The Fourth Circuit Court of Appeals denied a group of West Virginia Retirees’ (Retirees) request seeking the continuation of certain health benefits last week.
Since that’s the harshest sentence we’ve written all week, let’s review whether the court’s decision is heartless or justified.
Century Aluminum of West Virginia ran into financial trouble in 2007; it attributed the strain, in part, to rising healthcare costs. In 2009, Century curtailed operations at its Ravenwood, W. Va. plant, and announced a plan to modify or terminate retiree healthcare benefits for retirees who were 65 or older, or who retired between February 6, 1985 and June 1, 2006.
Considering what a public relations nightmare this we're-yanking-healthcare-from-senior-citizens announcement must have been, we suspect that Century was in dire straights. But we all know how greedy retirees can be; after a lifetime of hard work, they have the audacity to demand the benefits they were promised. (What do they think? That healthcare is expensive and the leading cause of bankruptcy in the U.S.?)
Shortly after the announcement, Retirees sued, arguing that their benefits were vested and the proposed modification would violate both the Labor Management Relations Act (LMRA) and the Employee Retirement Income Security Act (ERISA). In their suit, Retirees requested a preliminary injunction to preserve their benefits at the pre-announcement level.
The district court denied the injunction, finding that Retirees were unlikely to succeed on the merits of their claim because the collective bargaining agreement (CBA) that controlled the Century Union relationship stated that retiree benefits are only effective "during the lifetime of the particular CBA in effect," reports The State Journal.
The Fourth Circuit Court of Appeals affirmed, finding that the district court did not abuse its discretion in denying the preliminary injunction.
The Fourth Circuit's decision is bad news for Retirees, who now mount their challenge with two courts expressing doubt that Retirees can succeed on the merits.
What do you think, employment lawyers? Would you push this case to the bitter end, or would the Fourth Circuit Court of Appeals preliminary injunction denial prompt you to consider an exit strategy?
- Dewhurst v. Century Aluminum Company (FindLaw's CaseLaw)
- Appeals court upholds denial of Century retirees' benefits motion (The Record)
- Coca Cola Faces ERISA Class Action Lawsuit (FindLaw's Law & Daily Life)
- ERISA & Pensions: Court Clarifies the Reach of ERISA (FindLaw's Library)