News From USW: Judge Orders Continental Tire to Fulfill Contract, Pay Health Care Costs for Retired Workers

PITTSBURGH--News From USW: A federal judge yesterday issued a summary judgment ordering Continental Tire Co. to pay medical premiums for 2,000 retired United Steelworkers who filed a class action lawsuit against their employer after Continental arbitrarily cut the benefit.

Federal Judge Jack Zouhary of the U.S. District Court for the Northern District of Ohio Western Division told the German-based tire company to fulfill its contractual obligations to the retired workers from plants in Charlotte, N.C.; Mayfield, Ky. and Bryan, Ohio, and is expected ultimately to enter final relief on behalf of 2,000 affected retirees.

After learning of the ruling, USW International President Leo W. Gerard said, “The fact that the court issued summary judgment shows just how disgraceful Continental Tire was in abandoning its contractual obligations to American tire builders who gave the company a lifetime of work.

“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.”

Over the past five years, Continental began closing its American plants and outsourcing those jobs to factories in places like Brazil and Malaysia while continuing to characterize itself in advertising as an “American Company.” It also slashed health care benefits to retirees that it had agreed to in contracts.

Contractually, 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. Instead, Continental summarily decided it would pay $3,000 for everyone, no matter how old or what the circumstance.

Mark Cieslikowski, president of USW Local 850 in Charlotte, where 1,080 had worked at the Continental plant in 2005, but where only 160 remain now, said the loss of the insurance coverage devastated retirees.

“It was a great benefit we enjoyed for years. But we gave up raises to get that. It was a trade off. We paid for it in a different form. Now the company comes back and takes it away from you,” he said, “I have retirees who have no health care because they could not afford the premiums and because they had pre-existing conditions, they could not buy insurance. If you are a diabetic or you have high blood pressure, lots of companies will not insure you.”

USW Executive Vice President Ron Hoover said it is time for Continental to do the right thing and make the payments. “This is an international corporation that has made massive profits throughout this sorry affair. It is time for them to finally stand up and fulfill promises made to workers who labored hard for them over decades and pay those medical premiums now. Right now.

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.

The USW represents more than 850,000 workers in the U.S. and Canada, including 70,000 in the tire and rubber industry.