%1

The United Mine Workers of America announced today that it has reached a settlement with Peabody Energy and Patriot Coal, ending its months-long campaign against the two St. Louis-area coal producers, the St. Louis Post-Dispatch reported. The settlement will provide funding of more than $400 million to cover future health care benefits for retirees affected by the bankruptcy of Patriot Coal, the union said. St. Louis-based Peabody will make payments totaling $310 million over the next four years, the proceeds of which will be applied to future retiree health care benefits. Payments of $90 million will be made in 2014, followed by payments of $75 million each year at the beginning of 2015 and 2016, with a final payment of $70 million at the beginning of 2017. As part of the agreement, the union relinquishes its 35 percent stake in Patriot, which it received as part of a ruling by U.S. Bankruptcy Judge Kathy Surratt-States. The union said it has also agreed to halt its public relations and direct-action effort related to Peabody in St. Louis and elsewhere regarding the effects of the Patriot Coal bankruptcy. The settlement will be submitted to Judge Surratt-States for her approval; she is expected to rule shortly after a Nov. 6 hearing on the matter.

A federal judge has dismissed a lawsuit filed by a union representing mine workers that claimed retiree benefits were unfairly jeopardized by Patriot Coal Corp.'s bankruptcy filing last year, Dow Jones Daily Bankruptcy Review reported today. U.S. District Judge Joseph Goodwin said in a ruling on Friday that Peabody Energy Corp. and Arch Coal Inc. didn't violate the Employee Retirement Income Security Act when they transferred the retiree liabilities to Patriot, which took on assets spun off from Peabody and Arch in 2007 and 2008. The United Mine Workers of America sued Peabody and Arch in October on behalf of more than 10,000 retirees and workers, seeking to hold the companies accountable for the benefits promised to their retirees but assigned to Patriot in the spinoff.

A top SEC official said yesterday that the U.S. Securities and Exchange Commission's scrutiny of public pension liabilities will not let up any time soon, Reuters reported yesterday. Pension disclosure will be "a continuing and very significant theme of the SEC," said John Cross, head of the SEC's Office of Municipal Securities. The SEC has cracked down on pension and disclosure problems, hitting Illinois in March with charges for not adequately informing investors about the liabilities. The SEC had brought similar charges against New Jersey in 2010. Both states settled the charges without admitting or denying them. The SEC has also caught Harrisburg, Pa., and Miami in its regulatory net for allegedly making misleading statements and omissions in bond documents. The Pew Center on the States has reported that bigger cities faced a collective pension liability of $217 billion in fiscal 2009, while states had a shortfall of $757 billion for retiree pensions in fiscal 2010.

Peabody Energy Corp, which created now-bankrupt Patriot Coal through a spin-off, said that an offer to settle claims relating to health care benefits for Patriot Coal retirees had been rejected by the United Mine Workers of America, Reuters reported yesterday. Peabody and Patriot have been fighting over the funding of benefits for about 3,100 retirees that Peabody agreed to continue covering after the October 2007 spin-off of Patriot. Peabody said that its mid-August offer to settle all claims with the UMWA could have been used to provide the retirees with lifetime health care benefits comparable to those of Peabody's active corporate employees. Earlier this month, Peabody said that it had no obligation to fund health and pension benefits for Patriot retirees affected by the company's insolvency, arguing that new labor deals between Patriot and the UMWA effectively relieved it of any funding obligations.

Union members who work for American Airlines and US Airways Group rallied on Capitol Hill yesterday, urging the U.S. Justice Department to drop its opposition to a planned merger between the two airlines, Reuters reported yesterday. The rally by pilots, flight attendants, baggage handlers and others also attracted a handful of the 300 lawmakers that the union representatives are meeting this week in hopes of building support for the deal. Representatives of the Association of Professional Flight Attendants, the Allied Pilots Association and US Airline Pilots Association and the Transport Workers Union also met yesterday with William Baer, the head of the Justice Department's Antitrust Division, to express displeasure over the lawsuit. The Justice Department filed a lawsuit on Aug. 13 to stop the planned merger between US Airways and American's parent, AMR Corp. The government argues that it would violate antitrust laws because it would lead to higher airfares and other fees. A judge will hear the case without a jury in November and decide whether the deal can go forward.

Peabody Energy Corp., the company responsible for creating now-bankrupt Patriot Coal through a 2007 spinoff, said on Friday that it has no obligation to fund health and pension benefits for Patriot retirees affected by the company's insolvency, Reuters reported on Friday. Peabody said in court papers that new labor deals between Patriot and the United Mine Workers of America effectively relieve Peabody of any funding obligations. In a lawsuit relating to Patriot's bankruptcy, Patriot and Peabody are fighting over the responsibility to fund benefits for a group of about 3,100 retirees that Peabody agreed to continue covering after the October 2007 spinoff. A judge in May declared that Peabody was relieved of that burden when Patriot abrogated its labor obligations for all employees and retirees earlier this year and negotiated new, cost-saving deals as part of its restructuring in chapter 11 bankruptcy.

Michigan Gov. Rick Snyder and Treasurer Andy Dillon have been subpoenaed to give depositions about decisions they made that may be tied to Detroit's bankruptcy filing, The Associated Press reported yesterday. Documents filed Wednesday in Detroit federal court show Snyder's transformation manager Richard Baird also was served a subpoena Friday. Snyder is ordered to appear Sept. 17 at the American Federation of State, County and Municipal Employees Council 25 office in Detroit. Dillon and Baird must appear Sept. 18. The union claims state-appointed emergency manager Kevyn Orr has negotiated in bad faith while trying to restructure $18 billion or more in debt. A hearing is scheduled Tuesday on the state's motion to keep the officials from testifying.

Detroit’s two pension funds are at risk of losing at least $24 million in a complicated investment in a historic downtown hotel, at a time when the current and future financial health of those funds are major issues in the city’s petition for chapter 9 bankruptcy, the Detroit Free Press reported Sunday. The owner of the iconic Westin Book Cadillac Hotel — which was shuttered for 20 years and has failed to gain secure financial footing since its rebirth, in large part due to a reopening that coincided with the 2008 recession — has not made a single payment to the Detroit General Retirement System on a $9-million loan made in 2006 to help renovate and open the hotel. The same owner, the Ferchill Group, has also not paid back a $15-million loan backed by the Police and Fire Retirement System. Detroit emergency manager Kevyn Orr is looking into the pension funds’ real estate deals as part of an investigation he ordered into all Detroit employee benefits programs.

Over objections from CalPERS, a judge last week declared that the city of San Bernardino, Calif., is eligible for bankruptcy, paving the way for a historic showdown over the sanctity of public employee pensions, The Sacramento Bee reported today. The ruling by Hon. Meredith Jury means that San Bernardino officials will now negotiate a payment plan in the coming weeks with CalPERS (the California Public Employees’ Retirement System) and other creditors. Experts say that the city is expected to develop a plan that would “impair,” or reduce, the amount of money paid to CalPERS, the largest public employee pension system in the country. That would translate into lower pension benefits for retirees and current employees — shattering decades of precedent over public pensions in California. A similar fight is brewing in Stockton, which filed for bankruptcy protection in spring 2012, a few months before San Bernardino. At the same time, officials in California are closely watching Detroit’s largest-ever municipal bankruptcy, which could well result in a reduction of pension benefits.

The nine-member committee that will represent city of Detroit retirees during the city's bankruptcy case includes former and current union officials, among others, Crain’s Detroit Business reported yesterday. Per a court filing on Thursday, the committee members include Ed McNeil, special assistant to the president of the American Federation of State, County and Municipal Employees Michigan Council 25; Wendy Fields-Jacobs, executive administrative assistant to the president of the United Auto Workers; Michael Karwoski, retired assistant corporation counsel for the city of Detroit; Shirley Lightsey, president of the Detroit Retired City Employees Association; Terri Renshaw, retired senior vice president and general council, Comerica Inc. and deputy corporation counsel for city of Detroit; Robert Shinske, treasurer of the Detroit Fire Fighters Association, Local 344; Donald Taylor, president of the Retired Detroit Police and Fire Fighters Association; Gail Wilson Turner, former deputy chief of police for Detroit; and Gail M. Wilson, vice president of human resources for the Detroit-based Legal Aid and Defender Association and formerly director of human resources for the 36th District Court in Detroit. The committee will represent 23,500 Detroit retirees in court and during negotiations.