AK Steel sues union for breeching contract

AK Steel sues union for breeching contract

AK Steel Corp. is suing the union that represents workers at its Middletown, Ohio plant. The lawsuit, filed August 11, claims the Armco Employees Independent Federation (AEIF) did not follow proper procedure in requesting arbitration to decide whether members should share in AK’s 2004 profits. According to AK Steel, its auditors Deloitte & Touche determined there were not enough profits available for sharing from 2004. The terms of the labor contract require AEIF to obtain an independent audit from one of the five major public accounting firms. “The company and the union agreed to a profit sharing plan, and agreed to the components and the calculations of that plan,” AK spokesman Alan McCoy told SteelOrbis. “It says that if the union cares to challenge the profit sharing calculations as performed by our independent auditors then they are to utilize a different auditor among the top five. And they failed to do that. Thus, the issue is not eligible for arbitration. Thus, our recourse was to go to ask the federal court to intervene and stay the arbitration.” AEIF spokesperson Ed Shelley disagrees and asserts that the union did follow the rules. “The contract does provide for an independent audit. We attempted to do that,” he said, “we went to all the major accounting firms and they declined, so we went to the next top five and they all declined as well.” “We did follow the procedure. With or without an independent audit, a legitimate disagreement in our contract provides for arbitration. The company makes the claim that the only valid disagreement is one made by the accounting firm. According to them, we didn't have an accounting firm, therefore there couldn't be a disagreement, and therefore there couldn't be arbitration. We disagree with that.” Mr. McCoy told us that the company is having discussions with arbitrators and AK Steel is still hoping to resolve this conflict. The company has approximately 3,500 employees in Middletown and 8,200 nationwide.