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GM Canada Retiree Sues Over Benefits

Fri, 05/07/2010 - 12:30pm
Manufacturing.net

TORONTO (CP) -- In another legal blow to a post-restructuring General Motors Canada, an Ontario man is launching a potential class-action lawsuit against the automaker on behalf of himself and 3,500 other retired white-collar employees for rolling back their benefits.

The lead plaintiff, Joseph O\'Neill, says GM Canada violated its contractual obligations to retired workers by cutting their benefits without their approval.

As part of an attempt to slash costs during a massive restructuring, the automaker said in 2007 and again in 2009 it would reduce or eliminate several post-retirement benefits it had earlier promised to its workers.

Among other things, GM Canada eliminated semi-private hospital coverage, reduced the annual maximum coverage for dental and orthodontic benefits, increased the amount members would have to pay for prescription drugs and eliminated life insurance coverage.

"Retirees depend on the drug plans, extended health-care benefits and the life insurance that GM promised it would provide," O\'Neill said in a statement Friday.

"We can\'t go back and demand more money for the work we did over the course of our careers at GM. It isn\'t fair for GM to come along after the fact and take away the benefits that we have already earned."

GM Canada spokesman Tony LaRocca said the company wouldn\'t comment on the lawsuit while it\'s before the court.

The statement of claim filed in the Ontario Superior Court argues that the benefits promised by GM Canada to its white-collar employees were "an integral and fundamental part" of their compensation and were earned throughout the course of their employment.

By taking these benefits away retroactively, GM has breached its contracts of employment with its retired workers, the claim alleges.

It adds that retired employees weren\'t in a position to negotiate with GM and were left vulnerable to the whims of the company.

"(GM Canada\'s) actions have had a serious impact on the class members," according to the statement of claim.

"Many of the class members live on modest non-indexed fixed incomes, and they are particularly vulnerable as a result of their advanced age, susceptibility to health problems, and limited capacity to assume increased financial burdens or to seek additional employment income."

The claim adds that employees didn\'t purchase additional life insurance or benefits when they were available, and are now left with less coverage than they assumed they would have.

O\'Neill, who is now a member of a group representing retired white-collar GM employees, worked for GM for nearly 40 years, starting in 1964, and was a manager at the Oshawa truck plant when he retired in 2002.

The suit calls for the court to restore the retirement benefits in full or, if that\'s not possible, to partially restore them so all retirees get a proportionate share.

GM Canada is also facing a class-action lawsuit by the more than 200 dealerships whose businesses were closed last year as part of the automaker\'s massive restructuring.

That lawsuit, which is seeking $750 million in damages, claims the automaker broke franchise laws by giving its dealers at most four business days to respond to a termination package offered by the company. In addition, the dealerships say they were unable to negotiate as a group and didn\'t have group legal counsel.

Eighteen individual dealerships slated for closure are also suing GM for alleged breach of contract in a separate suit.

The plaintiffs in that case say GM\'s agreement with its dealers allowed them to renew their contracts and keep selling GM vehicles until at least 2015 as long as they fulfilled sales and other obligations. They argue that the company was unable to adequately justify its decision to shut down some of its Canadian dealerships and apparently used an arbitrary measure to decide which businesses to close.

That claim asks for punitive damages of $1.5 million as well as additional damages for "loss of profit, loss of goodwill, loss of reputation, loss of business opportunity and loss of market share."

GM Canada has filed a motion to have the case heard by the National Automobile Dealer Arbitration Program, or NADAP, rather than the courts.

None of the allegations have been proven in court.

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