The nearly year-long bankruptcy case came to a head late last month when Judge Kathy A Surratt-States sided with Patriot’s claim that it couldn’t reorganize without changes to its labor deals.
Surrat-States acknowledged it was a “case plagued with uncertainty” but there was no doubt that the lives of the employees, both union and non-union, depended on the outcome of the reorganization and keeping the company viable was the best option.
“There can be no Patriot Coal stock to dispute, or tonnage payments to negotiate, or companies to reorganize, unless there are men and women willing to bend their knees to excavate coal,” she said in her 102-page ruling on the case.
"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."
Since Patriot filed for Chapter 11 bankruptcy last July, UMWA has staged numerous protests across the country against the company as well as Peabody Energy – the coal miner that spun Patriot off in 2007.
The union, which had accused Peabody of intentionally setting Patriot up to fail, said it would continue to wage a legal battle against Peabody and Arch Coal.
Former Arch Coal properties had been spun into a company called Magnum Coal which added further liabilities when it was later added to Patriot.
Union president Cecil Roberts slammed the judge’s decision, saying it 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".
Roberts blamed the legal system for failing to protect people in the interest of saving corporations.
“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,” Roberts said on May 29.
“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.
“We are disappointed that the Bankruptcy Court failed to see that and we intend to appeal the ruling to the Federal District Court,” Roberts said.
The initial notice of appeal solely focused on Patriot Coal but was amended on Monday to include “Patriot Coal Corporation and its affiliated debtors”
Patriot chief executive officer Bennet Hatifeld released a statement following the court’s decision stating that the company would continue to work with the union to reach “a consensual resolution”
"For the coming days, we plan to continue operating in the normal course under our current UMWA contracts," Hatfield said.
“Patriot management will continue diligent negotiations with the UMWA leadership to address their concerns about our court-approved proposals.
"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's current benefit proposal would cease pension contributions and convert health care to a voluntary employees' beneficiary association funded by $15 million in upfront cash and $300 million in profit-sharing contributions.
Patriot has said UMWA would receive a 35% equity stake in Patriot once it has been reorganized, which it could sell to help fund the VEBA.
The company's proposal would also reduce wages and decrease paid time off.
UMWA said it was unfair and unnecessary.
"Patriot says that for it to survive, the union-represented workforce needs to be on the same scale as its non-union workers," Roberts said on Wednesday.
"No, it does not need that and it never did.”
UMWA has elected to have the appeal heard by the US District Court for the Eastern
District of Missouri.
