The federal judge presiding over coal operator Blackjewel LLC’s bankruptcy has set a timeline in the “hot goods” dispute over millions of dollars worth of coal sitting in railcars in Kentucky and Virginia.
Frank Volk, chief U.S. bankruptcy judge for the Southern District of West Virginia, gave the Labor Department, Blackjewel and Blackjewel Marketing and Sales (BJMS) — buyer of the disputed coal — until Sept. 23 to submit a series of briefs to the court. A final set of briefs is due Oct. 1.
Volk said he expects to review the documents “swiftly” and rule soon after whether the coal should remain sitting until the Blackjewel workers who mined it are fully paid, or if it can be sold.
While the timeline provides some clarity about the future of the coal in question, Friday’s hearing highlighted continued uncertainty about if and how hundreds of miners across the region will be paid millions of dollars in owed wages.
The Labor Department says the coal is “hot goods.” Under the federal Fair Labor Standard Act, workers must be paid at least minimum wage or the things they produce can’t legally be moved or sold. More than 1,000 former Blackjewel employees across West Virginia, Kentucky and Virginia are still awaiting their final paychecks more than two months after the company declared bankruptcy.
“The FLSA has put the prohibition in place to discourage employers from benefiting from the uncompensated work of the employees,” Samantha Thomas, associate regional solicitor for the Labor Department, told the court during the Friday status hearing. “It's about making sure that employers that actually abide by the law are not unfairly treated — because here's BJMS and Blackjewel being able to profit off of the fact that [sic] they’re able to move coal that they didn't really pay for in terms of workers being paid for their work.”
Volk asked the Department of Labor about its “end game” for the coal sitting on the tracks.
Thomas said that in the case the judge does affirm the coal cannot be moved, the agency would hope Blackjewel, BJMS or “another party” would step up and pay the owed wages so the coal would no longer be considered “hot goods.”
BJMS attorney Sean George told the court it was extremely unlikely BJMS would do that.
“My understanding, candidly with all, is that there is no possibility that BJMS is going to pay more than $1.4 million that it's agreed to pay,” he said.
BJMS and Blackjewel argue not allowing the coal to be sold deprives the court from using the proceeds to pay creditors, including workers. The two companies have agreed BJMS will pay $1.4 million for the coal, and if sold, have agreed to set the money aside for possible use to pay owed wages. During a hearing earlier this month, the companies also argued the coal is degrading in the railcars and losing value.
“That sounds like the end game is to inflict economic duress on the parties by prohibiting the movement of coal,” said Scott Kane, an attorney with Squire Patton Boggs, representing Blackjewel. “Certainly the debtors will argue that in these particular circumstances, that doesn't further anyone's interest, including the interests of the employee creditors, who are owed those FLSA wages.”
In a notice filed Thursday, the Department of Labor noted back wages owed to workers directly involved in producing the “hot goods” coal in Kentucky and Virginia totals more than $3 million.
“In other words, the wages for the uncompensated work that resulted in the production of the hot goods at issue total more than $3 million – more than double the amount Blackjewel and BJMS ask this Court to force DOL to accept and to release the coal,” agency attorneys wrote.
A temporary restraining order against the rail cars in Kentucky issued in district court is set to expire on Sept. 20. The Labor Department said it’s open to shifting the Kentucky railcars to allow work at the nearby mine to restart if approved by a judge.
Sam Petsonk, an attorney representing Appalachian Blackjewel workers, told the court in addition to the train being blocked by court order, dozens of miners, now in their seventh week of protest, are camped on the railroad tracks blocking the train.
“It is miners themselves who continue day by day to also, in their own capacity, apart from the injunction, to block the movement of that train,” he said. “They wanted that action to reflect their intentions and preferences and interests as to whether it is in their interest for this coal to move before the back payment is made.”
The miners have pledged to remain on the tracks until they are paid.