U.S. Steel Wins Court Victory Steelworkers

U.S. Steel won a major victory when a federal jury decided the company’s cancellation of a $225 million rail-mill project at its South Works plant did not break a contract.

The verdict, reached in U.S. District Court after about six hours of deliberations Wednesday, dealt a blow to the United Steelworkers of America and USW Local 65, which sued the steelmaker in 1984 for failing to complete the project.

U.S. Steel stood to lose up to $500 million in damages had the jury decided in the union’s favor. Steelworkers who lost their jobs over the project’s cancellation would have been compensated.

At issue was whether U.S. Steel’s promises to complete the rail mill--if the union met certain conditions--amounted to a contractual obligation.

Stuart M. Israel, an attorney for the union, said the verdict was hard to reconcile in view of a jury finding that U.S. Steel did have a contract to build the mill if it was relieved of its obligation to build a $33 million pollution-control facility at its Gary Works.

But Jeffrey Beeson, an attorney for U.S. Steel, said, “Justice was served” by the verdict.

Company Unveiled Plan

In 1981, the company unveiled plans for a mill to build railroad rails and structural steel. The plan would have added 800 jobs at South Works and strengthen job security for 1,200 workers.

U.S. Steel put the project on hold in 1982, saying it first needed repeal of a state tax on rail-mill products and union approval of work-rule changes covering manpower requirements on the production line.

The union approved the changes and agreed to lobby lawmakers and Gov. James R. Thompson to support the tax repeal, which Thompson signed into law in September, 1982. And U.S. Steel Chairman David M. Roderick said he hoped mill construction would begin the next month.

But a few months later, the company set another condition before construction could start--a waiver of an order to spend $33 million on pollution controls at its Gary, Ind., plant.

Illinois Attorney General Neil Hartigan proposed a plan to waive the environmental order in August, 1983. The next day, U.S. Steel announced it was conducting an economic study to determine if the rail mill remained feasible.

Three months later, the company demanded more union concessions at South Works as another condition for the mill. The union wouldn’t comply.

South Works now employs fewer than 900 workers.