The U.S. Supreme Court has rejected a challenge by Atlantic City’s main casino union that sought to restore health and pension benefits for union workers at Atlantic City’s Taj Mahal casino.
During a long bankruptcy proceeding for the casino’s former owner, Trump Entertainment, a bankruptcy court judge allowed the company to terminate the casino’s union contracts and end health benefits and pension payments for about 1,000 union workers. The company instead offered a 401k program and a stipend to allow workers to purchase health insurance under the Affordable Care Act.
By denying review, the justices let stand a U.S. Court of Appeals ruling that that the bankruptcy code permits Chapter 11 debtor-employers to reject or modify employee benefits established in a collective bargaining agreement even after the agreement has expired
The ruling was appealed by the city’s main casino workers union, Unite HERE of Local 54, and set off a public battle with billionaire Carl Icahn, who was seeking to take over the casino and since has. Icahn said a planned re-investment into the casino was contingent on the court’s upholding the bankruptcy court action.
The union appealed saying federal labor law prohibits an employer from abandoning a collective bargaining agreement, even in a bankruptcy. Though the casinos’ deal with employees had expired, the union argued that labor laws allow some provisions to remain in effect while a new deal is under negotiation.
Icahn has said that if a higher court restored the benefits he would withdraw financial support from the casino and shut it down and that the casino—which has lost significant revenue during the bankruptcy proceedings—simply can’t afford the benefits in the resort’s current casino market.
Icahn is currently investing about $15 million on immediate upgrades at the casino.
Local 54 has voted to authorize a strike at the casino months ago, but so far has not walked off the job.
