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Favorable settlement reached in retiree class actions against Akron Beacon Journal and its foreign owner

Thursday, March 29, 2012

Retirees will receive benefits better than originally promised, as former employer abandons efforts to walk away from healthcare benefits

The retirees in this case approached three law firms, who all turned them down, until they found The Chandra Law Firm, LLC.


Contact: Subodh Chandra

216.578.1700 (o) or Subodh.Chandra AT

AKRON, OHIO - A global settlement was reached this week in two class-action lawsuits filed against the Akron Beacon Journal, its foreign owners, and officers on behalf of newspaper retirees and their spouses. The retirees, members of the Communication Workers of America (CWA) Local 14514 and Northeast Ohio Newspaper Guild, Local 1, had sued their former employer for breach of promises to provide lifetime prescription-drug benefits, with co-pays ranging from $2 to $5, in return for their early retirement. Many of them had also been promised lifetime medical-insurance benefits.

In early 2007, shortly after Canadian media mogul David Black's company acquired the Beacon Journal, the newspaper switched health-insurance plans and drastically reduced these retirees' benefits, forcing them to incur far greater co-pays and deductibles than those the Journal had promised. Some retirees were hit particularly hard by the changes. Guild retiree John Olesky estimates that, through 2009, he paid more than $16,000 in extra co-pays and deductibles. Others, like CWA retirees Hugh Downing and Ruth West, were unable to afford the higher prices and experienced declining health as a result. John Costello, who used to control his chronic arthritis pain with injections that cost him five dollars a week, has had to "do without" ever since his share of the cost jumped to $600. Still other retirees learned to their dismay that the Journal's new plan would not even cover visits to physicians they had been seeing for decades.

The retirees experienced early success in one of the lawsuits, White v. Beacon Journal Publishing Co., et al., filed in September 2009, winning an injunction from U.S. District Judge David Dowd. The judge ordered the Beacon Journal to restore the benefits it had wrongfully changed, and to reimburse class members for the excess medical and prescription-drug expenses they had incurred. Facing the prospect of a similar ruling in the second lawsuit, liability for the retirees' mounting attorneys' fees, and personal liability for Mr. Black and other company officials, the Beacon Journal came to the negotiating table, submitting to a process that ultimately led to this week's settlement.

The settlement restores, and in many cases actually expands, the healthcare and prescription-drug benefits promised to class members when they retired. Class members eligible for medical coverage, for instance, will pay nothing for most Medicare-eligible services after meeting a low annual deductible. And no class member will pay more than $2 or $5 (depending on their year of retirement) for any generic or name-brand prescription drug. The settlement also establishes a $100,000 fund that will be used to reimburse the retirees and their spouses for excess amounts that they were forced to spend over the past few years for medical care and prescription drugs.

Attorney Subodh Chandra, one of four attorneys representing the retirees, hailed this week's settlement as a victory for justice. "Everyone is struggling hard enough in this economy," Chandra said. "When employees dedicate their lives to a company, and are promised retirement benefits for the rest of their lives in return for retiring early, and they rely on that promise-and then their employer pulls the rug out from under them, that's just not right."

Chandra added, "While defendants ultimately did the right thing after years of litigation, I hope that this week's settlement is a wake-up call for other employers, and that they will think long and hard before breaking promises to our vulnerable elders about something as important as their healthcare benefits."

Chandra noted that the settlement ensures that the retirees and their spouses will, for the rest of their lives, receive benefits that are even better and less expensive for the retirees than what they could have been awarded had they proceeded to trial and won. For example, many retirees will, for the first time in many years, begin to receive "major medical" insurance benefits again, even though the early-retirement bargain they struck with the Beacon Journal provided that such benefits would terminate at age 65. The prescription-drug plans being offered to the retirees, moreover, provide more comprehensive coverage than did the plans in effect when most class members retired.

The cases at issue are captioned White v. Beacon Journal Publishing Co., et al. and Olesky v. Beacon Journal Publishing Co. Both matters are before Judge Dowd. (For more details regarding the settlement, please contact The Chandra Law Firm, LLC.)

In addition to Chandra, the retirees are represented by Donald Screen, also of the Chandra Law Firm, LLC in Cleveland, Ohio, and by Allen Anderson and Kenneth Petterson of Smith & Johnson in Traverse City, MI. The settlement, subject to court approval, includes a requirement that defendants pay the retirees' attorneys' fees and advanced litigation costs, to be apportioned between the retirees' law firms.

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