A federal lawsuit filed last year on behalf of retirees at the Y-12 nuclear weapons plant in Tennessee is moving forward.
In response to a motion filed by Consolidated Nuclear Security – the government’s managing contractor at Y-12 and defendant in the case — U.S. District Judge Thomas Varlan refused to dismiss the lawsuit, at least not in its entirety.
He did agree to toss some of the legal arguments that could be used by the plaintiffs, who claim that CNS misled employees when they were planning for retirement and making decisions on whether to take earlier retirement and reduced their benefits in a manner that broke promises made by CNS and its predecessor contractors at Y-12, including Babcock & Wilcox, Lockheed Martin, Martin Marietta, and Union Carbide.
CNS, a partnership that includes Bechtel and Lockheed Martin, took over management of Y-12 on July 1, 2014.
After CNS instituted a number of benefit changes for employees and retirees in early 2015, there was an uproar of discontent. Retirees staged a series of protests, including a gathering near Y-12 and one in front of the Oak Ridge federal building – where the Department of Energy has its field headquarters.
According to background in the court document, CNS on Jan. 1, 2015, “made several changes to the healthcare and welfare benefits of plaintiffs and the classes (potentially represented) which significantly altered the cost, coverage and value of the benefits. The change in benefits reportedly had these impacts: increased premiums for medical and drug prescription benefits; significant reductions in the level of coverage for medical services and prescription drug benefits; and the inability to obtain or maintain alternative medical and/or drug coverage at a “reasonable cost” due to their advanced ages and impaired health conditions.
Retirees said they felt let down and betrayed after helping win the Cold War.
“Plaintiffs contend that employees were attracted to positions with the contractors, in part, because of the retiree program,” the judge’s order states. “They assert that many employees accepted lower levels of compensation, in comparison to employment they could have obtained elsewhere, based on an understanding derived from representations made by the contractors that they were earning a valuable package of retiree benefits – including healthcare benefits – which would make their retirement years financially secure.”
These commitments were passed along, even as the contractors changed over the years, according to the complaint.
The lawsuit was filed last summer in U.S. District Court in Knoxville on behalf of retirees Betty Hatmaker and Charlene Edwards, the plaintiffs, and other Y-12 retirees. CNS later filed a motion to have the suit dismissed.
Varlan issued a memorandum opinion and order on May 9 that granted parts of the defendant’s motion to dismiss but refused to dismiss the case altogether.
A central point is whether promises of lifetime benefits constitute a “breach of fiduciary duty” if those benefits later change or are reduced.
The federal judge sided with CNS on some issues, involving the legal arguments, but he left open a possible means for the retirees’ legal team to argue for compensation.
“To the extent that plaintiffs are alleging breach of fiduciary duty claims based on the ‘serious consideration’ theory, the Court will not, at this stage, preclude plaintiffs from seeking relief under this theory,” Varlan wrote.
The judge’s opinion allows the lawsuit to stay in U.S. District Court, setting the stage for lawyers to seek more information and documents through the discovery process.
No trial date has been set for the case.
Greg Coleman, a Knoxville attorney representing the Y-12 retirees, said he was happy with the judge’s order.
“We understand this is the initial stage, and we’ve got work to do moving forward,” Coleman said.
CNS spokeswoman Ellen Boatner said, “CNS does not discuss active litigation. Therefore, we will not be making any comments at this time.”
