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AK Steel Corp. reached a deal to provide continued health-care coverage to more than 1,200 current and future retired hourly employees and their surviving spouses.
The settlement, if approved by the court, would provide a modified plan of retiree health-care benefits, company contributions, and the creation of a voluntary employees’ beneficiary association plan, according to a joint motion for preliminary approval of class settlement filed March 2 in federal court in Michigan.
The parties’ agreement calls for AK Steel to make three lump sum contributions to the VEBA in the amount of $1 million each during the next three years. The company would also make quarterly contributions to the plan in the amount that equals $250 times the number of hourly employees who are actively at work in the bargaining unit represented by the United Auto Workers.
The proposed deal comes weeks after the U.S. Supreme Court issued separate opinions addressing disputes over union retiree health benefits. Last week, the court ordered the U.S. Court of Appeals for the Sixth Circuit to review its 2017 decision awarding lifetime health benefits to certain retirees of auto parts manufacturer Kelsey-Hayes Co. Earlier last month, the Supreme Court reversed another Sixth Circuit decision involving the retiree benefits, this time of construction equipment designer CNH Industrial.
The proposed AK Steel deal was reached two months after a group of retirees sued the company on behalf of current and future retirees who are or were represented by the UAW in collective bargaining. In their lawsuit, the retirees sought to stop the company from unilaterally modifying vested health-care coverage for them and their spouses.
This isn’t the first time AK Steel has been embroiled in a dispute over retiree benefits. In 2010, a federal judge in Ohio approved a settlement that required AK Steel to provide its hourly and salaried retirees with continued health benefits, valued at nearly $179 million. In 2008, another judge in Ohio approved a deal that called forAKSteel to contribute $663 million over four years to a VEBA trust for its retirees.
McKnight Canzano Smith Radtke & Brault PC and Legghio & Israel PC represent the retirees and the UAW. Zausmer August & Cladwell PC and Taft Stettinius & Hollister LLP represent AK Steel.
Nelson v. AK Steel Corp., E.D. Mich., No. 2:17-cv-14209-TGB-SDD, joint motion for preliminary approval of settlement, class certification and appointment of class representatives and class counsel 3/2/18.
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