GM does not owe $450 million in health benefits to retirees of Delphi, a former subsidiary of the company, a U.S. District Court judge in Detroit ruled.
The payments were part of a contract GM reached with the UAW in 2007. However, when the automaker came out of bankruptcy in 2009, a new contract negotiated with the union did not include the medical benefits.
The UAW argued that GM was still on the hook after Delphi escaped its own bankruptcy in 2009.
Judge Avern Cohen ruled that the 2009 contract between GM and the autoworkers took precedence and clearly showed the payments were not due.
“Whether New GM has a moral obligation regarding the payment is another matter and not relevant,” he wrote.
The union is considering whether to appeal the decision.
“We are disappointed with the court’s decision in this case, which seeks to protect benefits for retirees who worked all their lives to help make GM and Delphi successful,” said UAW President Bob King in a statement.
The issue of Delphi pension benefits was the subject of a Government Accountability Office report this fall. The GAO urged GM to improve the benefits of some former workers.
It was an eventful week for GM, which named a new CEO and received the news that the government had sold the stake it had bought in the company to keep it afloat.