Coal Tattoo

The breaking news is out that a U.S. bankruptcy judge has ruled in favor of Patriot Coal’s motion to reject its contract with the United Mine Workers union and to alter its retiree health-care plant.

You can read the 102-page decision from Judge Kathy A. Surratt-States here. This is the “conclusion” section at the end of the ruling:

Was Debtor Patriot Coal Corporation created to fail? Maybe not. Maybe. Maybe the executive team involved at Debtor Patriot Coal Corporation’s inception thought the liabilities were manageable and thus the reality of Debtors’ bankruptcy was more attributed to unwarranted optimism about future prospects. 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. Further, Congress could have incorporated pre-funding requirements for health benefits as it did for pensions when Congress enacted ERISA, but it did not. “The legacy of unfunded retiree medical benefits was itself the result of Congressional inaction, a changing manufacturing landscape, and the benign neglect and false hopes of companies and unions alike.”

UPDATED: The UMWA has issued this statement, which says in part:

The ruling announced today by Judge Kathy Surratt-States of the U.S. Bankruptcy Court of the Eastern District of Missouri in favor of proposals by Patriot Coal to eliminate its collective bargaining agreements and cut off retiree health care 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,” United Mine Workers of America (UMWA) International President Cecil E. Roberts said today.

 “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,” Roberts said.

UPDATED 2: And here’s what Patriot Coal had to say:

“This ruling represents 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,” stated Patriot President and Chief Executive Officer Bennett K. Hatfield.  “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.”

“For the coming days, we plan to continue operating in the normal course under our current UMWA contracts.  Patriot management will continue diligent negotiations with the UMWA leadership to address their concerns about our court-approved proposals,” continued Hatfield.  “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.”

UPDATED 3: West Virginia Sen. Jay Rockefeller said:

I join the thousands of miners in our state who are deeply disappointed with today’s ruling. 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. It’s tragic to watch how some industries treat their workers after they’ve given much of their lives to these companies.