The Sixth Circuit held that GM was not obligated to contribute $450 million to fund retiree health benefits for UAW members because the most recent contract between the UAW and GM extinguished GM’s former obligation to contribute. In response to earlier litigation between the UAW against GM to recover retiree health benefits and a bankruptcy reorganization, GM established a trust to fund UAW retiree health benefits and agreed to make a one-time $450 million payment to the trust. Thereafter, GM filed for Chapter 11 bankruptcy and sold all of its assets and liabilities to the “New GM.” Days after the sale was approved, New GM and the UAW entered into a new settlement which: (1) did not mention the $450 million payment, and (2) established a new benefits agreement. When the UAW sought the $450 million payment, New GM refused to pay, arguing in part that the agreement did not require such a contribution.
The district court granted summary judgment in favor of New GM, finding that the $450 million contribution obligation did not survive GM’s reorganization. On appeal, the Sixth Circuit disagreed, finding that the obligation did survive because the purchase agreement associated therewith passed on all liabilities arising under the UAW Collective Bargaining Agreement, which included the obligation to make the $450 million contribution. However, the Court nonetheless determined that New GM was not obligated to pay because a subsequent settlement agreement between GM and the UAW was properly construed as having extinguished GM’s former obligation. The Court pointed out that the settlement agreement did not mention the obligation and made clear that it superseded, extinguished, and/or released GM from all former obligations concerning retiree health benefits arising from the former UAW/GM litigation and settlement agreements and all GM bankruptcy proceedings. Accordingly, the Court affirmed the district court’s granting of summary judgment and New GM was not bound to make the contribution. The case is Int’l Union, United Auto., Aerospace & Agr. Implement Workers of Am. v. Gen. Motors, LLC, 2015 WL 223950 (6th Cir. May 14, 2015).