CHARLESTON, W.Va.–A federal bankruptcy judge says Patriot Coal can eliminate its collective bargaining agreement with the United Mine Workers of America and change retiree health care benefits as it tries to emerge from Chapter 11 bankruptcy.
Wednesday’s ruling by St. Louis-based U.S. Bankruptcy Judge Kathy Surratt-States is a blow to the UMWA. Union President Cecil Roberts said the ruling is “wrong, unfair and fails to fully recognize the coming wave of human suffering that will be experienced by thousands of people throughout the coalfields.”
The union has held a number of emotional rallies in recent months in Charleston and St. Louis blaming Patriot’s financial problems on Peabody and Arch coal companies. Roberts has claimed many times Patriot was set up to fail when it was formed by Peabody with more liabilities than assets in 2007. The next year Patriot purchased Magnum Coal from Arch, which shifted retiree benefits to the new company.
Patriot President and CEO Ben Hatfield called the ruling “a major step forward for Patriot, allowing our company to achieve savings that are critical to our reorganization and the preservation of more than 4,000 jobs,”
Roberts says it’s not surprising that bankruptcy court “cares more about the short-term interests of the company that it does the dedication of thousands of workers.” He says the union will appeal the ruling to U.S. District Court.
The door is now open for Patriot to pay its union workers less. The union says that will also mean eliminating some paid time off and increasing out-of-pocket health care costs. Patriot can also begin changing retirement benefits to thousands of retirees, many who did not work for Patriot, as early as July 1.
Judge Surratt-States said in her ruling the union has to take some responsibility for Patriot’s financial problems.
“Unions generally try to bargain for the best deal for their members,” she wrote. She also said Congress can be blamed for unfunded retiree medical costs along with “the benign neglect and false hopes of companies and unions alike.”
The UMWA’s Roberts says the union’s fight is not over.
“But I want to make it emphatically clear that despite this ruling, the UMWA’s effort to win fairness for these active and retired workers is by no means over,” Roberts said in a statement. “Indeed, this ruling makes it more important than ever for the architects of this travesty, Peabody Energy and Arch Coal, to take responsibility for the obligations they made to thousands of retirees who are now at imminent risk.”
The union has a lawsuit against both Peabody and Arch in Charleston.
Roberts says he will continue to have talks with Patriot; in fact, he was speaking with the company Wednesday afternoon not long after the judge’s ruling came out.
Patriot’s Hatfield says for the coming days the company plans to continue to operate under the current UMWA contracts.
“Patriot management will continue diligent negotiations with the UMWA leadership to address their concerns about our court-approved proposals,” Hatfield said in a prepared statement. “While the Court has given Patriot the authority to impose these critical changes to the collective bargaining agreements, and our financial needs mandate implementation by July 1, we continue to believe that a consensual resolution is the best possible outcome for all parties.”
Patriot has previously offered the union a 35 percent stake in the new company.
The next UMWA rally is set for next Tuesday, June 4, in Henderson, Ky., where more than 4,000 people are expected.