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Caterpillar Logistics Services Retirees Win a Preliminary Injunction Providing Them Premium-Free Retiree Healthcare

September 17, 2008

United States District Court Judge Aleta A. Trauger, sitting in Nashville, Tennessee, granted a motion for a preliminary injunction brought by Caterpillar retirees to provide them with retiree healthcare they were promised by the company. Caterpillar was ordered to provide Caterpillar Logistics Services (“CLS”) retirees with the same level of retiree healthcare currently provided to Caterpillar retirees who retired before January 1, 1992.

“This is an important victory for the retirees who can now get the health care they desperately need and can fully enjoy the benefits they were promised for the decades of service they provided to the company,” said attorney Beth Alexander, of Lieff Cabraser Heimann & Bernstein, in Nashville.

Background of the Litigation

Caterpillar was enjoined from deducting monthly charges for retiree healthcare from the pensions of the CLS subclass. These monthly charges ranged from $115 to $250 per month, reducing these former hourly workers’ modest pensions as much as 25%. Caterpillar was also enjoined from charging the retirees deductibles of $300 (for individuals) or $600 (for families) before the health insurance applies and other costs specified in the court’s order.

The Court held a three-day hearing on the Motion in July. On September 16, 2008, the Court found that the testimony of the retirees demonstrated irreparable harm from the financial hardship that they are suffering and will continue to suffer due to the changes in their retiree healthcare that took effect in 2004, resulting in ever-increasing costs since then.

The evidence showed that the retirees were delaying surgery, stopping their prescribed medications, and putting off doctor visits to reduce their increasingly unmanageable medical costs. One of the class members put off amputation surgery despite continued pain in his legs because he could not afford it, while another was taking only half of her prescribed blood pressure medicine to save money. Class members also testified that the premiums caused them extreme financial anxiety during retirement.

The Court found that Caterpillar and the UAW entered an agreement extending the 1988 Central Labor Agreement to the CLS employees in return for a no-strike clause. When a labor dispute arose in 1991, the CLS employees continued to work, honoring the no-strike clause. The Court found that the extension of the Agreement provided for the 1988 Central Labor Agreement to remain in full force and effect. CLS employees who retired before the labor dispute ended had their retiree healthcare benefits vest under the 1988 agreement, which provided premium-free retiree healthcare.

In so ruling, the Court rejected Caterpillar’s argument that the CLS retirees were automatically subject to conditions it unilaterally implemented during the labor dispute and in subsequent Central Labor Agreements, which imposed a cap on retiree medical benefits. In sum, the Court found that the subclass was likely to prevail on the merits of its claim because subclass members have a vested contractual right to retiree healthcare benefits based on the Caterpillar Logistics Services Agreement’s extension of the 1988 labor agreement.

The plaintiffs and class are represented locally by Lieff, Cabraser, Heimann & Bernstein, LLP, in Nashville, AARP Foundation Litigation in Washington and the firm of Meites, Mulder, Mollica & Glink in Washington.

Caterpillar is represented by Columbus Gangemi, Jr., Joseph Torres, and Derek Barella of Winston & Strawn, 35 W. Wacker Drive, Chicago, IL 60601.

ABOUT LIEFF, CABRASER, HEIMANN & BERNSTEIN, LLP

Lieff, Cabraser represents plaintiffs in nationwide class actions and multi-party complex litigation in federal and state courts. Its practice includes employment discrimination, mass torts, antitrust, securities and consumer litigation. It is based in San Francisco, with offices in New York and Nashville. Learn more at www.lieffcabraser.com.




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