A federal judge has ruled that General Motors is not obligated to honor a contract between itself, its affiliate, Delphi, and the United Auto Workers. GM entered the contract two years before GM’s June 2009 bankruptcy filing to cover $450 million in retiree medical benefits.
After GM emerged from bankruptcy, the UAW entered a medical benefit contract with the post-bankruptcy GM in July of 2009, and the original amount was not included. Opposing the UAW’s claim that GM is legally obligated to pay the funds because Delphi emerged from bankruptcy in October 2009, U.S. District Judge Avern Cohn stated that the July 2009 contract was clear in expressing that GM does not owe the $450 million in medical benefits.
“Whether New GM has a moral obligation regarding the payment is another matter and not relevant,” reads a section of Cohn’s 36-page decision. “The UAW’s efforts to turn the absence of language into language is reminiscent of the efforts to capture a ‘will o’ the wisp.”
The union is contemplating whether to appeal the decision or not, according to UAW President Bob King. However, it seems that the UAW’s lawyers are at fault here by creating a subpart contract with the “New GM” that didn’t adequately reference the initial $450 million contract.