Judge: Bowater cannot change GNP pensions Violation of retirement act claimed

BANGOR – A U.S. District Court magistrate judge has reversed two of her previous decisions and has ruled that Bowater Inc., the former owner of Great Northern Paper Inc., should not be allowed to change GNP retirees’ pension plans.

The ruling last Friday by U.S. District Court Magistrate Judge Margaret Kravchuk sets up an appeal by Bowater. Kravchuk’s ruling still has to go before a federal judge for approval.

“The judge has reversed her original decisions of August 2001 and November 2001 that the plaintiffs’ case was moot,” Bowater spokesman Gordon Manuel said Monday. “Based on that, we would expect to appeal her recommended decision of May 30.”

The case involves whether Bowater should be allowed to change pension plans it initially agreed to continue intact for almost 1,000 Great Northern Paper employees and retirees when the company sold the mills to Inexcon Maine in 1999. According to Jim Case, an attorney representing the employees and retirees, Bowater first agreed to continue the plan then began to alter it after Great Northern was sold.

Case said he believed the changes were a violation of the Employee Retirement Income Security Act, which contains has anti-cutback rules. More than 550 retirees are “most seriously affected” by any changes to the plan, he said.

Eventually, Case said, under the threat of a lawsuit, Bowater reversed its changes to the pension plan and twice told Kravchuk that because of the reversals any legal action was moot.

Kravchuk agreed with Bowater. But Case said he wanted to protect the employees and retirees by getting a court ruling that stops Bowater from making any changes in the future.

Last year, the 1st Circuit Court of Appeals agreed with Case that the U.S. District Court should allow arguments to take place on Case’s lawsuit. If a February conference with attorneys, Bowater stated that it wanted to renew its request to dismiss the lawsuit because it was moot.

During the same conference, Kravchuk stated that Bowater’s attorneys could do that, but she “intended to issue a recommended decision regarding the merits of the ERISA claim in light of the remand order.”

In her Friday ruling, Kravchuk wrote, “I now … declare that Bowater violated ERISA when it amended the subject plan in August 1999 to preclude plaintiffs from aging into their accrued benefits, and enjoin Bowater from again amending the plan in a matter that will ‘decrease,’ ‘reduce’ or ‘eliminate’ accrued benefits.”

Great Northern Paper, in Millinocket and East Millinocket, became bankrupt in early January, and the owners sold the mills to Brascan Corp. of Toronto in late April. The mills are now called Katahdin Paper Co.