A federal judge has granted an injunction and ordered arbitration between Constellium and the steelworkers union over the health benefits of retired employees.
According to the order issued by Chief Judge Thomas Johnston, the case arises out of a unilateral decision by Constellium to alter the benefits available to its Medicare-eligible retirees.
The union and Constellium have been parties to several collective bargaining agreements from 1999 to the present. The most recent agreement, and the one subject to the order, was entered into Sept. 19, 2017, and remains in effect until Sept. 19, 2022. The agreement establishes a grievance procedure for disputes between the two parties.
On Aug. 24, 2018, Constellium sent a letter to Medicare-eligible retirees stating that starting Jan. 1, the company was terminating the employer-provided medical and drug coverage for Medicare-eligible retirees. Instead, these retirees could purchase supplemental medicare insurance from Aon Retiree Health Exchange. The letter also stated that Constellium was establishing Health Insurance Reimbursement Accounts into which Constellium would deposit $4,500 per year for each retiree and his or her spouse. These retirees are required to sign up for coverage with Aon by Dec. 7 or forfeit the ability to utilize Aon or receive any deposit by Constellium into an HRA in the future.
On Sept. 7, the union filed a grievance pursuant to the grievance process outlined in the collective bargaining agreement. The grievance stated that Constellium made a unilateral change to the agreement and requested a cease and desist.
On Oct. 2, Constellium denied the grievance stating the change did not violate the collective bargaining agreement and that the change was allowed under a previous court decision.
On Oct. 4, the union demanded arbitration but none has occurred to date.
On Nov. 2, Constellium filed an action for declaratory judgement requesting from the court ability to make unilateral changes for the retirees. The union then filed its present grievance on Nov. 7 requesting a preliminary injunction.
A preliminary injunction hearing was held Nov. 26.
Constellium requested the court issue a $1 million bond, arguing the amount was proper because the cost the company will incur if the changes are stopped or delayed could “easily run into seven figures.”
In the injunction hearing, the union agreed to a bond but believes the amount Constellium requested was excessive. The union believed a $10,000 bond was more appropriate, and the court agreed.