Bonuses, climbing Patriot legal bills angers organized labor - WOWK 13 Charleston, Huntington WV News, Weather, Sports

Bonuses, climbing Patriot legal bills anger organized labor

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Now that it is official Patriot Coal seeks to cut the health care benefits of its former union miners, union members are ramping up already heated efforts to save what they feel has been rightly earned.

After hosting a news conference Monday, the United Mine Workers of America again marched from Peabody Energy headquarters, the company which spun off Patriot, to the court where Patriot is negotiating its bankruptcy.

The march included a speech from UMWA President Cecil Roberts, who shouted words of encouragement and praise on the efforts of the UMWA and other friends of the Fairness at Patriot cause.

"The rest of the labor union is getting behind this movement," Roberts said at a Tuesday rally, noting several labor groups who have both offered official and unofficial support to the UMWA's Fairness at Patriot initiative.

The accusation the union has levied against Peabody is that it purposely spun-off assets that were doomed to fail, while also dumping major liabilities.

Roberts likened the executives, in their "$5,000 suits" and "Gucci shoes" to criminals, saying they robbed UMWA miners at Tuesday's hearing. He said union members and those who stand beside them are the witnesses to the crime.

"Every night you can turn on the TV and somebody robbed somebody," Roberts said. " … I want you to know that we are all witnesses today and we saw it all."

The bankruptcy affects about 1,500 active miners in West Virginia and more than 4,000 retirees.

Peabody has repeatedly said that market conditions were behind Patriot's problems. A report from Bruce Rader, professor of finance at Temple University, rebuts that assessment, saying Patriot only could have succeeded under unreasonable assumptions about the coal industry and the broader energy market.

"This is a whole new chapter in one of the most outrageous corporate crimes our members have ever seen," Roberts said. "Peabody Energy spun off Patriot Coal and set it up to fail.  Arch Coal did the same, and now all these well-paid executives want desperately sick retired miners to foot the bill."

Patriot Coal filed a lawsuit against Peabody Energy last week hoping to modify an agreement that would reduce Peabody Energy's portion of Patriot's healthcare expenses for specified retirees. The agreement stated that if Patriot's obligations were reduced, so would Peabody's. Peabody has been providing Patriot with funds according to the agreement since the spin-off.

"Patriot is taking the untenable position that our payments should continue in full in the future even if Patriot's expenses are reduced," the Peabody statement said. "Such a claim is not only unreasonable, but counter to the fundamental basis of the language in the contract. These are Patriot's obligations and, to the extent they are reduced, we will meet our agreement with Patriot to fund the new lower levels."

Further salting their wounds, the UMWA has pointed out, is that while Patriot has taken action to eliminate health care for retirees and impose wage and benefit cuts on active miners, executives were recently offered bonuses. The "Critical Employee Retention Plan" is a Patriot initiative that seeks to give out $7 million in bonuses it says is essential to retaining executives through the bankruptcy process.

"I don't know that I've ever seen a clearer demonstration of the 1 percent versus the rest of us," Roberts said

Executive retention plans are not unknown in corporate bankruptcy cases. The reasoning is that a company cannot expect to recover if its top executives who have most of the knowledge and skills for running the company leave in large numbers.

The UMWA also claims it has evidence of legal expenses as high as nearly $1,000 per hour for attorneys and $400 per hour for paralegals. Documents the UMWA shared at the conference showed Davis, Polk and Wardwell have billed the company for more than $14 million since the company filed for reorganization.

According to the UMWA, the firm has billed Patriot for over $21,000 in meals since July of 2012.

"Where we come from, it doesn't matter how late you work, miners buy their own dinner," said Roberts. "The money this company is spending to try to squash us in court could buy a lot of medicine, pay for a lot of oxygen tanks and fund a lot of dialysis treatments. Miners worked hard to earn those benefits, and we're not going to stand idly by when corporations try slick legal maneuvers to try to take them away from us and our families."

Also on Monday, the UMWA announced the Interfaith Worker Justice hearing and investigation on the impact Patriot's bankruptcy plan could have on the coalfields.

"People need to know what the impact of this action will be," said Kim Bobo, executive director of Interfaith Workers Justice (IWJ), a network of faith leaders who assist working Americans.  "What happens if retired miners who can barely breathe do not get the health care they worked for and were promised?  What happens to their communities when the tens of millions of dollars that annually flow into the coalfields in retiree health care and pension benefits is cut off?"

Bobo said the investigation will inform leaders of "what's at stake here."

Patriot CEO Bennett Hatfield has called the actions to modify collective bargaining agreements with the UMWA necessary to the "survival of Patriot and the preservation of more than 4,000 jobs.

"Without the cost relief we are seeking, all of these jobs will be lost and it will no longer be possible to provide healthcare for more than 23,000 employees, retirees and their dependents," Hatfield said in a recent statement. "Our labor and retiree benefit costs have risen to levels that simply cannot be sustained given the challenges facing the Company and our industry."

He said that removing the health care liability, which is around $1.6 billion, is the "single most important" action for Patriot to emerge from bankruptcy.

"We very much regret the necessity of these changes to our employees' and retirees' wages and benefits," Hatfield said.

Patriot Coal did not return a request for comment on the Monday news conference held by the UMWA.