Court Dismisses Claims over Differing Treatment of Delphi Retirees

September 6, 2011 ( - A federal court has dismissed the portion of a lawsuit by salaried workers and retirees from auto parts supplier Delphi Automotive PLC that claimed federal officials unfairly considered politics in advising the government how to change their pension plan.

The workers and retirees say after Delphi filed for bankruptcy protection, their pension plan was changed in ways that could cut benefits for more than 15,000 people by 30% to 70%. At the same time, the pensions of union-affiliated employees were preserved as changes were made (see Official to Investigate Differing Treatment of Delphi Retirees).  

According to the Associated Press, the salaried retirees said the differences between the way they were treated and the way the unionized retirees were treated resulted from officials favoring union members for political reasons.  

The AP said the U.S. District Court for the Eastern District of Michigan dismissed the workers’ claims against Treasury Secretary Timothy Geithner, former “car czar” Steven Rattner and Ron Bloom, the Obama administration’s senior adviser on the auto industry. Judges Arthur Tarnow and Mona Majzoub said the plaintiffs did not show Geithner, Rattner and Bloom discriminated against them, and that, even if there was discrimination, the retirees did not prove they would have been eligible for increased pension rates if the discrimination hadn’t occurred.  

Delphi, of Troy, Michigan, was GM’s parts unit until it was spun off in 1999. The company was in bankruptcy court protection from 2005 to 2009. It bought back ownership stakes from GM and the Pension Benefit Guaranty Corp. earlier this year (see Delphi Buys out GM, PBGC Interests). In May, it registered its intention to make an initial public offering worth $100 million.  

The employees’ claims against the PBGC remain.