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Judge refuses to dismiss 3 charges in Delphi retirees' pension suit

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Judge refuses to dismiss 3 charges in Delphi retirees' pension suit

Robert Snell / The Detroit News

Detroit -- A federal judge today refused to dismiss three charges in a lawsuit filed by thousands of salaried Delphi retirees seeking to restore pension benefits.

U.S. District Judge Arthur J. Tarnow denied an attempt to dismiss the retirees' claim that their pension plan was terminated illegally in an agreement made between Delphi and the PBGC, not by court decision. He also would not dismiss a claim the retirees' constitutional rights were violated when the pension plan was terminated.

Delphi's 20,000 salaried retirees filed a class-action lawsuit last year seeking to block the company's decision to abandon its pension plans and hand them to the government's insurer, the Pension Benefit Guaranty Corp.

About 100 retirees, spouses and others nearly filled an overflow room set up on the first floor of U.S. District Court in downtown Detroit to watch the hearing on two projection screens.

That decision to terminate the pension plan, which also applied to hourly pension plans, will cost some younger retirees up to 70 percent of their pensions and saddles the pension agency with a $6.7 billion in debt. Many of the affected retirees and their dependents are in Michigan.

Retirees also sued the Treasury Department and members of President Barack Obama's auto task force. The Treasury, and task force members have asked Tarnow to dismiss the lawsuit or, in the alternative, for summary judgment.

Delphi -- after abandoning its pension plans -- ultimately emerged from bankruptcy in October when most of its assets were sold to its lenders; GM acquired its steering business.

The retirees claimed General Motors Co. denied them equal protection, freedom of association and freedom of speech by agreeing to make supplemental payments to certain Delphi retirees represented by the United Auto Workers and two other unions, but not others.

The lower benefits began in February; some retirees are losing up to 70 percent of their benefits.

The PBGC sought to dismiss several counts, including the retirees' claim the pension plan was terminated illegally in an agreement made between Delphi and the PBGC, not by court decision.

PBGC lawyer John Menke cited laws providing alternatives to having the decision made in court.

"I know the PBGC has been doing it this way for years, but just because they've been doing it wrong doesn't mean they should be able to continue to do this," retiree lawyer Anthony Shelley said. "The parties that were hurt weren't even at the table."

Menke said the PBGC did not promise benefits to Delphi workers or violate their constitutional rights by reducing pension benefits.

"There was not enough money left behind by Delphi to pay that," Menke said.

Menke emphasized the PBGC cares about retirees impacted by a drop in pension benefits.

"We're deeply concerned about these retirees," Menke told Tarnow, prompting groans from retirees in the overflow room.

From The Detroit News: http://detnews.com/article/20100924/AUTO01/9240445/1148/Judge-refuses-to-dismiss-3-charges-in-Delphi-retirees--pension-suit#ixzz10USx8yyF

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