The Supreme Court gave Donald Trump a break Tuesday by declining to hear a case involving the bankruptcy of one of his namesake casinos and the workers’ subsequent loss of health and pension benefits.
Unite Here Local 54, a service employees union, had requested that the justices hear a complaint stemming from the 2014 bankruptcy of the Trump Taj Mahal casino in Atlantic City. The union said workers were improperly stripped of their benefits as part of the casino’s reorganization.
The case involved long-standing tensions between federal labor law and bankruptcy law, so the union had a reasonable expectation that the court would take it up. The eight justices nevertheless denied the request Tuesday without comment.
Trump founded the Atlantic City casino in 1990, which is now owned by Trump Entertainment Resorts. He sold off majority ownership of the company in 2012 to investor Carl Icahn. Trump gave up his remaining 10 percent stake earlier this year, according to the Associated Press.
“Just because courts have OKed Icahn seizing our health insurance, pension and paid breaks doesn’t mean that this company will be able to rebuild its business while workers are still without healthcare and protesting in the streets,” said Al Wallinger, a 26-year bellman at the Trump Taj Mahal, in a statement provided by Unite Here.
The case would have been an unwelcome distraction for the Trump campaign, which has focused on appealing to blue-collar workers. A representative for the campaign could not be reached for comment.
The casino declared bankruptcy in 2014, having lost $25 million the previous year. As part of the reorganization, a bankruptcy court allowed the company to alter the terms of its contract with Local 54, which represented about 1,100 of the Trump Taj Mahal’s 3,000 employees. By the time of the bankruptcy the union’s contract with casino management had expired.
The changes involved replacing the workers’ pension system with a 401(k) program and replacing the healthcare program with Obamacare. The union opposed both.
Local 54 argued in court that while the contract had expired, it nevertheless remained in effect thanks to federal labor law, and that prevented its terms from being altered in bankruptcy.
The National Labor Relations Board, the main federal labor law enforcement agency, agreed with the union, saying the bankruptcy court went too far and usurped the board’s powers.
“Only the NLRB may enforce an employer’s obligation to maintain the status quo terms and conditions of employment in the post-contract-termination period,” it argued in an amicus brief to the 3rd Circuit Court.
In February, the 3rd Circuit Court of Appeals said the bankruptcy court got it right and upheld the earlier ruling. Nevertheless, it conceded that there was a major gray area involved. Tuesday’s action by the Supreme Court means that ruling will stand.
In practical terms, had the union prevailed, it would have meant that in bankruptcy cases in which a company has an expired labor contract, courts could not alter the terms even if they thought that doing so would be necessary to prevent the company from having to close.
It is unlikely that most unions would take it that far, since once a company liquidates their members would be out of their jobs. But it would have vastly strengthened their hand in negotiations with companies going into bankruptcy.
