Judge Rules For McDonnell Douglas Workers in Plant Closing

September 7, 2001 (PLANSPONSOR.com) - A federal judge has ruled in favor of more than 1,000 McDonnell Douglas workers, finding that the firm closed a plant to avoid paying pension, health and retiree medical benefits.

Although having the burden of proof, the workers were able to convince the court that while McDonnell Douglas (subsequently acquired by Boeing) claimed the closing was due to business reasons, that was a mere pretense for the real motive – a desire to save money on pension obligations.

In the suit, plaintiff James Millsap alleged McDonnell Douglas knew it could reap a total of $24.7 million in benefit savings if the 300 oldest employees were laid off before reaching age 55. According to court documents, the average employee in Tulsa was almost 51 years old; 300 of them were about to turn 55 and become fully eligible for retirement benefits. 

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A Defense Contract Audit Agency audit report showed that the company transferred an additional $11 million in pension-plan surplus to another business segment following the Tulsa closing.

The Tulsa plant in question made tail parts for F-15 fighters.  A Boeing spokeswoman told Dow Jones that the Tulsa facility was closed along with others in 1994 following a drop in military spending after the end of the Cold War.

“History of Mendacity”

In his 90-page opinion, Judge Sven Erik Holmes wrote that the court was “unable to give deference to a business decision when the evidence produced by Defendant does not credibly support the characterization as a business decision.” 

The court noted that McDonnell Douglas had hired consultants who advised it on how it could save money by selecting certain older workers for termination in a plant closing.

The court also cited numerous instances where “Defendant’s actions evinces a history of mendacity as seen in the pattern of bad faith conduct in which it participated in the events leading up to the lawsuit.” 

That pattern included what the court termed the company’s false assertion to employees that the procurement of a major contract would keep the plant open for at least three more years.  However, when the contract was procured, the work was sent to another company plant in St. Louis, putting most of the Tulsa employees out of work, according to the court.

Judge Holmes gave the parties three weeks to propose how to proceed in determining the appropriate relief for the plaintiffs, and also suggested he might impose additional sanctions because of the company’s “failure to respond to discovery and repeated false statements under oath throughout this lawsuit.”

– Nevin Adams        editors@plansponsor.com