Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Judge Allows Patriot Coal To Reject Collective Bargaining Agreements
Author: Joel R. Glucksman
Date: June 13, 2013
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Patriot Coal Corp. will be permitted to reject collective bargaining agreements and reduce employee pensions and benefits for 13,000 union workers and retirees, a court ruled this week.
U.S. Bankruptcy Judge Kathy Surratt-States granted a request from the company to stop making pension contributions and convert retiree healthcare to an outside fund, putting an end to an embittered battle between Patriot Coal and unions that began last July when the company sought bankruptcy law protection. The corporation said the changes will save $150 million a year in labor costs. The ruling will also allow it to save roughly 4,000 jobs and avoid running out of money by early next year.
In her 102-page opinion, Surratt-States noted that while Patriot Coal carries most of the blame for its insolvency, the unions themselves are partly culpable as well.
“Unions generally try to bargain for the best deal for their members, however, there is likely some responsibility to be absorbed for demanding benefits that the employer cannot realistically fund in perpetuity, particularly given the availability of sophisticated actuarial analysts and cost trend experts,” she wrote.
Although Patriot has said it will not impose the cuts until it concludes another round of negotiations, the company and the United Mine Workers of America have already undergone 12 discussions since the company filed, and have been unable to reach an accord on future projections and the fairness of labor policies on the workers, Bloomberg reports. UMWA, which called the ruling “wrong,” said it was eager to begin new negotiations immediately to find common ground on the best way to salvage worker and retiree benefits.
“As often happens under American bankruptcy law, the short-term interests of the company are valued more than the dedication and sacrifice of the workers, who actually produce the profits that make a company successful,” said UMWA President Cecil Roberts.
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