Union: Airline's Attempt to Defraud Thousands of Retirees Out
of Medical Benefits Under Scrutiny
Bankruptcy court Judge
Eugene Wedoff ruled in support of a motion filed by United Airlines
flight attendants, represented by the Association of Flight
Attendants-CWA, AFL-CIO, to appoint an examiner to investigate
United's plan to change retiree medical benefits for workers who
retired before July 1, 2003.
Flight attendants contend United intentionally misled thousands
of workers into ending their careers or retiring early, defrauding
them out of their retirement benefits. AFA's arguments were
supported by the International Association of Machinists and
Aircraft Mechanics Fraternal Association in court.
"The employees and retirees who have sacrificed billions of
dollars annually to see United succeed deserve to know the extent
of management's deception in baiting employees to retire with false
promises of secure and reasonably priced medical benefits," said
United Master Executive Council President Greg Davidowitch. "We
hope that this ruling encourages United management to drop their
ill-conceived plan, make good on their agreements with employees,
and move forward with the business of the airline."
The court strongly
encouraged that the US Trustee appoint an examiner by Feb. 24 and
the examiner will be required to report back to the bankruptcy
court by March 19. The scope of the investigation aims to determine
if United decided to use the bankruptcy code to pursue changes to
retiree medical benefits prior to July 1, 2003. This date was
significant because United established it as the retirement
deadline by which an employee would have to retire to secure
medical benefits. United had not notified retirees that it intended
to pursue changes to these benefits prior to that date.
Robert Clayman of Guerrieri Edmond and Clayman, Council for AFA
said, "This ruling means that the examiner will seek to determine
who knew what, and when they knew it."
Judge Wedoff said that there is substantial urgency in resolving
this issue because the ultimate success of the airline depends on
management and employees effectively working together. To that end,
he stated that the appointment of an examiner is "well worth the
investment in arriving at a prompt conclusion" to the issue.
United management signed a letter of agreement in May 2003 to
ensure that flight attendants retiring before July 1, 2003 would
have access to health care benefits that were less costly and more
comprehensive than those that would be in place for those who
retire after that date. Based on that agreement, over 2,500 flight
attendants retired before the July 1 deadline, only to find out
just six months later that United intends to double-cross them and
cut their benefits. These changes would force retirees to pay
hundreds of dollars more per month of their modest pensions just to
continue reduced health insurance.
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