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Judge Voids Union Contract of Trump Taj Mahal Employees

Carl Icahn got what he wanted on Friday, but it may cost him the Trump Taj Mahal.

According to the Press of Atlantic City, Federal Bankruptcy Court Judge Kevin Gross ruled on Friday that the Trump Taj no longer was required to pay for healthcare or contribute to pension for union workers. This move was the first part of a plan put into motion by Icahn to save the bankrupt Atlantic City casino, but backlash could still result in the property’s closure.

Trump Entertainment officials had argued cutting benefits for their workers was a necessary step towards saving the casino. The move will allow the casino to save $14.6 million in costs. This includes $5 million in healthcare expenses.

The union had been open to reducing pension contributions, but would not budge on healthcare payments. Under the terms of the ruling on Friday, union members will now have to find healthcare coverage under the Affordable Care Act and the company will offer a 401(k) plan instead of a pension program. Healthcare coverage for employees ends on October 31.

Icahn Blasted Over Cutting Benefits

It didn’t take long for Icahn to be blasted publicly following the decision. Assemblyman Vince Mazzeo (D-Atlantic) voiced his displeasure on the ruling, stating, “I’ve met with many Taj workers who simply want to earn a livable wage and provide for their families. These aren’t rich people — to ask and now force workers to give up their pension and health benefits is just wrong. It’s no way to treat the people who have put their lives into building the Taj Mahal. I hope this can be resolved in a way that allows workers to keep what they’ve rightfully earned, while continuing to be able to put the Taj Mahal on the financial footing to remain open long term.”

Bob McDevitt, president of Local 54 of UNITE-HERE, accused Icahn of wanting to use a “slave work force” to run the Taj Mahal. McDevitt pointed out that the ruling will result in a 35 percent pay cut for low-wage hourly workers, calling them “poverty-level” jobs.

Icahn Wants State Help But State is Saying No

The next part in Icahn’s plan to save the Taj is to seek $175 million in state assistance to save the struggling casino. Part of this is $25 million in Urban Revitalization and Economic Redevelopment grants However, this plan is already receiving resistance from lawmakers.

State Senate President Stephen Sweeney spoke out on Friday and quickly struck down any potential aid from the state, saying, “Stripping the employees of health care and their existing pensions is a destructive act of profiteering that should not be allowed,” Sweeney said in a statement released after the ruling. “I won’t allow state or any other public funds or subsidies to be used to support this plan.”

If Icahn can receive state assistance, he claims that he will put up $100 million of his own money to help revitalize the Trump Taj. He plans to convert debt into equity and become the official owner of the Taj. He did similar to take over ownership of the Tropicana.

Union Seeking Stay on Ruling – Trump Claims Stay Will Force Closure

The Local 54 will appeal the ruling and is seeking a stay of Gross’ ruling. Kathy Krieger, attorney for the Local 54, argued that the ruling would harm the Atlantic City casino industry and Taj workers.

Trump Entertainment lawyers are claiming that a stay will force a closure. Trump Entertainment attorney Kris Hansen pointed out that the company would have to tell the New Jersey Department of Gaming Enforcement next week whether they would close in November. He said that at present, “We are not going to tell them we are closing on Monday. We are going to scrape together our cash” in an attempt to remain open. He continued saying that, “Right now we can keep our doors open, but if you stay this, we can’t.”

Trump Entertainment has been in “scrounging” mode for quite a while. When they filed bankruptcy, they claimed that even with the Taj closing that the company would run out of money in December. This past week they claimed that they have been selling used mattresses and televisions from the closed Trump Plaza property in order to raise cash.

While not confirmed, there is a chance that the union could start picketing next week and Krieger even hinted at a strike when asking for a stay in the ruling.

Will the City Really Let the Taj Close?

The question now remains whether the city and policymakers will stick to their guns and not support Trump Entertainment in their efforts to save the Taj. While many are siding with the Union, can the city really afford to let a fifth casino close in 2014?

New Jersey Gaming, Sports and Entertainment Advisory Commission chair Jon Hanson voiced a different opinion than that to Senate President Sweeney. While he said that the Trump plan was not their “number one mission,” he did say that the Commission was in “listening mode.”

What does this mean? On the surface, it likely means that the door is not completely shut on state aid. Further negotiations could bring about terms that the state can “live with” but likely ones that the union will not fully sign off on.

Unlike Revel, Showboat or Trump Plaza, there is a plan being floated that can save the casino. Will lawmakers really let a fifth casino close and face further deterioration to the Atlantic City economy, or will they make some tough and unpopular choices?



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James Guill

James Guill began his poker career in 2006, spending two years traveling the US tournament circuit. Since 2008, he has covered the game extensively for some of the biggest names in the industry. When not writing about the latest poker news, he can be found hunting for antique treasures in Central Virginia.