Cases & Deals

Continental Tire obtains preliminary approval in settlement in ERISA class action

Client(s) Continental Tire North America, Inc.

Jones Day represented Continental Tire North America in a class action under ERISA and Sec. 301 of the Labor-Management Relations Act filed by retirees and the United Steelworkers of America challenging Continental's modification of its retiree medical plan for retirees at its unionized plants. Effective January 1, 2007, CTNA implemented a significant reduction in retiree medical benefits for its union retirees - reducing the annual cap on its contributions to $3,000 per household from $18,000 per pre-Medicare eligible and $4,200 for those eligible for Medicare. The putative class encompasses approximately 2,500 households. Jones Day opposed a preliminary injunction motion and class certification motion. Following court-sponsored settlement negotiations, a settlement was reached that transfers the complete responsibility for providing retiree health care benefits from CTNA to a independent trust - a Voluntary Employees' Beneficiary Association ("VEBA") - sponsored by the USWA. Under the settlement, CTNA will pay $158 million to the VEBA, which represents approximately 74% of its estimated retiree medical liability as recorded on its accounting statements. The Court has granted preliminary approval of the settlement, and notice has been sent to the class. If final approval is granted by the Court, the responsibility for providing retiree medical benefits will be transferred to the VEBA effective January 1, 2009.

Pringle, et al. v. Continental Tire North America