Court Rejects Caterpillar's Arguments and Orders that Case Go Forward in Retiree Medical...

CHICAGO -- In an order issued today, May 17, 2007, Judge Trauger of the United States District Court for the Middle District of Tennessee rejected the arguments of Caterpillar, Inc. and ordered that a lawsuit against Caterpillar go forward for allegedly denying retirees and their surviving spouses

Caterpillar retirees and surviving spouses of retirees sued the company on March 28, 2006 alleging that Caterpillar has denied them retiree medical benefits that were offered for years under their union contracts. Caterpillar has charged retirees for portions of their medical insurance premiums and also charged retirees and surviving spouses of retirees increased payments on prescription drugs and medical procedures. Plaintiffs seek to represent a class of more than 4,000 retirees and surviving spouses who have been charged.

The plaintiffs sued Caterpillar on behalf of a class of all retirees and surviving spouses of retirees who were represented by the union and who retired on or after January 1, 1992 and before March 16, 1998. The plaintiffs brought their claims under ERISA, the Employee Retirement Income Security Act, 29 U.S.C. SSSS 1132(a)(1)(B) and (a)(3) and the LMRA, the Labor Management Relations Act ("LMRA"), 29 U.S.C SS 185 (a).

Caterpillar filed a motion to dismiss the entire complaint, advancing a variety of arguments against the plaintiffs' claims. In the May 17, 2007 Memorandum Opinion and Order, Judge Trauger rejected each of the defendant's arguments. She held that the plaintiffs have stated a claim under the LMRA and ERISA and are entitled to proceed with their lawsuit, summarizing the plaintiff's claim as follows:

"The plaintiffs claim that the defendant breached its promise to pay lifetime retiree health benefits at no cost when, in 2004, without the retirees' consent, Caterpillar began charging retirees and their surviving spouses for a portion of their medical care." (p. 2)

After reviewing the alleged facts and relevant law, the court stated:

"To summarize, in interpreting the language of the relevant documents, the court finds evidence that Caterpillar intended to confer lifetime vested retiree medical benefits upon the plaintiffs." (p. 27)

The judge ordered that the case will now proceed with the discovery and class certification phases.