Labor Negotiations in Chapter 9 Bankruptcy

Debora Boutte, City of Vallejo

Marc Levinson, Orrick

Charles Sakai, Public Law Group

CalPELRA 2009 Annual Conference

Debora Boutte, City of Vallejo Marc Levinson, Orrick Charles Sakai, Public Law Group

Speakers

Introduction Bankruptcy Update Collective Bargaining Under Ch. 9 Impact on Employee Relations Questions

Agenda

Introduction

5

Vallejo Background

Relatively low per capita income Binding arbitration in Charter One of the first cities in CA to implement 3% at 50 for public safety

employees 2.7% at 55 for miscellaneous

employees Very generous employee and retiree health program

FY 08 Budget Attempt to reduce 2 truck companies Lost arbitration, Cost: $4 million Economy tanked, revenue loss: $4

million Employee flight, pay out cost: $4

million Negotiation Mediation Bankruptcy

Vallejo Pre-Bankruptcy

Vallejo Pre-Bankruptcy

Media Administrative Rules/Charter/Muni Code

MOU’S Documentation

Bankruptcy Update

Bargaining Under Ch. 9

5/23/08 - Bankruptcy Petition Filed

6/17/08 - Motion for Approval to Reject CBA’s

9/05/08 – BK Judge approves eligibility

9/15/08 – RSHS hired 1/22/09 – VPOA deal cut 2/04/09 – CAMP deal cut

Bargaining Timeline

6/22/09 – BAP approves eligibility

8/27/09 – Court approves stipulated rejection of IAFF MOU

8/31/09 – IBEW MOU Rejected Parties Currently in Negotiations 1/4/10 – IAFF Mediation 1/11/10 – IAFF Arbitration

Bargaining Timeline

“Normal” Concession Bargaining Absent an open agreement or reopener, there is no obligation to bargain and no option for unilateral implementation

Threat of Layoffs/Furloughs Create Incentive to Bargain

What’s Different?

Bankruptcy Changes Unilateral Implementation Under “Pendency Plan”

Motion for Approval to Reject Collective Bargaining Agreements

What’s Different?

Rejecting CBA’s Pre-Rejection Bargaining Under Bildisco

Post-Rejection Bargaining

Bargaining Under Chapter 9

Endgame Mutual Agreement Unilateral Implementation Interest Arbitration

Bargaining Under Chapter 9

Impact on Employee Relations

Impact of Bankruptcy

No Or Little CommunicationEmployee MoraleIn Fighting DisciplineIndustrial Disability RetirementsEmployee Exodus

Importance Of Communication Communication Is Extremely Critical During Bankruptcy/Hard Economic TimesCommunication Should Be Done On An On-going BasisCommunication Can Avoid:

MistrustEmployee ExodusIn-fighting

Importance Of Communication Communication Can Build:

TrustTeamsLoyaltyPlan Of ActionBetter Survival Rate

Questions