Retirement Heist: how companies plunder and profit from the nest eggs of American workers

Their union couldn’t help them because, when it negotiated a contract in 1994, the United Rubber Workers had agreed not to represent retirees in any future lawsuit in exchange for delaying an increase in benefits. Some unions have less noble reasons for not backing retirees. When negotiating compensation for current workers, some are tempted to toss the retirees, who don’t vote, overboard. Without a union to back them in court, the retirees face almost impossible odds. There are few attorneys who handle ERISA cases for plaintiffs. One reason is that an individual employee or retiree can’t afford the fees, and class actions can be hard to bring for a variety of reasons. Courts have interpreted ERISA as disallowing any punitive or pain-and-suffering damages, so there are no potential damages of this sort that attorneys can use to finance cases. All a plaintiff can win is restoration of the disputed benefit, if he’s still alive. The plaintiff’s attorney takes a risk, too: Thanks to the way in which courts have interpreted ERISA’s attorneys’ fee provision, it’s up to a judge to decide whether the plaintiff’s lawyer will be reimbursed for any of his time and expense.

Still, the retirees who had worked at the Jeannette plant passed a hat and chipped in: $100 per couple. Mabel Kramer, a widow, chipped in $50. She’d begun working at the company in 1944, making gas masks for World War II soldiers. She was no longer receiving her pension of $179 a month, based on her husband’s thirty-four years with the company, because GenCorp deducted every cent to use for her health coverage, for which it was charging her $284 a month. She had to pay the company the remaining $105 from her $810 Social Security check.

The $12,000 the retirees collected would cover only a fraction of the cost of mounting a suit, but the retirees found a lawyer who was willing to take the case anyway: William Payne, a Pittsburgh attorney who had represented retirees over the years in more than sixty cases. One of the first cases he worked on, soon after getting out of law school in the late 1970s, was the now infamous Continental Can case, in which company managers had used a secret program with the code name “BELL,” which is a reverse acronym for “Let’s Limit Employee Benefits.” The can company used the system to identify older workers who were about to lock in bigger pensions and targeted those plants for closing. The case was a rare win for workers. It has been mostly downhill since. Payne has spent the rest of his career watching ERISA protections get eroded in the courts.

Payne and his law partner, John Stember, met the retirees at Dick’s Diner, a popular fuel stop just off the highway between Pittsburgh and Jeannette, and over coffee and cheesesteaks he cautioned them that the case could take a long time. The retirees were undaunted. Three, John Van Dyke, Stanley Wotus, and Ed Peksa, all veterans who had served in the Pacific during or after World War II, volunteered to be plaintiffs. Nor were Payne and Stember daunted by the cardboard boxes the retirees hauled with them, filled with decades-old documents they’d dredged out of basements, closets, and garages. They filed suit in October, and the first meeting with the judge was scheduled the following May. In the seventeen months since GenCorp had started charging them for health coverage, the retirees’ costs had doubled.

ROAD TRIP

The first court conference was in Akron, Ohio, 110 miles away. Van Dyke, who had the best eyesight, drove the other guys in the predawn darkness to rendezvous with Payne, who drove them the rest of the way in the minivan he usually used to take his sons to hockey practice. They had to pull over numerous times. Van Dyke had had part of his stomach removed following a bout of cancer in the 1990s and needed small, frequent meals. Others had prostate problems, and Wotus was taking several medications for blood pressure and heart problems. Peksa, who misjudged the insulin shots he was taking for his diabetes, at one point passed out in the backseat, prompting a quick pit stop at a gas station mini-mart for orange juice.

Despite their various pit stops, the retirees made it to the 9 A.M. court session on time. There, the eager retirees cited labor contracts promising lifetime coverage. But GenCorp, in court documents, maintained that “lifetime” didn’t mean “at no cost.” This kind of semantic game had become common. Another popular one was to say that “lifetime” referred not to the life of the retiree but to the life of the contract.

GenCorp argued that the retirees had knowingly released the company from its obligation to pay, and pointed to the enrollment forms retirees had filled out years earlier, saying coverage was “replaced.” In short, the retirees, not GenCorp, were trying to renege on a written agreement, company lawyers maintained.