BUCKSPORT, Maine — A federal judge has dismissed claims over severance and vacation pay made by a union representing workers at the now-closed local Verso Paper mill.
Judge John Woodcock issued the 86-page ruling Tuesday in U.S. District Court in Bangor.
The International Association of Machinists filed suit against Verso last month over the issue of severance and vacation pay that workers are owed by the company, which shut down the mill last month. The union accused 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.
The machinists also claim in the lawsuit that the pending $60 million sale of the mill to AIM Development, a subsidiary of scrap dealer American Iron and Metal, violates federal antitrust laws. Woodcock has not yet made a decision on the machinists’ claims that the sale and closure of the Bucksport mill is part of an attempt to monopolize the market for coated paper, which is used in magazines and catalogs.
A proposal by Verso to acquire rival coated paper maker NewPage had been held up for a year while federal officials considered whether the merger might violate federal antitrust laws, but that acquisition was given the green light by the Department of Justice on Dec. 31. Despite claims to the contrary from millworkers and unions, antitrust regulators determined that the closure of the Bucksport mill was unrelated to the proposed combination of the two firms.
Bill Cohen, spokesman for Verso, said that as of Wednesday, the company has completed the $1.4 billion merger with NewPage.
On the severance issue, Verso officials 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, countered that state law mandates all severance be paid within one pay period of employees’ last full day of work.
Employees worked through Dec. 17, when most completed their final shifts at the mill, but were paid regular wages through the end of December.
In his Jan. 6 decision, Woodcock wrote that state law “precludes [the union] from proceeding [with severance pay claims] once the state of Maine Director of Bureau of Labor Standards brought suit in state court against” Verso.
Woodcock also indicated in the dismissal that the machinists’ claims about vacation pay should be filed in state court rather than in federal court. In light of these decisions, the judge added, it would be inappropriate to allow the union’s motion for attachment and trustee process to proceed, or to permit the United Steelworkers union to join the lawsuit.
Two days before Christmas, state officials and Verso reached a deal by which the roughly 500 laid-off workers are expected to receive half of the severance pay they are owed by Jan. 8. The remaining severance will be paid either within five days after the sale of the mill is completed or by March 19, whichever comes first.
Cohen said Wednesday that Verso is preparing to send out initial severance payments to all former workers at the mill, including the machinists, on Thursday, in accordance with its agreement with the state.
Cohen said the company always has intended to make the mandated severance payments to the workers and has pursued a cooperative approach with all the mill’s unions and with the state in deciding when those payments would be made. The machinists’ argument that severance had to be paid in full by Dec. 24, he added, “didn’t hold legal water.”
John Carr, spokesman for the machinists, said Wednesday that “we respectfully disagree” with Woodcock’s decision to dismiss the severance claim. He said there is an appeals process and that the union is discussing its options with its attorney, Kim Tucker of Lincolnville.
“No decision has been made” about a possible appeal, Carr said.
He added that the union hopes for a more favorable outcome on the antitrust portion of its complaint, a hearing on which will be held in federal court at 1 p.m. Tuesday, Jan. 13, in Bangor.
According to Cohen, the sale of the mill had been expected to close on Friday, Jan. 9, but Woodcock has asked the company to wait until after the antitrust hearing is completed. He said the company hopes the judge issues a decision quickly after the hearing so the sale can be completed without further delay.
