Bill Knight column for Thurs., Fri., or Sat., June 20, 21 or 22
Contracts are getting to be worth less than the paper they’re printed on.
Judge Kathy Surratt-States of the U.S. Bankruptcy Court in St. Louis on May 29 ruled in favor of Patriot Coal in the company’s efforts to renege on collective bargaining agreements and void promises made to 20,000 retirees who worked for Patriot, Peabody Energy and Arch Coal.
Those workers for years made the companies profitable, only for the corporation to dispose of them and their families at the time when the contracts are most important.
The United Mine Workers (UMWA) union maintains that Patriot was designed to fail in order to dump retiree health-care costs, similar to Hostess’ manipulation of bankruptcy. Patriot Coal was spun off from Peabody Energy with 42% of Peabody’s liabilities, but only 11% of its assets, according to an analysis by Temple University finance professor Bruce Rader.
Patriot CEO Ben Hatfield conceded that in conversations about his observations of the spinoff when he worked for a competitor, according to West Virginia’s State Journal newspaper.
UMWA President Cecil Roberts said the decision was “wrong, unfair and fails to fully recognize the coming wave of human suffering that will be experienced by thousands of people throughout the coalfields.”
Plus, Roberts added, it wasn’t even financially necessary.
“The UMWA presented a very clear picture in court of what Patriot actually needed to come out of bankruptcy,” he said. “Patriot can survive as a viable and profitable company well into the future without inflicting the level of pain on active and retired miners and their families it seeks. Patriot is using a temporary liquidity problem to achieve permanent changes that will significantly reduce the living standards of thousands of active and retired miners and their families.”
UMWA has filed suit charging that Peabody and Arch violated the federal Employee Retirement Income Security Act (ERISA) in creating Patriot.
Unless the parties come to a new agreement in stalled negotiations, the ruling means that Patriot's health-care commitments as early as next month could be turned over to the Voluntary Employees Benefits Association, a fund that would be administered by the union. The Mine Workers say Patriot will only guarantee to pay $15 million, plus 20 cents per ton of coal mined, which the UMWA calculates will cover $5 million a year in retiree benefits. Retiree health care for Patriot’s beneficiaries costs almost $7 million a month, the union adds.
The “decision favors corporate greed over honest, loyal work,” said Green For All CEO Phaedra Ellis-Lamkins. “These workers have given years of service and have risked their lives in the coal mines only to see the benefits they were promised stripped away. It is hard to imagine anything more unpatriotic than what Patriot Coal and its founding companies are doing. We will continue to stand by coal miners and their families.”
Since the ruling also permits Patriot to eliminate its contracts with UMWA – allowing the corporation to cut wages and health benefits and implement substandard conditions of employment – the Mine Workers could legally strike. The union represents 1,700 current workers at Patriot Coal in addition to the tens of thousands of retirees.
“We remain willing to take painful steps to help Patriot get through the rough period it faces over the next couple of years,” Roberts said. “But if we’re going to share in that pain, then we have every right to share in the company’s gain when it becomes profitable.”
However, last week Patriot negotiators walked out of talks with the union and canceled scheduled talks, despite being only about $30 million apart, Roberts said.
“We are very disappointed by this action,” he said. “We had made significant progress. The union had agreed to more than $400 million in savings for the company over the life of the current contract. But that still wasn't enough for them.”
In Washington, U.S. Sen. Jay Rockefeller (D-W.Va.) was alarmed.
“I join the thousands of miners in our state who are deeply disappointed with today’s ruling,” Rockefeller said. “Once again we are seeing how the bankruptcy system is stacked against the American worker. I will continue fighting to put workers and employers on a level playing field by closing the legal loopholes that allow companies to pad their profits while abusing the legal system to escape from the promises they made.”
Meanwhile, everyday union workers wonder why their organizations have agreed to labor peace through contracts if there’s no good-faith exchange of value – no reciprocal reward – from employers.
Contract law itself has been upended.
[PICTURED: Demonstrators rally in support of mine workers in a St. Louis protest; photo from the Labor Tribune.]