A U.S. District Court Judge has ruled there is no obligation for General Motors Company (NYSE:GM) to pay $450 million in medical benefits to retirees. In the ruling Judge Avern Cohn dismissed the claim by the United Auto Workers union that GM was still under contract for the payment.
In a 2007 contract, GM, its former Delphi Corp affiliate, and the UAW agreed to the medical payment. That contract was not incorporated into a subsequent contract in 2009, drafted following GM’s bankruptcy filing. UAW was making the claim that since Delphi emerged from bankruptcy in 2009, “new GM” was still under contract for payment.
Judge Cohn disagreed. ”Whether New GM has a moral obligation regarding the payment is another matter and not relevant,” Cohn wrote in his opinion. ”The UAW’s efforts to turn the absence of language into language is reminiscent of the efforts to capture a ‘will o’ the wisp.’” Reuters provided excerpts from the 36-page decision. The 2009 contract clearly discharges GM from the payment, Cohn explained. Further, the contract was overseen by U.S. Bankruptcy Judge Robert Gerber in New York, who deemed it in the best interest of the retirees.