Judge Rules that Bowater Can’t Change GNP Pensions

BANGOR -- Reversing previous decisions, a U.S. District Court judge has ruled that Bowater, the former owner of Great Northern Paper Company, cannot change GNP retiree’s pension plans.

Friday’s ruling by U.S. District Court Judge Margaret Kravchuk still has to go before a federal judge for approval, and is expected to be appealed by Bowater.

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

Bowater has sought to change the terms of pension plans it had initially agreed to continue intact for almost 1,000 Great Northern Paper retirees and former employees when the company sold the Katahdin area mills to Inexcon Maine in 1999.

According to Jim Case, an attorney for the retirees, Bowater first agreed to continue the plan, then altered it after Great Northern was sold. He claims that this was a violation of the Employee Retirement Income Security Act.

Twice, according to Case, Bowater reversed its changes to the pension plan, and twice told Judge Kravchuk that because of the reversals, any legal action was moot.

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Case said that it was necessary to obtain a court ruling that stops Bowater from making any changes to the pension plan in the future.

The 1st Circuit Court of Appeals agreed last year that the U.S. District Court should permit arguments to take place on Case’s lawsuit.

Bowater seeks to renew its request to dismiss the lawsuit as moot.

In her Friday ruling, Judge Kravchuk stated that she now declares “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 manner that will decrease, reduce, or eliminate accrued benefits.”

Great Northern Paper closed its mills in Millinocket and East Millinocket in late December of 2002, filing bankruptcy in early January, 2003. The mills were sold to Brascan Corporation of Toronto in late April, and are now called Katahdin Paper.

Katahdn Paper intends to resume limited production at the East Millinocket mill soon, but the Millinocket facility is expected to remain closed for as long as a year, although it is widely speculated that it will never reopen.

-- Ken Anderson 06/03/03