Daimler Trucks North America LLC has agreed to contribute $480 million to a new employee benefit plan to end a putative class action filed by a group of retirees and the United Auto Workers (UAW). The truck manufacturer was accused of illegally cutting their benefits. The manufacturer and the putative class filed a joint motion, urging the judge to approve the settlement, which requires Daimler to provide “significant funding” for new voluntary employees’ beneficiary association trust. The agreed upon settlement will resolve allegations Daimler reneged on a series of deals it made in collective bargaining agreements with the union that said it would provide benefits to workers during their lifetimes, even after they retired.

Plaintiffs Alan J. Meyers, Rocco H. Colanero, Allen Penley and Eddie Warren Bridges, along with the International Union of United Automobile, Aerospace and Agricultural Implement Workers of America, filed suit in May on behalf of a class of former employees who were represented by the union in collective bargaining and who currently are receiving retiree medical benefits from Daimler Trucks, together with their covered and surviving spouses, according to the complaint. The group claims Daimler told the UAW that it would cut those benefits starting on Jan. 1, because the medical benefits it agreed on were not vested, the suit says. The union said in the complaint:

Such changes, if implemented, would cause significant and irreparable hardship for the individual plaintiffs and many members of the proposed plaintiff class, who subsist on fixed incomes and limited means and who depend on their medical insurance coverage for their health, and in some cases, for their survival.

Union and lead Plaintiffs said in the motion that the settlement would cover 1,100 proposed class members. They also said that the agreement is consistent with a recently ratified memorandum of understanding related to the retiree benefits owed to the active and recently retired UAW-represented employees. The memorandum says that the benefits will be provided indefinitely by the beneficiary trust, which will be viable in the long term. It will be funded by hundreds of millions of initial and ongoing contributions from Daimler. The company will make an initial deposit of $450,000 to fund the startup costs, followed by another lump sum contribution of $410 million, which was to be paid by Oct. 1. If the settlement is given court approval, the company will contribute an additional $70 million to the settlement.

Source: Law360.com

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