Canadian steelworkers will appeal U.S. Steel decision

HAMILTON—The United Steelworkers (USW) confirms it will launch an appeal to overturn a judge’s decision favouring U.S. Steel (USS) on a controversial issue in ongoing bankruptcy protection proceedings.

“Following review and analysis on the Superior Court ruling released Monday, we can reiterate that we disagree with much of what the judge decided,” said USW Ontario Director Marty Warren.

“We will be appealing this ruling and our appeal documents will be filed shortly,” Warren said.

The Feb. 28, 2016 court decision granted U.S. Steel creditor priority in the insolvency proceedings of the company’s former subsidiary, U.S. Steel Canada (USSC). In the aftermath of the ruling, considerable misinformation about the decision’s implications has been circulating in Hamilton and Nanticoke, where USSC continues to operate.

“We want our thousands of members and retirees to be aware of the facts and the reality of where this process stands,” says a joint statement from Gary Howe, President of USW Local 1005 in Hamilton, Bill Ferguson, President of USW Local 8782 in Nanticoke and Rob Newstead, Unit Chair of the USW Local 8782 Pickling Division.

“These court proceedings are far from over and our goals and priorities have not changed. We continue to do everything we can to protect our members’ jobs and pensions, and to achieve a restructuring that will ensure the ongoing viability of our plants and that we keep making steel in Hamilton and Nanticoke,” the local leaders said in the joint statement.  

“There have been public statements and rumours in our communities that are ill-informed and misguided. It is irresponsible to put out misinformation that creates fear that the operations will be closed down, or false hope that all issues will be wrapped up shortly,” added Tony DePaulo, Assistant to the USW Ontario Director.

“We encourage our members not be distracted by this misinformation and to remember the union is working to find a way to restructure USSC as a viable going concern and fighting to protect pensioners,” said DePaulo, a lifelong Hamilton resident.

“The reality is that this week’s court decision was just about Phase 1 of the USS Claims trial. In Phase 2, the court will hear the USW’s objections to how USS has treated its Canadian plants and pensioners. The litigation will go on for a while and it is just one part of our broader efforts to protect the interests of our members, our pensioners and the communities of Hamilton and Nanticoke.

“The court case and the fight for the future of USSC are not over by a long shot. We believe these are high-quality steel making facilities that will survive the current industry challenges and that will be restructured to provide good jobs in our communities for years to come. Our commitment to working for our members, our pensioners and our communities is not diminished by one poor judicial decision.”

Appeal Details

Following is a summary of some of the issues and concerns behind the USW’s decision to appeal this week’s Superior Court ruling:

  • The USW strongly disagrees with the Court’s endorsement of U.S. Steel’s strategies and secret corporate manoeuvring to place itself ahead of USSC’s pensioners, other USW stakeholders and other creditors – all undertaken by USS while it was the administrator of the very pension plans at issue.
  • The Court unfairly put the burden on the union to prove its objections to USS’s claims, rather than on USS to prove that it had valid claims.
  • The decision largely ignored that USS knew USSC was insolvent when it granted the secured claims.
  • The Court found that USS and USSC knew USSC was insolvent by Oct. 30, 2013
  • The Court ignored that USS, the controlling parent of USSC, kept this fact secret from the pensioners, the USW and other material creditors.
  • Instead, USS proceeded to secretly pile secured debt on USSC, to place itself ahead of its pensioners and other USW stakeholders and other creditors.
  • The Court, in the view of USW, made a significant error when it accepted that this USS secured claim was valid.
  • In the end, the Court simply rubber stamped approval of USS claims without any concern for the fact that USS had complete control of USSC and manipulated the flow of funds to USSC from USS to the detriment of USW stakeholder creditors or other creditors.
  • In Phase 2 of the USS Claims trial, the USW will continue to pursue its claims that USS breached its fiduciary duty to USW stakeholders, oppressed USW stakeholders and that USS’s claims should be equitably subordinated to USW stakeholder claims.
  • The USW is asking for a broad range of remedies in Phase 2 which could have significant consequences for the USS claims, including an order ranking the USS claims in whole or in part behind the USW’s claims.
  • The Court has not yet dealt with the USW’s appeal about the remedies the court can grant to the USW in Phase 2 of the USS claims trial. That appeal is scheduled for March 17, 2016.

SOURCE United Steelworkers (USW)