News from USWA: Federal Court Blocks Cooper Tire Sale of Standard Automotive Plants; Order Directs Cooper to Arbitrate with Steelworkers Prior to Sale

PITTSBURGH--Nov. 4, 2004--Responding to a lawsuit filed by the United Steelworkers of America (USWA), a federal judge has blocked Cooper Tire from completing its previously announced $1.17 billion sale of its Cooper Standard Automotive Division.

Last spring, Cooper Tire first announced plans to sell the Automotive Division, operations that cover 43 plants in the U.S. and other countries. The sale included four facilities represented by the USWA, two in Bowling Green, one in Auburn, Indiana, and another in El Dorado, Arkansas. At each of the four USWA plants, the contract contains a "successorship" provision providing that, if Cooper should sell the plant, it would only sell to a buyer who reaches a new labor agreement with the Steelworkers as part of the sale.

"Our intention was not to obstruct the transaction," said USWA International executive vice president John Sellers, "but merely to protect the contractual rights of our members."

Shortly after Cooper announced its sale intentions, the USWA asked Cooper to introduce it to the prospective buyer as soon as possible so that the required labor negotiations could begin. Rejecting the union's reading of the contract language, Cooper refused the request. In August, noting the dispute between the parties, the USWA urged Cooper to arbitrate whether bargaining would be required prior to the sale. Again, Cooper refused the union's request.

On September 22, shortly after Cooper Tire identified the likely buyer as an entity formed by the Cypress Group and Goldman Sachs Capital Partners, the USWA sued Cooper in federal district court in Fort Wayne, Indiana. The lawsuit sought an order that Cooper Tire be required to arbitrate the "successorship" dispute immediately and that it be prevented from completing the sale until the arbitration could be completed.

Judge Theresa L. Springmann issued the injunction on November 2. Responding to arguments by Cooper that the successorship clause called for illegal "pre-hire bargaining" and therefore could not be enforced, she observed that Cooper did not "cite a single case striking down bargained for successorship clauses of any kind as illegal -- this simply is not a case of illegal 'premature' union recognition and contract negotiation."

"We are obviously pleased that the court agreed with our argument that the union would suffer irreparable harm if the sale were allowed to proceed before an arbitrator had ruled on whether the contracts required pre-sale bargaining," Sellers said.

With the sale of the four USWA-represented facilities now blocked, the USWA is preparing to arbitrate the dispute quickly and, should it prevail in arbitration, to immediately begin negotiating with the prospective buyer.