Navistar to Settle Pension Suit

Associated Press

Navistar International Transportation Corp. announced Wednesday that it has reached a $14.8-million settlement of a class-action lawsuit filed on behalf of 2,700 former employees at the Wisconsin Steel Works.

“From our point of view, this is a very good settlement,” Roxanne Decyk, Navistar’s senior vice president for administration, said at a news conference at corporate headquarters.

The lawsuit sought at least $86 million in claims for benefits lost by employees as a result of the folding of Wisconsin Steel.

Navistar’s predecessor, International Harvester, sold Wisconsin Steel in 1977 to EDC Holding Co., which filed for bankruptcy in 1980.


Officials connected with the former employees could not be located for immediate comment, but Navistar released a statement from one of the workers’ representatives, Frank Lumpkin, who expressed satisfaction with the agreement.

“It has been nearly eight years since the Wisconsin Steel shutdown,” Lumpkin said. “We faced the prospect of years of continued litigation and chose to reach a settlement now.”

The agreement will be submitted to U.S. District Judge James B. Moran as early as today, Decyk said.

John Sheahin, vice president and general counsel of Navistar, said settlement of the so-called Lumpkin case should lead to a prompt federal trial in April on the merits of the two remaining cases arising from International Harvester’s sale of Wisconsin Steel.

“The settlement removes the risk that a jury’s sympathy towards the plight of unemployed steelworkers might prevent Navistar from receiving a fair trial on the merits of the other two cases,” Sheahin said.

In one case, the Pension Benefit Guaranty Corp., seeks to have Navistar held responsible for $65 million in pension benefits and accrued interest for which the federal agency would otherwise be responsible, Decyk said. In the other case, EDC claims $125 million in damages, while Navistar seeks $146 million from EDC as an unpaid creditor, she said.

A main contention of the federal agency and EDC has been that Navistar, as International Harvestor, divested Wisconsin Steel to avoid taking care of pension liabilities--an accusation Navistar denies.

Decyk said the cost of the Lumpkin settlement would be charged against earnings for the first quarter ended Jan. 31.