iTrump wins again! But the winner is Trump Entertainment Resorts, Inc. and not the presumptive Republican presidential nominee, Donald Trump.
In January, we informed our readers of an important decision from the Third Circuit Court of Appeals in favor of Trump Entertainment. In that ruling, the Third Circuit held that Trump Entertainment could reject the continuing terms and conditions of a collective bargaining agreement (“CBA”) that had already expired. Under the National Labors Relations Act, an employer has enforceable duties under a CBA even after the CBA has expired. The Third Circuit’s decision therefore provided debtors with a way out from under the CBA. This was the first decision by an appellate court holding that an expired CBA is still subject to rejection under section 1113 of the Bankruptcy Code. As we discussed in our prior post, section 1113 allows a debtor to reject a CBA as long as the debtor complies with the procedural and substantive requirements of that Code section.
On May 31, 2016, the U.S. Supreme Court denied without comment a petition for writ of certiorari filed by the workers’ union. By refusing to step into the mix, the Supreme Court let the Third Circuit’s decision stand. That decision will have the effect of strengthening the hands of employers who can now move to reject expired CBAs and thereby avoid having to continue to comply with the terms and conditions of the CBAs. It remains to be seen whether other courts will follow the Third Circuit’s lead.
The Supreme Court’s denial of certiorari may also have the unintended effect of removing a litigation issue that could have vexed Mr. Trump during his presidential campaign. After all, it is not universally known that Mr. Trump no longer controls Trump Entertainment, and it would certainly have been politically troublesome having to explain how it was appropriate for Trump Entertainment to reject the CBA and to stop funding the union’s health care and pensions.
