BANGOR — A dispute has broken out between two unions representing employees at the Verso Paper mill in Bucksport over whether the company should be forced to pay full severance to the displaced workers by Jan. 8, 2015.
On Monday, the United Steelworkers union filed paperwork in U.S. District Court in Bangor seeking to join a lawsuit filed Dec. 15 against Verso by the International Association of Machinists. Though they want to become a party to the suit, the steelworkers’ union is hoping the machinists’ complaint will be dismissed. The steelworkers support a severance pay deal Verso reached with the Maine Department of Labor on Dec. 23 and believe the machinists’ lawsuit could jeopardize that deal.
The machinists union, which represents 59 employees at the now-shuttered mill, contends that Verso is trying to evade a state law that requires all severance to be paid within one pay period of the final day of work. The machinists argue that because the last day of work was on Dec. 17, all severance should have been paid out by Christmas Eve, even though the mill is paying regular wages to millworkers through the end of December.
The machinists also claim that the proposed sale of the mill to AIM Development violates federal antitrust law.
Verso has said that its contract with the unions permits it to make severance payments to the workers within 90 days of termination, the effective date of which is Dec. 31, and that state law about the timing of severance payments makes exceptions for binding contracts between employers and unions.
The machinists’ union is pressing ahead with the lawsuit despite the Dec. 23 agreement between Verso and the state, by which Verso has promised to pay half of all severance due laid-off workers by Jan. 8. The remaining 50 percent of the severance would be paid within five days of the sale to AIM Development, which is expected to be completed on Jan. 9, or by March 19, 2015.
Representatives of the steelworkers’ union attended a federal court hearing held Monday morning in Bangor about the machinists’ complaint concerning the severance payment schedule.
Duane Lugdon, representative of USW, said Monday that his union represents more than half of the 500-plus workers at the Bucksport mill. He said that by seeking to block the sale of the mill, the machinists’ lawsuit threatens to derail the Dec. 23 agreement.
“Our mission is to get our (severance) money into the hands of our members as quickly as we can,” Lugdon said.
Jonathan Beal, attorney for the steelworkers, said Monday that the money for paying full severance to the millworkers is expected to come from the $60 million sale of the mill to the scrap metal dealer.
“We’re trying to keep that (Dec. 23 promise from being broken),” Beal said.
Representatives for the steelworkers and for the machinists each have said that if Verso declares bankruptcy before a proposed merger between Verso and NewPage can be completed, it would jeopardize all unpaid compensation.
During Monday’s hearing, attorneys representing the machinists and Verso argued primarily over procedure and jurisdiction. About 40 people, many wearing union logos on their clothing, sat in the gallery during the debate.
Lincolnville attorney Kimberly Tucker, representing the machinists, told Judge John Woodcock the court complaint about the severance payments was solely about the timing, not about how much the company is required to pay. She said Verso does not seem to be skirting state law about how much it has to pay and that the union is content to let the state Department of Labor determine how much each employee receives.
She added that the machinists do not see the Dec. 23 agreement between the state and Verso as a “negative.” State statute simply takes precedence over any payment schedule the state Department of Labor and Verso might agree upon, she said.
According to Tucker, Verso has indicated it is willing to make about $2 million in total severance payments, which is consistent with the state’s minimum requirements, but the machinists feel that the total severance should be closer to $3 million.
Portland attorney David Barry, representing Verso, told Woodcock that the state’s Dec. 23 agreement with Verso supersedes the machinists’ attempts to get the courts to force a different outcome. He criticized the machinists for contesting the state’s decision about the timing of the payments, and for accepting the state’s determination of each employee’s severance pay.
“They want to run and hide when (the state’s position) doesn’t suit them,” Barry said.
Picking up on Barry’s argument, Woodcock suggested to Tucker that the machinists “want your cake and to eat it, too.”
The machinists’ attorney emphatically agreed.
“Absolutely, your honor,” Tucker said. “What good is having a cake if you cannot eat it?”
The state law that determines the timing of severance payments has been on the books since the 1970s, she said. It has been amended several times because employers, and paper mills in particular repeatedly have tried to find ways around the law, she said.
Woodcock said that he is obligated to rule on the severance issue by Jan. 8. He set a deadline of Wednesday, Dec. 31, for Barry to file a written brief on whether a prior federal Supreme Court ruling sets a precedent that should be applicable to the machinists’ lawsuit.
A separate hearing on whether the proposed mill sale violates federal antitrust law has been set for 1 p.m. Tuesday, Jan. 13, 2015, in Bangor.