Bankruptcy ruling stuns labor

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COMPANIES REVENUES NET INCOME PRODUCTION RESERVES• EXXON $94.59 $4.99 2.6 6.347 SHELL OIL 92.19 (86.03)* 3.99 (3.49)* 3.0 (2.9) 6.37 (5.67) MOBIL 58.52 1.50 1.3 2.255 cut their production costs through layoffs and plant closings. Ultimately, the wealthy oil barons will decrease production in order to free capital for other currently profitable ventures such as real estate, chemicals, and mining. Eightytwo refineries have been permanently shut down since 1981 and thousands of oil workers have been layed off.

Favorable tax laws such as the oil depletion allowance, which grants huge tax deductions to cover the costs for drilling and exploration, have also added millions of dollars to the treasuries of the oil giants, accounting for profit levels four times greater than 10 years ago. This "embarassment of riches," as one SOCAL executive put it, has resulted in an unprecedented buying spree by the top corporations in the United States. Between 1979 and 1982, over $30 billion was spent on mergers in the oil industry.

The Goliaths of the Oll Business After the latest mergers among major oll companies, there's a new order giants, three new combinations and how they now rank in the standings. acquiring company before the latest merger.

Acquiring/ Acquired Billions, 1983 ROYAL DUTCH SHELL/ SOCAL/GULF TEXACO/GETTY • As of the end of 1982.

The U.S. Supreme Court's recent decision in the Bildisco case, which allows employers to use bankruptcy proceedings to violate hard-won union contracts, handed a major victory to employers. Top labor leaders, who have remained confident over the years that they can rely on friendly support from the courts, were stunned by this clear warning that future dependence on the legal system for a helping hand will be short-sighted and ill-advised.

The Bildisco case began shortly after Ronald Reagan's election in 1980. Bildisco Manufacturing Co., a New Jersey-based building supplier, had negotiIn the industry. Below, a look at two old Floures in parentheses represent the 1983 DAILY WORLDWIDE Billions, 1983 Millions of barrela Billions of barrels 58.07 (29.18) 2.57 (1.59) 2.3 (1.8) 3.59 (1.63)

53.42 (41.40) 1.72 (1.23) 2.1 (1.9) 3.90 (1.94)

Sources: Petroleum Analysis Ltd. and company reporta ated with Teamster Local 408 for a three-year contract set to expire in April 1982. Barely one year into the contract Bildisco, in January, 1980, refused to pay health and pension benefits and failed to remit union dues that the company had withheld from the workers' paychecks. A few months later, the company also failed to pay scheduled wage increases.

Turning to the legal system, the union filed unfair labor practice charges against Bildisco with the National Labor Relations Board. The NLRB found that the company had indeed broken the law and ordered Bildisco to pay its employees back wages and benefits.

The unions' paper victory, however, was short lived. The company, in complete disdain for the NLRB's ruling, refused to turn over any of the past due wages or benefits. Instead, Bildisco filed a bankruptcy petition seeking permission to set aside the entire financial package negotiated under the contract. Company lawyers argued that Bildisco could save substantial sums of money—approximately $100,000 in 1981 alone-if only it could get rid of the union contract.

The court granted Bildisco the best of two worlds by allowing the company to continue operating its business while disregarding the financial obligations spelled out in the contract. The bankruptcy court disregarded years of established legal precedent and ignored a specific clause in Bildisco's collective bargaining agreement that stated that the contract would remain binding even though bankruptcy proceedings might be filed before the expiration of the contract.

Pursuing separate actions, the NLRB appealed Bildisco's failure to comply with its ruling and the union appealed the bankruptcy court's decision. These two matters were eventually consolidated and appealed together to the U.S. Supreme Court in the fall of 1983, over three years after Bildisco first violated the contract.

Neither the NLRB nor the union contested the company's right to force its employees to accept wage and benefit reductions while the company continued to make profits under a court-approved debt reorganization plan. Teamster attorney James Zazzali primarily objected to Bildisco's failure to negotiate with the union before the company unilaterially modified the contract. Zazzali insisted that the union only wished to put forward "a moderate and a modest proposal." The union recognized, Zazzali contended, that they could not force management to reach an agreement on concessions during mid-contract modification talks. However, he urged the court to grant the union an opportunity to voluntarily work out concessions before permitting the company to force concessions through bankruptcy proceedings.

According to U. S. Law Week (Oct. 25, 1983), the union's legal counsel went so far as to cite, with approval, newspaper headlines about other unions that (continued on page 10, in “[catastrophe 1984 while they develop "cost-cutting" policies. American…]”)

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Total steel employment (in thousands) Employment is sharply down . . .