Federal bankruptcy Judge Michael McManus last week last week ruled that Vallejo employee unions cannot represent retirees in the city’s Chapter 9 bankruptcy case.
The Vallejo Police Officers Association, International Brotherhood of Electrical Workers Local 2376, and the International Association of Fire Fighters Local 1186 had asked the judge for permission to represent retirees, who are the San Francisco Bay Area city’s largest group of unsecured creditors with more than $135 million in claims for retiree health benefits. Vallejo opposed the union’s request.
McManus denied the unions’ request on three grounds. The motion is premature because he hasn’t yet ruled that the city is eligible for bankruptcy protection, he said in a written ruling. He added that retirees have not yet been contacted to find out if they want the unions to represent them and that unions would face a “conflict of interest” in representing both current and former employees of the city.
The city has said it intends to honor most retiree benefits, but it has asked the court to allow it to reject the collective bargaining agreements with current workers.
Vallejo and its unions last week began arguments over the city’s eligibility to declare bankruptcy. The unions have asked McManus to dismiss the Vallejo’s filing on the grounds that city is not insolvent and did not negotiate in good faith to avoid bankruptcy.
McManus did not hold hearings on the case this week but will continue the hearings next week, beginning Aug. 5.
