By on May 15, 2015

Delphi Audi Circa March 2015

The 6th U.S. Circuit Court of Appeals ruled Thursday General Motors will not owe $450 million to the UAW for funding health care among Delphi retirees.

The ruling affects a stipulation in the contract signed by “Old GM,” Delphi and the union in 2007, where the automaker would make a one-time contribution of $450 million, Detroit Free Press reports. Said stipulation remained in a revised 2008 agreement, but would not be included in a new contract when GM emerged from bankruptcy in 2009.

However, the UAW sought to hold GM to its obligation, suing the company in April of 2010 after the “new” version of the company refused to pay the contribution.

While a spokesman for the automaker said it was “pleased with the outcome of the case,” the union remains silent as to whether it will appeal the ruling before the U.S. Supreme Court.

[Photo credit: Delphi/Facebook]

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50 Comments on “Ruling Frees General Motors Of $450M Obligation To UAW...”


  • avatar
    carguy

    While I understand the UAW’s disappointment with the outcome, the bankruptcy process is designed to do exactly what it did: Remove liabilities in order to allow the company to survive.

    • 0 avatar
      psarhjinian

      It will be interesting to see if the usual “it’s an illegal bankruptcy!” crowd has any issue with this.

      I’ll bet not.

      • 0 avatar
        Pch101

        I’m not betting against you.

      • 0 avatar
        Landcrusher

        No one has pity for the burglar who gets robbed by the fence. So, those upset with the way things were handled aren’t being inconsistent by not caring here. It’s just desserts.

      • 0 avatar
        Pch101

        I am going to double down on my position to not bet against you.

      • 0 avatar
        jacob_coulter

        The taxpayer basically bought GM and handed it to the UAW. The UAW was put in front of the line in relation to other debt holders purely for political reasons.

        And then after GM refused to repay the over $40 billion in loans from the US taxpayer, they got to write off BILLIONS in future taxes because they got to use the bankruptcy as a “loss”.

        Sure, it was a totally legitimate bankruptcy, the process was the exact same as it was for say Circuit City or Montgomery Ward, nothing to see here. Anyone who disagrees must watch Fox News or work for the Koch Brothers. Maybe both.

      • 0 avatar
        Xeranar

        I’m always a bit shocked when that crowd also seems to think that nobody should ever retire or only on their ‘wits’ by somehow making a 401K turn into a full pension that their parents had. The irony is that most economists admit that getting more people out of the workforce will actually be beneficial not just in terms of wages but productivity and innovation as more people can move up and develop new skills and products that their fore bearers simply can’t.

        The painful irony in their thought process makes me sad.

        • 0 avatar
          Landcrusher

          The shocking thing is that after paying 15 plus percent of wages for their entire lives, most of the tail end of the baby boom will get back a fraction of that with following generations doing even worse.

          Every federal program does worse and worse every year it seems. Much of the lack of retirements today is further fallout from government interference in housing, lopsided regulations on banking, and other nonsense.

          How big will the government have to get before anything is left that isn’t the government’s fault?

    • 0 avatar
      Landcrusher

      Of course, the regular process was trounced upon, so there should be no surprise that those with a part in bending the rules are still trying to bend them in their favor. At least W has the decency to admit he did the wrong thing out of fear after the fact. These guys, having created a mess of precedent that will weigh on the country for decades more, still can’t stop trying to get more of the cake they already ate all of.

      No shame at all.

    • 0 avatar
      probert

      Debtors usually receive a percentage on the dollar.

      The unions gave up a lot during the restructuring and this is a bad faith action. It seems that with the rate of health care cost increase at record lows due the Affordable Care Act, a good faith deal could have been negotiated.

      If issues arise again that require union compromise, I’m sure – and I hope – this comes back to bite them. A lot of hard working people have been hurt here.

      • 0 avatar
        Pch101

        This is similar to the ignition issue.

        The liability belongs to the old company, not the new one. The old company’s lack of cash doesn’t change this. The union is in the same position now as it was when it started.

      • 0 avatar
        redav

        Didn’t the UAW also receive a whole lot of stock in the new GM? Did they get more than they gave?

  • avatar
    raph

    So if new GM is absolved of this debt then the public will step in through the government to cover the expense ( under VEBA IIRC the name for the program )?

    • 0 avatar
      seth1065

      RAPH,
      That was what I was wondering if GM shed this by going broke who is on the hook, the Union, the tax payer someone else?

    • 0 avatar
      Pch101

      This is similar to the situation of the pre-BK ignition victims — the legal recourse is against the old GM, not the new one.

      They sued the new entity because the old entity doesn’t have any money. Predictably, they lost.

      • 0 avatar
        Landcrusher

        Which points out a real weakness of the present system. There are bound to be responsible parties, but the money is gone, so they now have positions at the new or other companies with no fear for career or portfolio while many workers, investors, and vendors get the shaft. It’s amazing.

        • 0 avatar
          Pch101

          Didn’t you sell airplanes? Would you want to assume personal liability for every crash and mechanical failure?

          More to the point, who would be dumb enough to get into the airplane sales business if there was a constant threat of liability? And if everyone was smart enough to avoid selling airplanes, then how would anybody get to fly anywhere?

          • 0 avatar
            Landcrusher

            Why you think product liability has anything to do with my point is a mystery.

            The point is that the senior management, the officers, the board members always seem to get off rather painlessly if not rewarded with retention bonuses when the failures were clearly a matter of their responsibility.

            If I hurt someone in a demo ride, or lied to them about the product, or any number of transgressions, I would lose my position and possibly be open to civil suits or jail. But if you have a C in your title and you run the company into the ground, you grab a golden parachute? Also, you likely get rehired to do it all again? Perhaps by the company you destroyed?

            Hell, if you don’t pay your measly bills on time you can’t borrow again, but run a big company into the ground, screw all the vendors and investors and employees out of billions and you get a retention bonus? WTF?

            My point is gross negligence should be treated like gross negligence, and for top management corporate bankruptcyshould likely be followed by personal bankruptcy and similar public record of the failure.

          • 0 avatar
            Pch101

            I figured that you would miss the point of the analogy. (I was attempting to get you to try to put yourself into the shoes of people who would have their backsides in a sling for something that was a company problem. I should have known better.)

            When corporate risks get transferred to individuals, then individuals won’t take risks. When companies don’t take reasonable risks, then consumers suffer. Promoting a culture of fear ultimately hurts the society that spends more time worrying about punishment than in getting things accomplished.

            Companies should take financial liability for their mistakes, but the corporation is separate from the people who work for it. Barring willful misconduct, fraud, etc., the individuals need to be kept out of it. The whole point of having corporations is to limit liability so that the individuals who work for or invest in them can do so without destroying their lives if something goes wrong.

          • 0 avatar
            Landcrusher

            The problem isn’t corporate responsibility, it’s lack of individual responsibility.

            Most people here would, at the very least, lose their job for total failure. Those at the top do not. How do people think that fairness is taxing away the high compensation of those who earn it when the real problem is that many are not earning it? You can’t justify a ten million a year package if in year two you walk away and the whole thing folds and there is no recourse.

            If no one would take the ten million because they could not bear the responsibility or because they realize they may fail and get nothing then the problem would solve itself.

            Leaders in Japan make a lot less while taking much more responsibility. There is certainly a cultural difference, but let’s not call something impossible that’s clearly not.

            Personally, I’d be happy to see a lot of these empty suits chicken out and retire to a golf course. Get things going around here again.

          • 0 avatar
            Pch101

            As I noted, you’re more interested in punishing people because it feels good than in getting good results.

            If we had things your way, then we’d have a less productive economy because everyone who does anything that is remotely related to life safety would be afraid to do anything.

            The Obama era of NHTSA has a much better idea — impose very large fines so that these companies get bad publicity when they screw up and make a point of shaming these businesses so that management gets punished by Wall Street. (The primary purpose of the fines should be to generate headlines, not tax revenue.)

          • 0 avatar
            Landcrusher

            I can’t say this any more plainly. This is not about product safety.

            This is about executives running companies, failing, and not being punished. It’s not about fining the CEO or having him be personally liable for any more than he is now (which, if you can show gross negligence, he already may be).

            This is about folks bringing home ten million plus without real results. It’s not punishment not to pay someone who isn’t earning the money. I realize executive compensation is complex, but when you bankrupt a perfectly good company you ought not get a big check.

            So, no, you have said nothing to contradict my position that applies. Please try to understand rather than just contradict. At least contradict the point I am making.

            Now that I have gotten this far, I realize the problem may be the whole liberal brain block on personal responsibility. It’s an amazing thing, I can be held responsible for things I have no control over, but not for the things I do. Let me tell you about a better world in which agreeing with the President on Gay Marriage is less likely to get you fired than losing a quarter of your market share, increasing costs on crazy management schemes, or even firing your best performers and replacing them with idiots. At least a place where if the government has to bail you out you get to go home with a cardboard box and your lawyer tells you not to expect another dime.

          • 0 avatar
            Pch101

            One of the fundamental purposes of a corporation is to allow a business to operate while those who work for or invest in it can avoid personal responsibility.

            If you can’t grasp this very basic concept, then it is merely yet another example of one of your fundamental logical disconnects (which seems to hinder your understanding of just about every other topic that comes up on this website.)

            You may as well argue that corporations should not exist at all. Oddly enough, that makes you sound a lot like an Occupy Wall Street protester, which is frankly kind of amusing.

          • 0 avatar
            Landcrusher

            Once again, besides the point. (By the way, that’s not me saying you are lying, it’s saying your putting out points that are sort of off topic).

            This is not about protecting members of the corporation from outsiders or not. It’s about corporations enforcing the obligations of those contracted to it. It’s not about punishment, it’s about modifying behavior.

            The point of a corporation is not, nor has it ever been, to shield officers and employees from consequences of damaging the corporation by failing in their duties and obligations. Try going back and reading what I have said.

            As far as the idiots of occupy, I would prefer the government NOT own everything, but if they are going to own it then why pay high salaries for what’s bound to be losing performance?

          • 0 avatar
            Pch101

            As noted, you don’t understand one of the basic purposes of a corporation.

            If people wanted to do business without regard for liability protection, then they would form general partnerships and not bother with forming a company. There is a reason why smart and sophisticated people don’t do that.

        • 0 avatar
          ttacgreg

          ” I realize the problem may be the whole liberal brain block on personal responsibility.”

          By and large I think you present some convincing and cogent arguments. However including a broad brushed stereotyping statement like that discredits you and the foundation of your points made.

          Throw around stereotypes and labels is often an indication that one has run out of logical points to make.

          • 0 avatar
            Landcrusher

            In this case it’s a sign of frustration. I know liberals with an abundance of personal responsibility, and did not mean to imply liberals don’t have any. Apologies to anyone offended.

            The dogma does have a weak spot in the area though, and all too many adherents are either blind to it, in denial, or shielding themselves within it. As someone who leans libertarian, I have a problem with the fallout (which is a weakness of my own beliefs, I know).

  • avatar
    Mullholland

    I never thought I’d say this but I miss “Old GM.”

  • avatar
    Fred

    What does that Delphi Audi have to do with this story? Other than Delphi use to be a part of GM.

    • 0 avatar
      redmondjp

      That has EVERYTHING to do with it. We are talking about 30+ year GM employees (working at the various GM parts divisions that are now a part of Delphi) who retired and fully expected their pension and healthcare benefits.

      And were completely screwed out of them. Imagine what you would feel like if this had happened to you, with absolutely no recourse at this point. Working for decades for one of the largest corporations in the world, and then getting nothing in the end.

      There is no justice in this country any longer. Screw the other guy is our new national mantra.

      I worked for Delco Electronics (now part of Delphi) back in the 1980s. If I had stayed there for my entire career, I would have lost everything too.

      • 0 avatar
        Landcrusher

        How do people believe these schemes are somehow guaranteed? None of this is new. Companies have been doing this forever, and the government has been an accomplice while the unions have been part of the conspiracy.

        The hardest work is making choices who to do business with at all, not lifting heavy things. If you were lazy enough to vote for Union schemers and free lunch politicians and you now think it’s not your fault, you aren’t getting pity from me. Take your Social Security and Medicare and be quiet. I’m not grabbing my gun and coming over to your house to protect you from yourself.

        • 0 avatar
          Xeranar

          I kind of want to live in whatever fantasy world you think this makes sense in LC. Actually I take that back, I only want to see it from a million miles away by telescope since it is clearly a place filled with bile, evil, and self-loathing. Seriously, you’re trying to argue that pension obligations (i.e. contractual agreements, those things you LOVE) aren’t guaranteed when the contracts were….here me out now…GUARANTEED by the corporation at the time. The issue was that the 450 Million was originally to have been paid sometime prior and that the Court agreed to carry it forward then not after the bankruptcy which is understandable but technically it should have been considered a ‘priority creditor’ which means they should have gotten a share of New GM stock.

          It’s more an economic issue than anything personal to GM, Unions, or otherwise. Don’t get me wrong, Goldman Sachs manages a great deal of Union money and uses that as their social cover for their behavior but it doesn’t excuse direct workers from receiving their dues first.

          • 0 avatar
            Landcrusher

            Wow. Why do you think it’s hate? The fantasy land is clearly your home rather than mine. In the real world guarantees are only as safe as the guarantor and history has shown that in every decade, the guarantors have found ways to get out of their promises including the U.S. and other governments.
            How many people have to lose their retirements before you guys show some compassion and tell people to stop turning over their futures to a bunch of two faced snake oil salesmen?

            Senior managers who knew they would be retired and maybe dead conspire with similar union officials to get a burger today for payment decades later while the politicians, similarly aged and compensated put a patina of regulation on top with another layer of free lunch “guarantees”.

            Regular people think guarantee means something it never has. It’s just a contract, not a certainty.

      • 0 avatar
        redav

        Are they really screwed out of their retirement benefits, or is the UAW going to have to bit the bullet and pay out of their pocket (instead of using the expected one-time payment from old GM they never got)?

        I would expect that those individuals who were promised health care now have claim on the UAW for fulfillment of that promise.

        • 0 avatar
          RideHeight

          Your question is the key one. Will the union dodge this bullet just as adroitly as did management?

        • 0 avatar
          Pch101

          The old GM made a deal with its workers to fund pensions and benefits. The company failed to comply with the agreement.

          As a result, the union and the old company negotiated a compromise in the form of a VEBA to fund the healthcare benefits. The company then subsequently filed bankruptcy, which allowed the company to avoid complying with the second deal.

          The union got shafted not once, but twice. GM complained a lot about all of its legacy costs and blamed its problems on those costs, even though it never paid for all of them.

  • avatar
    manu06

    You can bet upper management of the old GM are still receiving healthcare and other
    benefits from the new GM even though they bear more responsibility for GM’s bankruptcy .
    The higher up the ladder you go the more responsibility you have and therefore the better
    compensated you are. The punishment for failure should equal the reward for success .

  • avatar
    Dr. Claw

    I clicked on this article, scrolled down and braced myself for what I usually see when “GM” and “UAW” are in the headline.

    I was pleasantly surprised. Yet another reason why TTAC >>>>>>>>>>>>>

    • 0 avatar
      Pch101

      As noted, most of the usual suspects are avoiding this post because they are happy with the outcome. If the UAW is on the losing side, then everything’s great.

    • 0 avatar
      Xeranar

      Most of the usual suspects as Pch pointed out are pleased by the outcome. You can still see some of them like LC spouting his lunatic views but the usual crowd is pleased a multi-billion dollar corporation crushed the 30K workers who got them there. It’s odd how much pride they take in supporting the billionaires and yet aren’t part of them…

      • 0 avatar
        Landcrusher

        That’s just a dispensable pile of crap, Xeranar.

        No one is happy those workers are getting screwed.

        You just need to redirect attention from the facts that your big government and unions once again failed to keep their promises and chose to protect the big company so they can continue to suck it dry like the parasites they are. Don’t know what the take of any billionaires is here, but the unions and government have been skimming a big percentage off the top of those workers’ incomes for decades precisely saying they would prevent this sort of thing.

        • 0 avatar
          Xeranar

          You can’t even build a coherent argument. This is why I don’t reply to you anymore. You’re a lunatic fringe who won’t actually cite a single argument but keep shouting ‘big gubmint!’ as if it actually means something. We pay less in taxes than every other western state and have a lower standard of living across the board. The proof is in the pudding, if we cut away the ‘red states’ who get more federal dollars than they put in and just looked at the ‘blue states’ we would see that ‘big gubmint’ isn’t the problem so much as lax labor laws and a refusal to enforce working standards that increase incomes.

          Flat out: Wage floors increase income. Unions increase income.
          If you ever read an economics book that wasn’t written for business majors (i.e. the kind that lie for the sake of capitalism) you would know these things.

          I just refuse to get my blood pressure up because I know at the end of the day you’ve already lost. Hillary 2016….two more supreme court justices that favor pro-union outcomes. Oh to watch TTAC burn with hatred as each time the UAW gets to the SCOTUS and wins will be truly a reward.

          • 0 avatar
            Landcrusher

            What is it you don’t understand?

            The union members paid two parties through dues and taxes to ensure they would get what they bargained for. The union and the government both failed them. They are worse off than if they had simply been skeptical and taken responsibility to get a simple agreement for cash for the labor and lower taxes/less government. I can make it simpler for you if necessary.

            What do you mean by cite an argument? I make arguments, and whenever I have ever bothered to cite anything it’s ignored by you guys or otherwise attacked as bitterly as you attack me.

            I’ve never seen a study that came close to proving your statement about wage floors. They mostly have the same flaw. At any rate, what does it matter to the guy who is unemployed because of the floor? It really doesn’t. What gives anyone the right to push him out of the market?

            The whole secession thing is a legal swamp, but I would bet on most of the red states coming out ahead if there is a split. The better solution to giver/beggar states is simple – less federal government.

            For the umpteenth time, your unsupported declarations about my education, abilities, etc. are both rude and wrong. I did just fine in both undergrad and graduate economics classes.

            I also hope I’m right and your wrong, but I’m hoping you are better off for my being right. Secretary Clinton would be an improvement over the current office holder, but I think we can do better.

  • avatar

    It’s worth remembering that the autoworkers were first offered healthcare by GM management in 1950. Walter Reuther, then leading the UAW prophesized that it would eventually bankrupt the companies. GM, along with other manufacturers, was fighting the idea of a national health plan and averted it via promises to pay money which wasn’t accounted for until retirement. Pretty piss-poor management decision.

  • avatar
    Dave M.

    I can’t stand the UAW, but I disagree with this ruling, especially after UAW compromised in the attempt to keep the old GM going.

    I doubt they’ll warm up to compromising any time soon in the future, however failing to do so may cost them jobs.

    I’ve always had a moral dilimna with corporate bankruptcy. The top dogs rarely if ever are affected like the rest of the company, and often they can just go set up another corporation.

    How many times has Donald Trump screwed over his debtors?

    • 0 avatar
      Big Al from Oz

      @Dave M.
      The UAW should not be placed in a position where it is necessary for them to compromise. They don’t run the business.

      Why should the union be involved in the management of a business?

      The union always negates to accept any responsibility for any adverse occurrences within any business.

      If they made themselves more accountable for their actions, I would support your view.

      • 0 avatar
        Landcrusher

        This is part of the fundamental issue with unions. First, when you say “the union” are you referring to the membership or the leadership? It makes a big difference. It was leadership’s job to avoid this sort of thing. They play hardball opposition at all times and use it at as a selling point. They failed the workers.

        Then, you have the function of the Union to act as a fifth column in the company which absolutely gets overly involved in management. The amount of decisions in which these unions have a say is legion. That’s why I always point out that the UAW gets the management they deserve. The decision makers at GM today were drawn from the pool of management talent available after much of the most innovative and forward thinking members of the pool had already decided a career at GM was not for them because of – the UAW.

        • 0 avatar
          Big Al from Oz

          I do think the best way is for the workers to be paid a retainer. Make it a livable income of say $15ph.

          Then paid a share of the profits to top up their income.

          A workers share in percentage is based on the responsibility they assume.

          So, the guy who just wants to clean toilet will get his fair share in comparison to a team leader.

          If their is an economic downturn or the company does poorly then all are to blame equally.

  • avatar
    manu06

    Total nonsense. The UAW compromised on several issues with GM. GM on the other hand
    never had any intentions of meeting their end of the bargin. Remind me again of how much
    money Rick Wagoner walked away with ? 10 million and 74k per year for life plus other bennies.
    Bet he is still getting paid.

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