PITTSBURGH, July 29, 2013 /PRNewswire-USNewswire/ -- The United Steelworkers (USW) today filed a motion in U.S. District Court for the Northern District of Illinois to dismiss the lawsuit filed by FreightCar America, Inc. (FreightCar) in the company's effort to evade contractual obligations to retirees, or, in the alternative, to transfer the lawsuit to U.S. District Court for the Western District of Pennsylvania.
The USW brought a class action complaint against FreightCar in federal court for the Western District of Pennsylvania in Johnstown to require the company to pay for the contractual retiree benefits on July 9, 2013, when FreightCar announced its intention to cease all contributions to retiree health and life insurance for approximately 800 individuals who are eligible.
According to its latest annual filing with the Securities and Exchange Commission, the company's obligation to these retirees and spouses accounted for a "substantial" portion of its $69.3 million liability for Other Post Employment Benefits ("OPEB") as of December 31, 2012, and the liability could increase substantially if the USW ultimately prevails. The USW has estimated that total liability for OPEB for these retirees is between $150 and $200 million.
The USW believes that FreightCar has attempted to evade the jurisdiction in Pennsylvania by filing a declaratory judgment action in Illinois against retirees who worked at FreightCar's plant in Johnstown. The Pennsylvania court had presided over three underlying class actions, two of which were settled on an interim basis between the parties in 2005, and a third settled in 2008 after the federal court found that the company had unlawfully discriminated against employees in order to avoid liability for their vested pension benefits.
FreightCar has sought relief in Illinois even though in settling the underlying Pennsylvania litigation, it agreed that retirees would have the right to re-file their claims with the United States District Court for the Western District of Pennsylvania. FreightCar also ignores that the Pennsylvania Court already held that FreightCar is obliged to provide retirees with the subject health and life insurance benefits.
The USW represents 850,000 men and women employed in metals, mining, pulp and paper, rubber, chemicals, glass, auto supply and the energy-producing industries, along with a growing number of workers in public sector and service occupations.