NASHVILLE, Tenn.-Pirelli Armstrong Tire Corp. can try to settle with individuals in a class-action lawsuit filed by union members over the firm's plan to cut out health benefits for retirees, U.S. District Court Judge John T. Nixon has ruled. Judge Nixon ruled PATC can send letters to the more than 2,000 class members as long as the company agrees to extend health benefits until Dec. 15 so the lawsuit's outcome can be determined. The tire maker previously had said benefits would be discontinued Nov. 15. Judge Nixon is hearing the case in U.S. District Court in Nashville.
In the letter PATC plans to send to hourly retirees covered in the suit, the tire maker claims it might be forced to cease operating if forced to pay the benefits.
``If the company loses, its financial viability is seriously threatened creating uncertainty about its ability to continue operations (and pay your benefits) in the future,'' said a copy of the proposed letter that was filed with the court.
The letter states PATC expects to lose about $55 million, including a retiree health care expense of about $31 million, in 1994. The firm projects its negative net worth will reach $44.1 million by year's end.
``Although (PATC) has attempted to cut costs in all areas, it is evident that no significant improvement can be achieved without addressing retiree health benefit costs,'' the company argued in asking the judge to allow the settlement offer.
An accountant called by the United Rubber Workers during a Nov. 4 hearing, though, said it was impossible to tell the financial state of the company based on the information presented.
Judge Nixon wasn't expected to rule until Dec. 15 on whether PATC has the right to curtail retiree health benefits. The tire maker's July announcement prompted the suit by the URW.
During the hearing, which was to conclude Nov. 10, URW attorney George Barrett argued that the company had promised retirees their health benefits would continue for life. He pointed out that benefits for retirees never stopped during strikes and called evidence of the company's intent ``overwhelming.''
``The employer says they are unable to pay. Inability to pay is irrelevant to solving this claim,'' Mr. Barrett said. ``Invite them if they are insolvent to go...and file for bankruptcy where all creditors will be treated equally.''
PATC said the benefits are stipulated only for the life of the contract, which expired in July.