Wash. court rules Seattle port must pay cancelled union benefits
In a narrow split decision, the Washington state Supreme Court ruled Oct. 14 that the Port of Seattle must pay retirement benefits agreed to in a 1997 contract with union warehouse workers despite the port ending the contract when it exited the warehouse business in 2003.
The 5-4 state Supreme Court ruling found that when employers — in this case the port — agree to provide retirement benefits through collective bargaining agreements, the employer must abide by these agreements unless the contract specifically details when the benefits will end.
The case involved International Longshore and Warehouse Union members that worked at a port warehouse operated by toymaker Hasbro. The company closed the 400,000-square-foot warehouse in 2002, leading to a 2003 decision by the port to get out of the warehouse business altogether. In doing so, the port ended the 1997 warehouse contract with the ILWU workers. The ILWU sued, claiming the benefits were guaranteed for life to those workers who retired while the contract was in effect. A lower court decision in 2005 ruled against the union, which then appealed.
In Tuesday's state Supreme Court ruling against the port, Justice Susan Owens said in the majority opinion that if the port did not want to provide retirement benefits to members of ILWU covered under the original contract, it should have insisted on this stipulation during the contract negotiations.
Instead, the port 'chose to accept the benefit of the employees’ long-term service without establishing that eligible retirees would have no continued right to receive benefits from the port' in the event that the contract was ended,' Owens said.
She added that because the port essentially promised the benefits to the ILWU workers, the situation 'prevented these employees from finding alternative ways to prepare for retirement, either by finding other employment with greater benefits or by negotiating with the port for higher wages in exchange for the lack of retirement benefits so that they could start their own personal retirement accounts.'
In a strongly worded dissenting opinion, Justice Barbara Madsen accused the court majority of 'overstepping its constitutional role,' 'asserting itself as a super-legislature,' and of 'usurping the parties’ right to address retirees' coverage by private contract.'
Madsen also warned that 'the unfortunate result of the majority opinion is that many employers will cease providing any health care benefits at all to employees in order to avoid the possibility of incurring an obligation to provide benefits for life — at the least they will cease providing retiree health care benefits.'
The Association of Washington Business told the Seattle Post-Intelligencer that even if the ruling was limited to public sector employment such as the port, it still represents 'an alarming expansion of employee benefit law.'
'If it applies beyond (the public sector), it would be staggering,' association officials told the newspaper.
Madsen, in the dissenting opinion, seemed to concur. 'The majority opinion is likely to affect a great many employees who, although not before us in this case, will suffer loss of health coverage and possibly loss of jobs before they acquire vested rights under the majority opinion.'
Dan Jacoby, a University of Washington economics professor and former chairman of the Harry Bridges Center for Labor Studies, told the P-I that many aspects of the case raised concerns for future labor negotiations.
'Things that look like promises, but can be withdrawn by one party at their will, are problematic. That the (warehouse worker’s retirement) trust could be dissolved, I find problematic,' Jacoby said. 'This ruling will sober employers about making longer-term relationships.'