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Letters from 900 parties read by judge before Patriot ruling

CHARLESTON, W.Va. -- More than 900 interested parties sent letters to the U.S. Bankruptcy Court in St. Louis before Wednesday's decision that allowed Patriot Coal to cut health care and pension benefits for thousands of working and retired miners.

Judge Kathy Surratt-States said that all of those letters, many of which detail the huge risks and sacrifices inherent in mining, were read before she ruled against the miners.

"Some discuss how physically, mentally and emotionally grueling being a coal miner was," Surratt-States wrote. "A sacrifice made with due consideration of the promised health care from cradle to grave."

But her 102-page opinion finds that the risk of potential mine closings if Patriot is not allowed to cut benefits outweighs the broken promise to the miners.

"What is better," Surratt-States asks, "something for a period of time or nothing in a short period of time?"

Two weeks earlier, on May 16, Surratt-States allowed bankrupt Patriot Coal to pay $6.9 million in bonuses to "key employees," rejecting union arguments that those bonuses unfairly rewarded executives.

Surratt-States also warned about the negative impacts of a strike by the United Mine Workers of America.

"If the UMWA calls a strike, especially a lengthy strike -- a decision which at least initially lies with President [Cecil E.] Roberts -- debtors will be forced to liquidate."

After last Wednesday's ruling, Roberts announced that negotiations between the union and the company will continue.

"We remain willing to take painful steps to help Patriot get through the rough period it faces over the next couple of years," Roberts stated. "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 again."

Bennett Hatfield, Patriot Coal's president and CEO, called the bankruptcy ruling "a major step forward" for his company. He also said Patriot would continue bargaining with the union.

Critics believe that Surratt-States decision will be devastating to working and retired miners, as well as other workers across the country.

She was appointed as a bankruptcy judge in 2003 by President George W. Bush.        

In her decision to reject the collective bargaining agreements and to modify retiree benefits Surratt-States ruled that Patriot Coal does not have to meet any contractual obligations to provide benefits to working or retired coal miners under the company's contracts with the UMWA.

She warned that if Patriot liquidates and closes its current mining operations in West Virginia, Kentucky and Illinois, then the overwhelming majority of Patriot's current employees will be unemployed.

Today, Patriot has about 4,200 employees, more than 2,900 of whom are represented by the UMWA.

The ruling set up a traditional conflict between labor leaders and the business community. Business leaders expressed sympathy for the miners, but talked about how difficult it is to preserve jobs and benefits in a tough economy. Labor leaders said that if the decision is not overruled it will devastate the benefits and legal rights first created for American workers during the New Deal under President Franklin D. Roosevelt.

Critics of the Patriot Coal Ruling

Patriot Coal was founded in 2007 when Peabody Energy sold all of its union operations east of the Mississippi to the newly created company. In 2008, Patriot bought Magnum Coal, a company that had taken over the union mines once operated by Arch Coal.

Those deals, the UMWA argues, gave Patriot Coal far more liabilities than assets from its creators -- Peabody and Arch.

Kenny Perdue, president of the state AFL-CIO, called the Patriot bankruptcy ruling sickening and called on Congress to reform federal bankruptcy laws.

"The judge ruled Patriot is not required to meet collective bargaining agreements that provide the workers, who made the original corporations billions in profits, health care and retirement benefits," Perdue said.

Perdue said that the bankruptcy court should "protect hardworking Americans and their promised benefits from greedy corporations ....

"This is not the first time this has happened. The steelworkers, the autoworkers and others have been down this road before. The consequences are catastrophic.

"If this becomes a trend, every single worker in America is at risk of losing their health care and retirement benefits. We can't let that happen. We won't let that happen," Perdue said.

Randy Moore, the United Steelworkers sub-district director for West Virginia, said, "It is deplorable that this can happen in our country. Individuals work all their lives. They give up money for wages at a bargaining table in exchange for health care.

"But then, because of a loophole created for corporate greed in our bankruptcy laws, people's lives are devastated.

"This is something that has been going on in manufacturing industries in this country since the Bush administration. The Steelworkers have suffered greatly, starting here locally with Special Metals in Huntington," Moore said.

The Huntington plant is the world's largest devoted exclusively to producing nickel alloys.

"We have seen health care taken away from retirees, while corporate leaders continue to make hundreds of millions of dollars," Moore said.

"Unfortunately, this is not something that can be fixed at the state level. It has to be fixed in Washington. I think all our citizens should let their outrage be known at the polls.

"As we move into the next election cycle, we should be asking our federal representatives what they are going to do to protect their constituents' retiree benefits."

Moore said that the Patriot bankruptcy ruling shows how out of balance the country is.

"I personally feel we are in a class war. The top one-percenters intend to do away with the middle class. If this isn't stopped, the standard of living we have known for several generations will be gone," he said.

Retirement and health benefits under union contracts, Moore stressed, come from union-company bargaining in which workers typically sacrifice larger wage increases in exchange for those benefits.

"This is one of the worst decisions I have ever seen in my lifetime," Moore said.

Conflicting Interests

Rep. Shelley Moore Capito, R-W.Va., told the "Sunday Gazette-Mail" on Thursday that she "met with Patriot Coal retirees this week and I am deeply saddened that their current health-care benefits would be lost under the court's ruling. I fundamentally believe that when promises are made they should be kept.

"At the same time, it is important to our state's families that Patriot emerges from bankruptcy strong enough to continue to provide jobs for the thousands of West Virginians it currently employs," Capito said.

Steve Roberts, president of the West Virginia Chamber of Congress, said Patriot's bankruptcy is complicated and that he has sympathy for both the miners and the company.

"Clearly, the mineworkers and the retirees are due to get their benefits and maintain the pay they have. But the company is saying, 'Look, with some concessions, we can probably stay in business and pay some benefits and wages that are on a reasonably competitive level.'" Roberts said.

Roberts said he feels sympathy for the "plight of the retirees, who had certain expectations. The other side, which the bankruptcy judge made pretty clear, is that 'You can't get blood from a turnip.'"

Roberts believes the dispute is not close to being resolved.

"Isn't it better to keep the company open, paying some of its obligations, rather than have the company not producing anything and nobody getting paid?

"There is plenty of sympathy for those who had salary and benefits expectations, but apparently the money just isn't there," Roberts said.

Hatfield, Patriot's president, said that the ruling would allow the company to preserve 4,000 jobs and remain competitive.

"The savings contemplated by this ruling, together with other cost reductions implemented across our company, will put Patriot on course to becoming a viable business," he said.Reach Paul J. Nyden at pjnyden@wvgazette.com or 304-348-5164.


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