Opinion ID: 596405
Heading Depth: 2
Heading Rank: 1

Heading: Overview of Negotiations

Text: 5 This procedurally complex case arises from the effort by the debtor Maxwell to find a buyer for the Daily News with sufficient resources to satisfy not only its creditors and its employees, but also to modernize the Daily News' printing plant so that it can compete in the New York metropolitan market. In September 1992 Mortimer Zuckerman--through his affiliate New DN Company--entered negotiations with the Daily News to buy its assets. These negotiations included a so-called stand-alone plan of reorganization that was conditioned on union support. One crucial component of the plan was concessions by Local No. 6 with respect to the July 28, 1974 collective bargaining agreement that guaranteed the printers lifetime employment. 6 On October 1, 1992 the debtor, in tandem with Zuckerman, proposed to the union that the collective bargaining agreement be modified to eliminate: (1) any obligation of Maxwell to require the purchaser of the assets of the Daily News to employ any member of the union, (2) any obligation of Maxwell to continue to employ any member of the union if Maxwell ceases publication or ceases publication and sells the Daily News pursuant to the bankruptcy proceeding, and (3) any obligation to arbitrate any controversy regarding these matters. Maxwell also provided documentation of the impact of the union's collective bargaining agreement on the financial stability of the Daily News and asserted that it had sought in vain prospective purchasers who would honor the labor agreement. 7 The union made a counter-proposal on October 14 in which it expressed a willingness to forego the lifetime job guarantees. The union proposed a progressive reduction in the number of shifts worked conditioned upon a cash buyout for each union member, three years' contribution to the pension and welfare funds, and an early retirement enhancement. The parties bargained in terms of shifts rather than jobs. Five shifts per week equals one full-time job; 200 shifts equal 40 full-time jobs. The full-time jobs of the 167 members of Local No. 6 are represented by 835 shifts. The progressive reduction proposed by the union began with an immediate reduction from 835 shifts to 540, then to 425 in 1996, to 300 in 1999, and to 200 in 2002. Translated into jobs that is 108, 85, 60 and finally 40. The initial cut to 540 shifts was designed to induce union members age 62 or older to retire. Although not acceptable to the debtor, Maxwell found this a constructive approach. 8 The next day, October 15, Maxwell responded with a proposal that hastened the reduction in shifts. The debtor's proposed modification contemplated an immediate cut to 400, a reduction to 300 once a proposed new color printing plant was operational, and then in one year intervals reductions to 250, to 200, and finally to 150. Translated into jobs that is 80, 60, 50, 40 and finally 30. Maxwell's proposal did not provide for any cash buyout or payment to the pension and welfare funds, but it offered an early retirement subsidy that would take the form of adding five years to the age at retirement and five years to the working time at the Daily News (referred to as 5 + 5). On October 19, the union made a counter-proposal that stood firm on the first shift reduction remaining at 540 (or 108 jobs) but accelerated the dates and times of all later reductions down to 200 shifts (40 jobs). It agreed tentatively to Maxwell and Zuckerman's 5 + 5 proposal. It did not address the other changes, awaiting resolution of differences on guaranteed shifts, buyouts, and the publisher's jurisdiction over work assignments. 9 Negotiations continued on October 21 when the union revised its October 19 offer by dropping the buyout, increasing the 5 + 5 retirement enhancements to 6 years, that is 6 + 6, adding a $10,000 cash payment to retiring employees, and lowering the first shift reduction from 540 to 500 (from 108 to 100 jobs) and the second to 350 (70 jobs). The union also demanded a guarantee that remaining employees would receive at least four shifts per week, but then retreated from this demand in the face of Zuckerman's strong opposition. 10 Late in the evening of that same day, Zuckerman delivered a final proposal reacting to the union's revised offer. Zuckerman's offer reduced the guaranteed shifts immediately to 400 (80 positions), to 300 (60 jobs) when the new printing plant opened, to 150 (30 jobs) one year later, and to 75 (15 jobs) a year after that. These remaining 15 jobs would be guaranteed for the remainder of the 13 year contract. Zuckerman withdrew his 5 + 5 proposal and did not propose any other continued payments to the pension and welfare fund. He did agree to make one immediate contribution of $1 million, which equals 18 months of continuing coverage. 11 At oral argument before us it was conceded that the total value of the package offered by Zuckerman to Local No. 6 amounts to approximately $30 million, and that Zuckerman has now reinstated its earlier 5 + 5 offer.