GM, Ford retirees lose benefits appeal

GM, Ford retirees lose benefits appeal

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A federal appeals court on Tuesday upheld proposed settlements reached between General Motors Corp. and Ford Motor Co. and the United Auto Workers union over reduced health care benefits for retirees.

A small percentage of retirees from each of the two companies had objected to the proposed settlements, approved by U.S. Detroit Court in Detroit. Those retires appealed to the U.S. 6th Circuit Court of Appeals.

On Tuesday, the appeals court approved the proposed settlements, which require GM and Ford retirees to pay more for their health care.

"GM, Ford, the UAW and the (retirees) presented ample evidence to aid the district courts in evaluating the propriety of these settlements," the appeals court said.

GM, Ford and the UAW reached the settlements in 2005, and the U.S. District Court approved them the following year. The settlements cover

472,000 retirees and dependents at GM and 172,000 at Ford.

The objecting retirees, about 2,000 of them, said the settlements violate the automakers' promises that their health care benefits would continue after retirement. They claimed the UAW had too much influence in selecting the attorney who represented the retirees and that retirees were given inadequate information on how to challenge the settlements.

In a unanimous decision, the Cincinnati-based federal appeals court agreed with the lower court that the settlements were "fair, reasonable and adequate" and that retirees were properly represented and given adequate information.

"If we decided for the sake of argument that the retirees were likely to win the debate, any such victory would run the risk of being a Pyrrhic one because the cost of insisting on irreversible health care benefits might well be -- and indeed almost certainly would be -- the continuing downward spiral of the companies' financial position," the appeals court said.

GM has said the agreement would save it $1 billion after taxes each year, while Ford said it would save it $200 million annually.

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Jim Higgins
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