By Mark Wineka
mwineka@salisburypost.com
The Wallace and Graham law firm of Salisbury played an instrumental role in negotiating a $178.6 million class action settlement involving retirees of AK Steel Corp. of Cincinnati.
Final court approval of the settlement came after a hearing Monday in U.S. District Court for the Southern District of Ohio.
The settlement resolves claims brought by hourly and salaried retirees regarding their retirement medical plan. The retirees had worked for AK Steelís Butler Works plant, located in western Pennsylvania about a hourís drive north of Pittsburgh.
The settlement provides hourly and salaried class members with assistance toward their future medical needs by setting up a $91 million trust fund. Also, the retirees will receive continued benefits worth an additional $87.6 million.
Class co-counsel for the retirees were Gregory F. Coleman of Greg Coleman Law, Knoxville, Tenn., and Mona Lisa Wallace and John Hughes of Wallace and Graham of Salisbury.
The case was known as Merkner v. AK Steel Corp. The class representatives in the lawsuit were Ed Merkner, Tom Rodgers, Pete Connor, Jack Kriess and Ed Musko.
In a press release, Coleman said, ěIn todayís economic climate and in view of the very high cost of medical care, preserving retiree medical benefits to the maximum extent possible is a critical priority for our clients.
ěIt is one of the largest recent retiree benefit settlements of which we are aware.î
Wallace praised the hard work of her clients.
ěThe class representatives were involved in this case from the beginning,î she said in a release. ěThey worked with selfless dedication to help us obtain the best possible result for their friends and coworkers. Without their involvement this case would not have successfully resolved.î
Wallace added, ěThese steelworkers worked long and hard for many years, and now as they age, many require medical care. We look forward to assisting our clients over the coming months in implementing this very significant class action settlement.î
According to court documents, attorneysí fees of $9.1 million will be paid to the class counsel of Wallace and Graham and Greg Coleman Law.
The plaintiffs argued in the class action that AK Steel was not entitled to modify or terminate health benefits to retirees or their eligible dependents.
The company countered that the benefits were neither vested nor guaranteed.
In 2006, AK Steel negotiated with the United Auto Workers at the Butler Works. The collective bargaining agreement said that beginning Jan. 1, 2007, benefits for hourly retirees from the Butler Works would be reduced in three steps.
The first two sets of reductions ó the elimination of the Medicare Part B reimbursement and elimination of dental and vision insurance ó occurred before the class action was filed.
After the legal action was taken, the court issued a preliminary injunction preventing AK Steele from changing the remaining health benefits, pending the end of the lawsuit.
Here are terms of the agreement, according to court filings:
AK Steele will continue to pay health benefits to hourly class retirees, whether they are medicare-eligible or not, at current levels until Dec. 31, 2014.
The approximate value of this commitment is $84 million.
AK Steel will continue to pay health benefits at current levels to salaried class retirees, whether or not they are Medicare-eligible, until Dec. 31, 2014.
The value of this commitment is $3.6 million.
AK Steel will make cash payments totaling $77.4 million to a Voluntary Employeesí Beneficiary Association (VEBA), set up as a trust fund.
The VEBA will assume the responsibility for providing health benefits to hourly class retirees and their dependents beginning Jan. 1, 2015. The company is relieved of any obligation to pay health benefits after that date.
Similarly, AK Steele will make cash payments of $4.5 million to the VEBA for salary class retirees.
The VEBA will be governed by a board of trustees charged with acting in the best interest of the retirees.
AK Steel will pay the attorney fees for the class co-counsel of $9.1 million.
Contact Mark Wineka at 704-797-4263.