BUCKSPORT — A local chapter of a union on Monday sued the owner of the Verso Paper mill and the scrap metal recycling firm buying the now idled facility in an effort to block the sale.
Local Lodge 1821 of the International Association of Machinists filed the complaint Monday in U.S. District Court in Bangor. The union is seeking a court injunction against Verso, claiming the way that Verso has reached an agreement to sell the mill property to AIM Development has violated the Sherman Antitrust Act.
Among other things, the injunction would require Verso to more aggressively solicit offers from companies that would continue to operate the mill as a paper making facility.
Bill Cohen, spokesman for Verso, said Monday that officials with the company had not been formally notified of the suit or seen the complaint. He added that it is the company’s policy not to comment on any pending litigation.
Rick Gilley, business representative for the Machinists, said Monday that the union, which has 59 members who work as mechanics at the Bucksport mill, is not trying to dictate to whom Verso should sell the mill. Gilley and four other officers with the union’s local chapter are listed as plaintiffs in the lawsuit.
“What we’re trying to do is make them abide by the law,” said Gilley, who worked as a mechanic in the mill’s maintenance department for 38 years. “It’s obvious they don’t care about the workers.”
He added that even though the Machinists are the only listed plaintiff in the lawsuit, the union really is “doing it for everybody at the mill.”
Of the mill’s 570 workers, about 500 are expected to be laid off at the end of the month. Two power generation facilities on the developed 250-acre mill site, which employ 50 to 60 people, are expected to keep operating if AIM takes possession of the property in January as planned.
Verso Paper announced Dec. 8 that the company had reached an agreement to sell its Bucksport mill and related power generation assets to the subsidiary of the Montreal-based American Iron and Metal for about $60 million.
Verso officials have said that, even though they have shut down operations at the mill, they plan on paying employees their regular wages through the end of December.
By merging with its major competitor and selling the Bucksport mill to a scrap metal dealer, the Machinists allege, Verso is trying to monopolize the market for coated paper, which is used in magazines and catalogs.
The proposed $1.4 billion merger between Verso and NewPage remains under review by the U.S. Department of Justice. In October, NewPage agreed to sell its Rumford mill to the Canadian company Catalyst Paper to address concerns that the joint company would control too much of the North American market for coated paper.
“Verso seeks to reduce output in the market for coated paper, which it will dominate as a consequence of its acquisition of its largest rival, NewPage Holdings,” Machinists representatives wrote in the complaint.
As a result of Verso’s agreements with NewPage and AIM Development, they added, “Verso will achieve dominance in the relevant national market for coated paper and simultaneously reduce output in that market substantially.”
Officials with the union also accuse the company of trying to “evade its legal obligation” under state law to make timely payments for severance, final wages and accrued 2015 vacation time.
Verso officials have indicated they have a contract with the Machinists and four other unions at the mill to make all required severance payments within 90 days of separation. But the unions, with the vocal bipartisan support of state officials, have cautioned Verso that state law mandates all severance be paid within one pay period of employees’ last full day of work.
“Verso has attempted to evade the timely payment of severance and vacation time, by refusing to agree to comply with the time requirements,” union officials wrote.
The plaintiffs have asked that the injunction remain in place until June 15.
According to the complaint, the injunction sought by the Machinists would:
— Temporarily prohibit Verso from selling the mill to AIM or any other salvage company.
— Require Verso to publicize the availability of the mill for sale at a reasonable price to be determined by the court to any bona fide buyer willing to continue making printing paper.
— Prohibit Verso from rejecting any offer to purchase the mill at or exceeding such minimum price set by the court.
— Bar Verso from taking any actions or refusal to act with respect to the mill that would be inconsistent with the continued operations of the mill after a brief shutdown of a few weeks.
— Prohibit Verso from selling or trying to sell the electric power plant or any other assets associated with the mill separately from the mill itself.
Donald I. Baker, the Washington, D.C., attorney handling the antitrust claims in the lawsuit, said Monday in a news release that Verso is required to consider purchase offers for the mill from competitors.
“The antitrust claims essentially state that a company may not shut down and scrap a productive facility, in the context of a merger that would make it the market leader, without offering the facility for sale to some purchaser willing and able to continue to operate it as a continued source of competition and employment in the industry,” Baker said.
Baker, a former assistant attorney general in charge of the Antitrust Division in the U.S. Department of Justice, said in an email that there is precedence for a federal judge blocking the sale of one business to another under the antitrust laws. In the late 1990s, a federal judge blocked the sale of an evening newspaper in Hawaii to Gannett Pacific Corp., which owned the morning newspaper and tried to buy the evening paper to eliminate the competition, Baker said.
“The U.S. District Court (in Hawaii) granted the injunction and the 9th (U.S.) Circuit Court of Appeals affirmed,” he said. “We then engineered a settlement under which the evening paper (called the Star-Bulletin) was sold to an outside investor who continued to operate for the next decade. So it is another example of a federal court blocking the permanent shut down of a competitor, in the context of a great deal of community interest in keeping the competitor alive.”
Attorney Kimberly J. Ervin Tucker of Lincolnville, who is handling the severance pay issues in the lawsuit, said Monday in a telephone interview there is a precedent in Maine that allows a judge to attach a lien to mill property to ensure workers receive severance pay. In 1981, the Maine Supreme Judicial Court upheld a lower court’s ruling in Anderson v. Kennebec Pulp and Paper Co. that did just that, she said. That paper company was located in Madison.
No hearing dates on the motions filed with the complaint seeking hearings before the end of the year have been set. The case has been assigned to U.S. District Judge John Woodcock.