgment that the company had improperly reduced the benefit levels contained in the collective agreement for retirees and their spouses. The judge’s decision stated that since the company was unable to force its terms with the USW during contract talks, it unilaterally and illegally began implementing those terms.
Continental appealed the judgment, but the US$158 million settlement with the union means further court action is stopped.
“This was an unconscionable attempt by an employer to strip away benefits from retirees who had already paid for them with a lifetime of work,” said USW President Leo Gerard. “We couldn’t let that happen, especially given the current shambles of our country’s health care system.”
USW President Leo Gerard
In November 2007, three USW members – all retirees of Continental Tire North America – visited Germany as guests of German union IGBCE. B.A. Hodges, Larry Little, and Jerry McChellan conducted a press briefing, met with IGBCE officials and shop stewards, and handbilled a Continental worksite in Aachen on the company’s unfair treatment regarding retiree health insurance.
In November 2007, three USW members – all retirees of Continental Tire North America – visited Germany as guests of German union IGBCE. B.A. Hodges, Larry Little, and Jerry McChellan conducted a press briefing, met with IGBCE officials and shop stewards, and handbilled a Continental worksite in Aachen on the company’s unfair treatment regarding retiree health insurance.
Upon the effective date of the recently negotiated settlement, the company will make payments into a Voluntary Employee Benefit Association, specifically to be used for retiree health benefits. Those payments include an immediate US$40 million sum; US$3 million compensation to class-action members of the lawsuit for the period of 2007 when the company’s US$3,000 cap applied; US$21 million in seven annual instalments; and Retiree Medical Benefit Liability Payments of approximately US$94 million over 20 years.