Federal judge sides with union over Continental contract modifications

Aug. 3, 2007

A federal judge has issued a summary judgment ordering Continental Tire North America Inc. (CTNA) to pay agreed-upon medical premiums for 2,000 retired members of the United Steelworkers (USW) who filed a class action lawsuit against the company after that benefit was reduced.

The decision by Federal Judge Jack Zouhary of the U.S. District Court for the Northern District of Ohio Western Division affects retired workers from current and former Continental tire manufacturing plants in Charlotte, N.C., Mayfield, Ky., and Bryan, Ohio.

"While we are disappointed with this decision, we stand by our past actions," says CTNA spokesman Rick Holcomb. "CTNA continues to believe that the modifications to the company's retiree medical programs implemented after bargaining with the Steelworkers union were in compliance with applicable law, and we have filed an appeal with respect to this ruling.

"We understand these changes are difficult for our retirees and their families, but, unfortunately, given the current market environment where health care costs continue to rise with no end in sight, increased cost sharing is unavoidable.

"It's important to remember, however, that unlike many other large employers, CTNA has modified -- not eliminated -- its retiree medical coverage for current retirees and will continue to pay a portion of the costs," he says.

According to the USW, Continental was obligated to pay approximately $18,000 a year for health care premiums for retirees not yet eligible for Medicare, and $4,200 a year for those old enough to receive Medicare. Following modifications by the company, the USW says Continental is paying $3,000 per retiree across the board.

USW International President Leo Gerard described the modifications as "disgraceful."

"Instead of honoring its commitments, this company callously betrayed the workers while continuing to take advantage of the American tire market -- something they wouldn't dare to do in Europe."

The USW said the payments should be made even if Continental appeals because the judge's ruling makes it clear that when a benefit is vested, a company cannot arbitrarily take it away.