A few years ago
General Motors got into financial difficulties. Historically,
some characterized GM as "the most important industrial company
in the history of the United States." Several people were quoted in the
2000s as saying GM and others were "too big to fail." GM was seen as
a bell-weather of this country. According to The Cutting Edge, "in
1953, at the peak its dominance, its President Charles Wilson declared before
Congress that what was good for the country was good for GM and vice
versa,"
In the economic
situation in which the U.S. found itself towards the end of the first decade of
this century, there was doubt about whether GM could survive. There are
car enthusiasts who insist that GM as we know it did
not survive, citing the elimination of Pontiac and Saturn from the
corporate structure, and the sale of the Hummer division. GM survived, but
there has been critique of the form in which it emerged.
I learned a long
time ago that bankruptcy is an intriguing process. It seems that trustees and
Bankruptcy Judges are faced with very difficult decisions affecting a company,
and those who invested therein, loaned thereto, and labored therefore. I have
never done any real bankruptcy work, though the subject has intruded on my
professional life a few times. From my distant vantage point, what appears to
be a real frustration endemic to the process is that there
will always be too little, sought by too many, and as a result a parade of
difficult or impossible choices.
In the uncertain
recent financial times, GM and the United Auto Workers (UAW) attempted to
renegotiate a variety of issues affecting the company and those
who labored there. One of the issues was a renegotiation of of
the rights of some retirees under a collective bargaining agreement. This
negotiation was tied to workers' compensation benefits for some retirees.
MichiganLive reported recently on litigation following some specific
renegotiation. GM was sued by the estate of Clifton Arbuckle, a GM retiree. His
workers' compensation benefits were reduced pursuant to that contract. At the
outset, that idea itself may be a curiosity to the workers' compensation
community. When you understand the process, it becomes a quite interesting
story.
In 1980,
Michigan's workers' compensation law allowed some adjustment of benefits based
on receipt of other parallel benefits. Similarly, the Florida law may allow
such a reduction or "offset" when an injured worker receives both
social security disability benefits and workers' compensation indemnity
benefits. It is a somewhat complex calculation in some cases, but the law
allows it. The Michigan law afforded General Motors a statutory right to
reduce benefits, that is apply an "offset" when both workers'
compensation and certain other company benefits.
There are a
variety of rights which we all enjoy as a result of our existence. The
U.S. Constitution and various state constitutions recognize and
memorialize these individual rights. The founders of this country did
not believe that those rights were granted to people by governments, but
that these rights are inherent in our existence. A distinction worth
remembering.
The law can grant
other rights, or benefits. The right to workers' compensation benefits is
granted by various state laws. In many instances, those rights come at some
expense. In other words, to earn entitlement to some statutory rights, we may
give up other statutory rights, or even constitutional rights. Thus the
"grand bargain" explanation for workers' compensation.
American
television spent decades enthralled with
the Miranda decision, and shows incessantly intoned "you
have the right to remain silent, if you give up that right . . . ." Every
police show and lawyer show loved to feature that phrase. We should have learned
from that. Rights can be given up. Having rights is one thing. Enforcing or
protecting rights is something else.
Though GM had
every right to reduce workers compensation benefits based on the concurrent
receipt of disability retirement benefits beginning in 1980, it chose not to do
so. Essentially, it had a right, but it elected not to enforce that right. What
reason? Well, as with so much else in the world, a decision like this is in
all likelihood a compromise.
similarly,
why would GM pay its employees $24.00 per hour when the
Michigan minimum wage is $8.15? It is a business decision. They pay what
the market demands for the skills, employee continuity, and other tangibles
or intangibles in which it sees value. In a similar vein, GM agreed not to
reduce workers' compensation benefits as a result of some employee receiving
other forms of benefits, that is it waived its statutory right. It agree to
that in a collective bargaining agreement with the UAW.
Then the economy
took a turn in the first decade of the new century, and GM began to
experience financial issues. GM thought one way to change the financial
situation would be to exercise the right to offset those other benefits. In
other words, having agreed to not enforce its legal rights for a period, GM
sought to enforce. They raised the issue with the UAW, and an agreement was
reached. As a result, GM decreased the workers' compensation benefits for about
1,800 retirees.
However, by that
time Clifton Arbuckle was no longer an employee of GM, but a retiree
instead. He contended that as he was not an employee, and that therefore the
UAW had no authority to negotiate on his behalf, or to agree that he would
receive less benefits.
The litigation
has been a bit of a roller coaster. The Magistrate (similar to the Florida JCC)
concluded the reduction was improper. The Michigan Workers' Compensation
Appellate Commission disagreed and upheld GM's authority. The Michigan
Appellate Court last month reversed the Commission and held the reduction was improper.
According to Michigan Live the Appellate Court found "no
evidence that plaintiff authorized the UAW to act as his representative to
modify the 1990 agreement under which he retired." GM vows to appeal the
case further. If the Michigan Supreme Court hears the case, they could side
with the Magistrate and appellate court of the Commission.
It is an
interesting reminder of the way that statutes work. Rights and benefits can be
codified, but they can also be waived. When there is an issue of such waiver, a
good question to ask may be whether the person doing the talking has the
authority of the person who will suffer the detriment being offered. There is
no way to know from the published material whether there was any discussion
between GM and UAW regarding the question, "does the UAW currently have
authority to speak for retirees?"
Perhaps they
discussed it fully and reached a thoughtful conclusion. If so, and the courts
later disagreed, that is something that happens in the world of disputes. However,
if it was not discussed, and everyone involved just presumed that authority
existed, it might be a lesson to others for future negotiations. Might this
story lead others to discuss authority when entertaining negotiations?
