PEORIA, Ill.—Caterpillar Inc. filed lawsuits Wednesday to make the United Auto Workers pay if courts rule that the heavy equipment maker reneged on a promise to provide free health care for life to retirees and surviving spouses.
Peoria-based Caterpillar argues that the union negotiated and approved contracts that scaled back health care coverage, but is now backing two class-action lawsuits seeking lifetime coverage for thousands of retirees and surviving spouses.
“How can the union sponsor lawsuits that fight the very terms that the union proposed, negotiated and ratified during collective bargaining? That’s the question,” Caterpillar spokesman Rusty Dunn said.
A UAW spokesman declined to comment Wednesday, saying union officials have not yet received copies of the lawsuits filed in U.S. District Court in Nashville against the UAW and seven of its locals in Illinois, Colorado, Pennsylvania and Tennessee.
UAW spokesman Roger Kerson also declined to comment on Caterpillar’s allegations that the union encouraged and supported the lawsuits over health care, which were filed by Caterpillar retirees and surviving spouses—not the UAW.
“We are disappointed that instead of abiding by its agreements, the UAW would actively encourage and sponsor the retirees’ litigation,” said Dan Day, Caterpillar’s corporate human resources manager.
Tens of millions of dollars could be at stake if courts side with the retirees and surviving spouses, said Peter Feuille, head of the University of Illinois’ Institute for Labor and Industrial Relations.
Caterpillar officials said Wednesday that they expect courts will back the company, but say the UAW should cover costs of a settlement if they don’t.
“This is not by any means against retirees or employees. We just think the union should be accountable to what we agreed to in the contract,” Day said.
One of the class-action lawsuits seeks free lifetime coverage for workers who retired between January 1992 and March 1998, when Caterpillar and the UAW were locked in a bitter, strike-marred contract stalemate.
The suit argues those workers are entitled to terms of a previous contract that provided free lifetime coverage for all eligible retirees and their dependents. Caterpillar maintains those workers are covered under a contract implemented by the company in 1992 that scaled back health care benefits. The case is scheduled for trial in October 2008.
The second lawsuit seeks free coverage for surviving spouses of Caterpillar employees who retired between March 1998 and January 2005.
Those dates cover a contract between Caterpillar and the union that provided free lifetime health coverage for surviving spouses upon the employees’ deaths, according to the suit. Caterpillar maintains the contract implemented in 1992 and subsequent contracts scaled back those benefits. That case is scheduled for trial in June 2008.
The U of I’s Feuille says the flurry of lawsuits won’t help a fragile relationship between Caterpillar and the union dating back to “years of really nasty fighting in the 1990s.”
“My guess would be no matter which way the suits come out, it’s probably going to have an impact on the next round of talks, not so much in terms of animosity levels but in terms of a new issue to bargain about,” Feuille said.
Company and union officials say they doubt any rancor stemming from the lawsuits will carry over into talks when the current six-year contract expires in 2011.
“It’s two different issues. You have to separate your business or you’d never get anything done,” said Dave Chapman, president of Caterpillar’s largest union local in East Peoria.
