Today, the 6th Circuit Court of Appeals upheld aDistrict Court ruling that dismissed a $450 million claim againstGeneral Motors.

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The United Auto Workers had claimed that GM was obligated tocontribute $450 million to the health care plans of Delphiretirees. The parts supplier subsidiary of GM filed for bankruptcyin 2005, at which time the UAW originally claimed Delphi wasresponsible for the $450 million contribution.

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In 2007, as Delphi was still in bankruptcy, Delphi, GM and theUAW entered into a memorandum of understanding, wherein GM agreedto contribute the $450 million to the UAW members’ retirement. GMentered into two more subsequent agreements to contribute the $450million.

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When GM filed for its own bankruptcy protection in 2009, neitherthe UAW nor GM “explicitly took a position” on the $450 millioncontribution, according to the 6th Circuit’s decision.The UAW’s retirement settlement agreement negotiated in GM’sbankruptcy did not explicitly mention the $450 millioncontribution.

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In October of 2009, three months after GM and the UAW had signedthe union’s retirement settlement agreement, the UAW asked forpayment of the $450 million. GM refused, on the grounds thecontribution was not a part of the retirement settlementagreement.

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In 2010, the UAW sued in U.S. District Court for the EasternDistrict of Michigan. In 2013, the court issued a summary judgment in GM’s favor,dismissing the claim.

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The appellate court departed from the lower court, in that iffound that “New” GM did assume responsibility for the $450 millioncontribution in the Master Sale and Purchase agreement signed inbankruptcy.

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But the 6th Circuit also said the 2009 retirementsettlement agreement signed by the UAW “extinguished” GM’sobligation to pay, because the agreement did not contain specificlanguage regarding the $450 million payment.

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The 2009 retirement settlement agreement superseded any “priorunderstandings, agreements or representations” between the UAW andGM, according to language cited in the 6th Circuit’sdecision.

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In finding for GM and upholding the lower court’s decision, theCircuit Court called the retirement settlement agreement “notambiguous.”

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Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.