Fear of Union Litigation Gives Whirlpool Standing in Retiree Benefit Suit

February 13, 2009 (PLANSPONSOR.com) - The U.S. District Court for the Southern District of Iowa has denied a motion to dismiss Whirlpool's lawsuit seeking the right to modify retiree medical benefits set forth in a now-expired collective bargaining agreement.

U.S. District Court Judge James E. Gritzner pointed out in his opinion that “In the absence of an alleged actual injury, a plaintiff seeking a declaratory judgment must show that “it is in immediate danger of sustaining threatened injury traceable to an action of [the defendant],” and in the present case the potential injury is litigation. Gritzner agreed with the company that it had a reasonable uncertainty that it could modify retirees’ benefits without the affected parties suing based on the local chapter of the International Union, United Automobile, Aerospace, and Agricultural Implement Workers’ (UAW) refusal to bargain and UAW’s frequent litigation in cases with identical facts.

“Though its Local 997 had no prior history of litigation, UAW itself had an extensive history of filing cases concerning attempted modifications to retiree medical plans, one established enough to cause the Company its alleged uncertainty,” the opinion said.   The court said Whirlpool met its burden to prove it had standing to bring the suit.

The court also rejected the union’s contention that the lawsuit failed to state a claim upon which relief can be granted, as it is not an attempt to “enforce” a plan under the Employee Retirement Income Security Act (ERISA), saying that argument was misapplied. It pointed out that it was the defendants, the retirees and the union, that were trying to enforce a plan and the company had a reason to fear a lawsuit, so Whirlpool’s allegations were sufficient to defeat a motion to dismiss.

Finally, Gritzner denied the union’s motion to transfer the case to a Michigan court in which there was another case that was brought by the union and a group of retirees against Whirlpool. Noting that the union’s lawsuit was filed first, Gritzner said the union had presented no circumstances justifying departure from the first-filed rule. The court recognized that the company’s suit could have been brought in Michigan because both the UAW and the company are headquartered there, but since the local union and 94% of the retirees in the proposed class of defendants are located in Iowa, the convenience of the parties favors keeping the suit in Iowa.

Last July, Whirlpool Corporation filed the lawsuit in federal district court seeking judgment that its modification of retiree medical benefits will not violate collective bargaining agreements with unions or ERISA. Whirlpool wants the court to approve its move of all current and future retired union employees of the Newton, Iowa, Maytag plants to the Whirlpool Corporation Group Benefit Plan (see  Whirlpool Sues Union to Modify Retiree Medical Benefits).

According to the case filing, the current retirees have been provided retiree medical benefits as dictated by union agreements in place when Whirlpool acquired Maytag in 2006. Whirlpool said its goal is to get the Newton retirees’ benefits in line with the benefits of other hourly employees.

The case is Maytag Corp. v. International Union, United Automobile, Aerospace, and Agricultural Implement Workers,S.D. Iowa, No. 4:08-cv-00291-JEG, 2/11/09.