The Supreme Court will not be deciding whether bankruptcy courts retain power to reject labor contracts after they have expired by their own terms.
In Hostess Brands Inc., Bankruptcy Judge Robert Drain from White Plains, New York, held in 2012 that the power to terminate a collective bargaining agreement ends when the contract expires, even though labor law requires the company to abide by the expired contract until the National Labor Relations Board declares impasse in negotiations. Judge Drain relied on the language of Section 1113.
Focusing instead on the purpose of the statute, the Third Circuit held to the contrary in January and found power to reject an expired union contract in the reorganization of Trump Entertainment Resorts Inc.
The union filed a petition for certiorari that the Supreme Court denied on May 31, likely because the Third Circuit was the first court of appeals to decide the issue.
Bankruptcy Judge Donald H. Steckroth from Newark, New Jersey, had reached the same result as the Third Circuit in a case called 710 Long Ridge Road.
The Third Circuit’s Trump Entertainment opinion resulted from an October 2014 decision by Bankruptcy Judge Kevin Gross of Wilmington, Del., who sided with the casino operator and held there was power to reduce wages or benefits in expired contracts. Judge Gross allowed a direct appeal to the circuit. Donald Trump was not involved in ownership of Trump Entertainment Resorts Inc.
To read ABI’s discussion of the Third Circuit’s Trump Entertainment opinion, click here.
The certiorari petition was Unite Here Local 54 v. Trump Entertainment Resorts Inc., 15-1286 (Sup. Ct. May 31, 2016).