In re Trump Entertainment Resorts, Inc.

534 B.R. 93, 74 Collier Bankr. Cas. 2d 141, 2015 Bankr. LEXIS 2415, 203 L.R.R.M. (BNA) 3562, 61 Bankr. Ct. Dec. (CRR) 107, 2015 WL 4480785
Procedural entryThis page is a short order in In re Trump Entertainment Resorts, Inc.. Read the opinion of the Court — 526 B.R. 116
United States Bankruptcy Court, D. Delaware·Decided July 21, 2015·No. Case No. 14-12103 (KG) (Jointly Administered)·Published

Opinion

OPINION

KEVIN GROSS, U.S.B.J.

The Court is ruling on the motion of Tramp Entertainment Resorts, Inc. and certain of its affiliates (collectively, the “Debtors”) seeking entry of an order against UNITE HERE Local 54 (the “Union”) “enforcing” the automatic stay of Section 362 of the Bankruptcy Code, 11 U.S.C. § 101 et seq., and certain other related relief (the “Stay Motion”). For the reasons set forth below, the Court will deny the Stay Motion.

JURISDICTION

The Court has jurisdiction over this matter and the judicial authority to issue a final order pursuant to 28 U.S.C. §§ 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b).

BACKGROUND

The limited facts relevant to the Stay Motion are undisputed.1 The Debtors own and operate the Trump Taj Mahal Hotel Casino (the “Taj Mahal”) in Atlantic City, New Jersey, at which certain members of the Union are employed.2 On September 9, 2014 (the “Petition Date”), the Debtors filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. At all times relevant herein, the Union had actual notice of the Debtors’ bankruptcy petition. On September 14, 2014, just five days after the Petition Date, the collective bargaining agreement in effect between the Debtors3 and the Union (the “CBA”) expired by its own terms. Even though the CBA expired, under the National Labor Relations Act (the “NLRA”) the Debtors were required to maintain the status quo (generally defined by the terms of the CBA) pending the negotiation of a new collective bargaining agreement (or in this case, rejection of the CBA). See In re Trump Entertainment Resorts, Inc., 519 B.R. 76, 83 (Bankr.D.Del.2014).

On September 17, 2014, the Debtors made a proposal to the Union regarding certain changes to the CBA, which included significant proposed concessions by the Union regarding the Debtors’ pension contribution and healthcare obligations (the “Proposal”). The Union rejected the Proposal.

Beginning on or about September 26, 2014, the Union began contacting potential customers of the Debtors to discuss its ongoing dispute with the Debtors and encouraging the customers to boycott the Taj Mahal. The Union orgánized a phone bank for the purpose of making such communications with potential Taj Mahal customers. The Union also e-mailed or sent letters directly to organizations which had contracted to hold conventions at the Taj Mahal, informing them of the Union’s dispute with the Debtors, the Union’s dissat[96]*96isfaction with the terms of the Proposal, and encouraging the organizations to cancel their contracts and hold their conventions elsewhere. The Union sent similar communications to prospective individual convention attendees, encouraging them to demand that their organizations relocate conventions scheduled to be held at the Taj Mahal. At least one organization can-celled its contract with the Debtors to hold a convention or similar event at the Taj Mahal on account of the Union’s communications.

On September 26, 2014, around the time the Union initiated the above-described communications with potential Taj Mahal customers, the Debtors filed a motion to reject the CBA pursuant to Section 1113 of the Bankruptcy Code (the “Section 1113 Motion”) [D.I. 134], which the Union opposed. On October 2 and 14, 2014, the Court held an evidentiary hearing regarding the Section 1113 Motion. On October 17, 2014, the Court entered an order granting the Section 1113 Motion (the “Section 1113 Order”) for the reasons set forth in an opinion dated October 20, 2014 (the “Section 1113 Opinion”). In the Section 1113 Opinion, the Court first found that it had jurisdiction to enter an order rejecting the CBA in spite of its expiration due to the Debtors’ ongoing status quo obligations under the NLRA. See Trump, 519 B.R. at 83-88. The Court then found that the Debtors satisfied the requirements of Section 1113 and authorized the rejection of the CBA and the Debtors’ unilateral implementation of the terms of the Proposal. See id. at 88-92. The Union eventually filed a proof of claim, dated November 24, 2014, in the approximate amount of $10 million, which is comprised predominately of damages arising out of the rejection of the CBA. Exhibit 4.

The Court made the following factual findings in the Section 1113 Opinion which are relevant to the Stay Motion:

[W]hile Debtors were imploring the Union to engage with them in discussions, offering to meet “24/7” ..., the Union was engaging in picketing, a program of misinformation ... and, most egregiously, communicating with customers who had scheduled conferences at the [Taj Mahal] to urge them to take their business elsewhere .... It is thus clear that the Union was not focusing its efforts on negotiating to reach agreement with Debtors....
[T]he Union refused to negotiate, delayed negotiations or did not negotiate earnestly, and presented only a partial counterproposal at the last minute. The Union was in essence intransigent in its position. Instead, the Union took a “fight rather than switch” stance even,in the face of Debtors’ submission of information that they were facing liquidation and would close the Casino unless negotiations led to a new collective bargaining agreement____
[T]he Debtors “stood on their head” to negotiate and were rebuffed time and time again. The Union presented no evidence that the Debtors did not confer in good faith....

Id. at 82, 90-91 (emphasis added). The Court further commented that, while the Debtors were allowed to unilaterally implement the terms of the Proposal, they remained subject to their labor law obligations to bargain in good faith with the Union in hopes of coming to a new collective bargaining agreement. Id. at 91-92. The Section 1113 Order was immediately effective upon its entry; the Court denied the Union’s oral motion for a stay pending appeal. The Union timely appealed the Section 1113 Order and Opinion, which appeal is currently pending before the United States Court of Appeals for the Third Circuit. After the Court’s entry of [97]*97the Section 1113 Order, and through the date of the hearing on the Stay Motion, the Union continued to communicate with potential Taj Mahal customers and urge a boycott.

On October 8, 2014, after the Union began communicating with potential Taj Mahal customers but before the Court entered the Section 1113 Order and Opinion, the Debtors filed the Stay Motion. In the Stay Motion, the Debtors argue that the Union’s communications with potential Taj Mahal customers violate the automatic stay contained in Section 362 of the Bankruptcy Code, in particular Section 362(a)(3).4

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In re Trump Entertainment Resorts, Inc., 534 B.R. 93, 74 Collier Bankr. Cas. 2d 141, 2015 Bankr. LEXIS 2415, 203 L.R.R.M. (BNA) 3562, 61 Bankr. Ct. Dec. (CRR) 107, 2015 WL 4480785 (Del. 2015).

534 B.R. 93 (In re Trump Entertainment Resorts, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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