BOSTON – The 1st U.S. Circuit Court of Appeals this week ruled that Bowater Corp. failed to provide sufficient guarantees of its intentions to protect the pension rights guaranteed to workers at Great Northern Paper Co.’s Millinocket and East Millinocket mills.

The ruling sent the case back to U.S. District Court in Bangor to address issues raised by the 1st Circuit’s unanimous decision, which was rendered Dec. 17. The case in Bangor is expected to be heard in the spring of 2003.

At the heart of the case are lawsuits brought by 551 GNP workers against Bowater, the former owner of the company. Bowater, headquartered in South Carolina, sold GNP to Inexcon of Maine in August 1999. Shortly after the sale, workers were informed by a letter from Bowater that their continuing service with GNP would no longer enable them to accrue certain pension benefits with Bowater.

The lawsuits filed by the workers in January 2000 allege Bowater violated the “no cutback” provision of the federal pension law – the Employment Retirement Income Security Act.

In March 2000, Bowater sent the employees another letter saying it had reviewed its pension policy and the continuing service of the workers would indeed count toward early retirement subsidy, apparently reversing its earlier letter.

In September 2000, the main part of the workers’ complaint was dismissed by a federal judge in Bangor as being moot, because the workers’ early retirement subsidy had been restored in the pension plan. But two remaining counts continued because 10 of the workers who had taken lump sum settlements after the initial letter from Bowater wanted their full benefits restored.

In October 2000, Bowater agreed to restore full benefits to the 10 workers who had taken lump sum settlements and the judge subsequently dismissed the rest of the counts as being moot.

Dismissal of the suits was appealed by the workers out of fear that Bowater had not admitted its initial actions were illegal and might, at some future date, again cut benefits. If that happened, more litigation would likely follow.

The circuit court in its ruling found that Bowater had never admitted its initial changes to the pension plan were unlawful and had never promised there would be no future changes, therefore, a “recurrence is certainly more than a theoretical possibility.” The court concluded the main count of the suit “is not moot.”

In its ruling, the circuit court suggested Bowater and the workers could settle the case if the company made firm commitments to honor the pension plan in the future.