FOR IMMEDIATE RELEASE
Contact: Subodh Chandra
216.578.1700 (o); 216.965.6463 (m); or Subodh.Chandra AT ChandraLaw.com
Retirees Sue Akron Beacon Journal for "Bait-and-Switch" Scheme
AKRON, OHIO - Today, retirees from the Akron Beacon Journal filed a federal class-action lawsuit against their former employer and Canadian media mogul David Holmes Black for engaging in a "bait and switch" that denied them contractually guaranteed, lifetime, low-cost health care in exchange for their early retirement.
These retirees, who are members of the Communication Workers of America (CWA) Local 14514, which was formerly known as the Akron Typographical Union, International Typographical Union Number 182, had been guaranteed lifetime employment with the Akron Beacon Journal as part of their union contract. The Journal persuaded these retirees to take early retirement and give up their right to lifetime employment in exchange for low-cost prescription-drug and other healthcare benefits for them and their spouses for the rest of their lives.
The suit alleges that in 2006 the Journal breached its contract with the retirees, who took early retirement by replacing their low-cost prescription-drug coverage with high-cost plans, causing a significant financial burden and leading, for some, to declining health. Black played a key role in interfering with the Journal's contractual obligations after he assumed control of the company.
The retirees released the attached Fact Sheet that explains the details of their case against the Journal, including the contractual obligations that were made and violated and the harm that has been done to the health of the retirees.
Retiree attorney Subodh Chandra said, "The Akron Beacon Journal convinced these people to give up lifetime job security, a permanent salary, and enhanced retirement benefits in return for diminished retirement incomes and guaranteed low-cost health care. But instead of keeping faith with their retirees, the Journal began cutting away the health-care safety net that they had been contractually guaranteed."
CWA has joined in the suit. Seth Rosen, CWA District 4 Vice President stated, "Employers must be made to stand behind the commitments they make to their employees and retirees, who after all made it possible for the company to grow and prosper. To callously cast them aside is both legally and morally reprehensible. CWA stands behind these retired employees and their spouses as they seek simple justice."
The suit, seeking an injunction and damages, is captioned White, et al. v. Akron Beacon Publishing Co., et al., and was filed in the United States District Court, Northern District of Ohio, Eastern Division.
Akron Beacon Journal Retirees v. the Akron Beacon Journal
People expect newspapers to tell the truth. Certainly, employees of the Akron Beacon Journal didn't expect their own newspaper to lie to them when it promised them low-cost, lifetime health-care benefits in return for giving up their guaranteed right to lifetime employment. But the Journal did lie to its employees, reneging on its health-care guarantees after its employees gave up their right to lifetime employment. These employees-now retirees-have suffered irreparable harm from the Journal's bait and switch and are now suing in federal court to force the Journal to keep its word.
For almost as long as anyone can remember, the Journal has tried to keep valuable employees on board by promising them lifetime employment, a practice still common in the publishing industry. Many members of the Akron Typographical Union, Local 182, received such a guarantee decades ago, either when they first signed up to work for the Journal or shortly thereafter.
By the 1960s, however, the Journal began offering a "Voluntary Retirement Incentive Program" to more senior Union members. If these employees agreed to retire by a certain date and give up their right to permanent employment, the Journal promised that they would continue to receive some of the same, attractive health-care benefits enjoyed by active employees. Having been told by the Journal that this offer was good only for a short period of time, and not wanting to risk being stuck with a less attractive benefits package later on, many senior Union members took the Journal at its word and agreed to retire early.
Voluntary-Retirement-Incentive-Program Benefits that the Journal offered to different retirees included:
- A lifetime prescription-drug card entitling its bearer (and his or her spouse) to purchase all needed prescriptions at only nominal cost, e.g., for a $2.00, $3.00, or $5.00 co-payment.
- Lifetime hospitalization and surgical coverage for retirees and their spouses (which becomes "secondary" upon eligibility for Medicare) on the terms in effect as of the date of their retirement.
In November 2006, the Journal (by then under the direction of Canadian media mogul David Holmes Black) sent a letter to those who had retired under its Program, outlining certain "changes" to these retirees' health-care benefits. Among other changes, the letter explained, the prescription-drug card would be replaced by another card under which far greater ($40.00 in the case of non-preferred drugs) co-payments would be required. The letter also implied that it would do no good for retirees to complain about the changes, since the retiree benefits had not "vested"-meaning that the Journal had every right, under the applicable collective-bargaining agreement with the Union, to make whatever changes it wished.
The Journal's publisher and Human Resources Director offered similar justifications at informational meetings, or whenever retirees telephoned or stopped in to complain. Mr. (David Holmes) Black insisted on these changes, retirees were told, "because he could."
Since February 2007, class members have been forced to pay considerably more for prescription medications than they had been paying before the Journal's unilateral cancellation of their guaranteed, bargained-for benefit. Many have also been harmed irreparably.
How Retirees Were Harmed
Example 1:The experience of class member John Costello is typical. Mr. Costello suffers from a severe and degenerative arthritic condition. Before the Journal changed his benefits structure, Mr. Costello was able to control his arthritis pain with an injection costing $600 weekly, but which, with the Journal's prescription-drug card, he received for a co-payment of only $5.00.
As Mr. Costello recounts, "When the Akron Beacon Journal unilaterally cancelled my prescription-drug benefit, I was unable to afford these arthritis injections and stopped taking them. Since then I have experienced daily arthritis pain."
Example 2:David White has suffered in a variety of ways. He was among those to whom the Journal promised supplemental health-care coverage under which he would incur little or no out-of-pocket expense for most medical services. He estimates that, in 2008 alone, he and his wife, Regina, were forced to pay some $6,000 in medical expenses that, under the program he was promised, would have been either no-cost or very low-cost. He also estimates that they paid about $1,200 in 2008 for prescription drugs that would once have cost about $200.
His most significant injuries, however, have been non-monetary. His long-time general practitioner, who treated his high-blood pressure and elevated cholesterol, now refuses to see him because his replacement insurance, through Aetna, is unacceptable. Indeed he has had an exceedingly difficult time finding any physicians in the Venice, Florida vicinity willing to accept this insurance.
Example 3:In addition to paying, in 2007 and 2008, some $2,000 more for medications than he should have, Hugh Downing suffered the indignity of being told by Aetna that he is "too old" to receive Darvocet to control the pain he experienced following facial surgery for skin cancer. Mr. Downing also suffers from coronary-artery disease and has had a heart attack, angioplasty, and numerous stents and heart catheterizations. Although for these serious conditions his doctors prescribe only name-brand medications, Aetna pays (when it pays at all) at most for generic forms. Mr. Downing is forced to pay out-of-pocket for needed name-brand prescriptions, such as Plavix, which cost him $80 for each refill.
He has also had to contend with other burdensome and expensive Aetna requirements, such as the necessity of having prescriptions pre-certified, of having to try certain "prerequisite" drugs first, and of having to absorb different co-pays depending on a drug's "tier." He believes his health has suffered as a result of his inability to afford or otherwise gain access to the medicines prescribed by his doctors.
Example 4:Ruth West, similarly, has difficulty affording the name-brand medications her doctors have prescribed for her diabetes, for a thyroid condition, for high-blood pressure, and for acid-reflux disease. Against her doctors' advice, Ms. West often opts for generic drugs (which themselves are more expensive without her promised drug card) or simply "does without." Due to all the added expense, some of her conditions are going untreated and have become worse.
Affected retirees gave up a valuable right-the right to lifetime employment-in reliance on the Journal's promise of nominal, fixed prescription-drug co-payments, and have experienced increased cost and, in many cases, declining health as a direct result of the Journal's actions. They relinquished job security, a permanent salary, and enhanced-retirement benefits, and instead accepted diminished retirement incomes-only to be left holding the bag for the increased price, and decreased accessibility, of their prescription medications. They believe the Journal breached an enforceable contract and also violated certain federal laws, and they are determined to obtain justice.