On Tuesday morning of this week, the Supreme Court of the United States denied cert in Unite Here v. Trump Entertainment Resorts. In plain English, it denied appeal, which means that the decision of the court below stands.
Chapter 1113 of the bankruptcy code allows the debtor, here the Trump entity, to reject a collectively bargained agreement (CBA) under certain circumstances. This seems to put bankruptcy law at odds with the National Labor Relations Act. The NLRA prohibits an employer from unilaterally changing the terms of a CBA even after the agreement has on its own terms expired.
In this case the union, Unite Here Local 54, said that the bankruptcy court lacked subject matter jurisdiction to amend the contract terms in Trump's favor. But the bankruptcy court decided that the more specific law prevails over the more general: section 1113 holds here. So it granted Trump's motion.
This is surely a case of what the presidential candidate who is a namesake of this corporate entity calls "working the system" in his favor. Of course once he is President he will use the same talents on our own behalf, on behalf of the whole people of the United States. And if you believe that, he'll sell you a famous bridge in his favorite city.
In this case he and his corporate entities worked the system so as to avoid their negotiated responsibilities regarding pensions, health insurances, severance funds, paid meal times and paid holidays. All the features of employment that separate old-fashioned middle class work from something distinctly lower-rung.
Anyway, the Third Circuit (which includes New Jersey, where the corporation involved is headquartered) upheld the decision of the bankruptcy court early this year. The decision says, "[T]he authority to reject an executory contract is vital to the basic purpose to a Chapter 11 reorganization, because rejection can release the debtor's estate from burdensome obligations that can impede a successful reorganization."
That is the judgment that SCOTUS has now allowed to stand. That settles the legal question for the Third Circuit, but not for the remainder of the court, because a rejection of cert has no precedential effect.